Auto industry doesn't fear federal budget cuts

• The auto industry doesn%27t expect any big loss of sales from federal budget cuts
• Economist%3A It won%27t effect 85%25 of dealers
• There may be a limited impact in areas near military bases or federal worksites

Despite warnings from President Obama about its impact on the economy, the looming budget cuts known as sequester starting Friday aren't scaring the auto industry.

So far, both automakers and dealers aren't budging in their predictions of a healthy year for sales. They say any impact from the deep cuts will be limited.

"This isn't even that dramatic of a cutback in spending compared to the rise in spending in the last several years," says Paul Taylor, chief economist for the National Automobile Dealers Association. "For 85% of the car dealers out there, there will be little or no concern."

He stands by his prediction that the industry will sell 15.4 million vehicles in 2013, closing in the 16-million mark of the better years of the auto industry a decade ago.

Concern about impact of the cuts is mostly limited to areas where there are large federal complexes or military bases. To cope with the cutbacks, many federal workers are going to be asked to take unpaid furloughs from work that could reduce their salaries -- and dissuade them from buying a car.

But even near Washington, D.C., where the cuts should be felt deepest in the economy, dealers aren't raising alarms.

"Of course this will impact our region, but we don't think it will impact our auto sales at all," says Tammy Darvish, vice president of the Darcars Automotive Group with more than a dozen dealerships ringing Washington and Baltimore. "It may deter customers from service/maintenance temporarily, but that's all."

Jack Fitzgerald, with about six dealerships in the same area, says he's already losing some sales from the fears of sequester, but he thinks it is all due to the media hype.

"It's not the actual reduction in spending. It's all the posturing and media hype," says Fitzgerald. "It's affecting our business," but "it will pass because they aren't cutting that much."

For the country's sake, Fitzgerald says he wouldn't mind if the cuts were more drastic.

"It's a plain old budget cut and it's only 2% and we need to do a whole lot more," he says.

Out in Casper, Wyo., Ford dealer Pete Greiner says despite the Obama's outline of impacts in just about every state, including Wyoming, he doesn't expect the cuts to make a dent in the local economy. "We're planning to have a great year," Greiner says.