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To: 4figureau who wrote (1659)	10/9/2002 11:16:30 AM
From: russet	Read Replies (1) \| Respond to of 5423

Congrats on the Russell review (ggggggg) Looks like one of the pins in the U.S. economy is deflating,...only house prices, bonds, the dollar, and a tired consumer to go,...and of course Lizzy and the girls but they will be the rock that America can lean on!!(ggggggg) What's Driving the Auto Bubble? Interview by Donna Guzik http://www.investorcanada.com/interview.php?contentID=1119 Cheap financing has led to increased demand for new cars, which has created an automobile bubble in the U.S. The slowdown to come will have an effect on the Canadian economy, says DesRosiers Automotive Consultants President Dennis DesRosiers "I don't think that the auto bubble is going to burst, I think it has already developed a slow leak." Summary There is evidence in the United States that there is an automobile bubble ready to burst. The bursting of an auto bubble in the States could be problematic for Canada because 80-85% of our automobile manufacturing business goes to the United States. A normal automotive cycle runs for roughly four to five years on the upside and then two to three years on the downside. We could see a softening of the auto market for roughly four to five years after being on the upside for nine to ten. 99.8% of the driving population in the United States owns a vehicle. Auto sales have been up for a combination of reasons, the price of vehicles has dropped, mortgage rates are low and incentives like 0% financing make it very tempting to enter the marketplace. There has been roughly $10-12 billion dollars of incentive money that has been put into the auto market over the past few years. Foreign car makers are continuing to take market share away from the big three automakers. General Motors has stopped their market share erosion, but Ford and Chrysler are still losing market share. Foreign companies are building more and more in North America, which in turn is translating into more Americans and Canadian embracing their products. The used car market is also exploding, with sales up around $40 million this year alone. The new vehicle market is at around $16 million for the year. One in seven jobs in Canada, one in six in Ontario and one in four in the Windsor, Oshawa and Oakville area are dependent in some way to the automotive sector, so a downturn in this sector will affect a lot of people. While the Big Three are closing plants, importers are building plant with the southern U.S. offering incentives. There are a number of people who think the government should intervene to help the auto industry, but Mr. DesRosiers says, that might not be the way to go.