CORRECTED-GM economist:no Brexit impact to US auto market now; more UK car production possible

Thu Jun 30, 2016 9:03am EDT
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(Corrects spelling of chief economist's name to Mohatarem throughout)

By Bernie Woodall

DETROIT, June 29 (Reuters) - It is too soon to measure the impact of the British vote to leave the EU on General Motors Co but the decision will likely not have much effect on the company in its home market, GM's chief economist said on Wednesday.

Mustafa Mohatarem said the most immediate likely impact for U.S. auto sales was a positive one as last week's referendum result brought with it a greater chance that U.S. interest rates "will remain lower longer" than if British voters had decided to stay in the European Union.

He set the chance that Federal Reserve Chair Janet Yellen will push to raise rates this year at less than 20 percent. "If the U.K. had stayed in the EU, the thinking was that a rate hike would come in July or September," Mohatarem said.

U.S. auto sales set a record last year and may set another one in 2016 in part because consumers are taking advantage of low- and no-interest auto financing.

Overall, Mohatarem said, GM "will wait until the dust settles" before more deeply assessing the impact of the Brexit vote on the company and the global auto market.

"How can you asses the impact of something if the rules are not yet set?" he said referring to the lack of certainty around how Britain will exit from the European Union.

He said that over time there may be a greater chance for additional production at GM's two plants in England, but he cautioned that the British pound, down about 10 percent against the dollar since the referendum result, would have to maintain a low exchange rate to the dollar for that to be realized.   Continued...