US dealers expect a sales slump in the US in the next five to six months, but some recovery in the second half of the year.

Paul Taylor, chief economist of the National Automobile Dealers Association (NADA), is forecasting that sales of new light vehicles will fall below 16m units this year. Speaking at NADA's annual convention in San Francisco, he said that an improved economy in the second half of 2008 should help reach a sales level of 15.7m units.

"Energy costs of gasoline, home heating and cooling will continue to drain money from consumer budgets and slow down consumer spending," Taylor said. "A sagging residential real estate market and credit crunch will be helped by recent interest rate cuts by the Federal Reserve. But real estate difficulties will persist into 2009 for about half of the US population."

Taylor revealed that franchised dealers remain reasonably confident in the economy, and cited the NADA dealer optimism index, which is considered to be an indicator of new vehicle sales.

"Short-term interest rates are falling, but credit problems and unemployment will persist in 2008," Taylor added. "So the economy is a mixed picture. Dropping gasoline prices would assist light vehicle sales but are not assured in a volatile energy market."