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Deals Give January Boost to Auto Industry, But Sales Still Drop

February 13, 2002

What one auto manufacturer called a "deal-centric" market continues to artificially prop up the industry, according to analysts, but the deals were not enough to stem a 5.2 percent drop in U.S. auto sales in January.

With most zero percent financing offers expiring in January, sales held up better than expected, driven by big rebates and a recovering economy. But despite renewed optimism, analysts and economists caution that America's climb from recession in 2002 will be fitful and sluggish, according to the Philadelphia Inquirer.

The relatively strong sales suggest that zero percent financing has not exhausted the demand for cars and trucks, according to industry analysts. Paul Taylor, chief economist for the National Automobile Dealers Association (NADA), maintains that no-interest loans convinced many traditional used-car consumers to switch to new, leaving a still-sizable market for 2002.

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