Ford Australia president Tom Gorman has said a recent interest rate hike might cause potential buyers to adjust their budgets, but would not stop many from purchasing new cars.

"Even with a rate rise, I think the economy is quite durable and capable of absorbing that, although that is not to say that people are going to have to make adjustments," he told the website redbook.goauto.com.au, adding:"The underlying strength of the economy is just a fact. The latest data suggests it is at a 33-year low, which is a very strong sign."

The report said Ford was estimating Australian vehicles sales to hit 1.03m sales this year, which was 70,000 short of Toyota Australia's estimate and 23,000 short of the prediction made by the Federal Chamber of Automotive Industries.

Gorman reportedly said the second half of the year usually softens slightly and he expects the coming federal election to also reduce demand.

But Gorman cautioned that the current turmoil in investment markets triggered by the US credit squeeze could take its toll if the situation deteriorated, according to redbook.goauto.com.au.

"The nervousness that you are seeing in the credit markets, flowing into the equity markets here I think has to be watched closely, because that does affect the consumer psyche and consumer behaviour, but overall I think with such low levels of unemployment and household wealth data being pretty positive, it still bodes well for our industry," he was quoted as saying.

Ford's Australian unit has struggled in recent years as sales of its large domestically designed and built six-cylinder and V8 Falcon line have declined in the face of rising petrol prices and reduced tariff protection, allowing imported rivals into the market at lower prices.

The company has nonetheless enjoyed some success with its Falcon-based Territory SUV line, but recently cut Falcon line output, axed the luxury Fairlane and LTD variants plus imported V8 engine options, and announced plans to close its local I6 engine plant, replacing its output with V6s imported from the US. A redesigned Falcon line is due out next year.

Rivals - General Motors Holden and Toyota's local large car manufacturing units - have been buoyed up by left-hand drive Middle East market export contracts unavailable to Ford, which makes only right-hand drive cars.

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