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US mortgage woes 'hit car firms'
GM Vice-Chairman Bob Lutz

Mr Lutz says the housing market is in "meltdown"
Ongoing problems in the American mortgage market have hit US car sales this month, General Motors' Vice-Chairman Bob Lutz has warned.

US car-makers are due to unveil April sales figures on 1 May, and Mr Lutz said he expected an industry-wide drop.

His comments come at a time of record repossessions in the so-called sub-prime mortgage sector.

These offer higher-interest mortgages to people on low incomes or with poor credit ratings.

A growing number of people with sub-prime mortgages have failed to meet their monthly payments in recent years as US interest rates have risen.

Mortgage 'meltdown'

"The [car] market as a whole has been a little weakish," said Mr Lutz.

"That has come as a result of the housing market problems and the mortgage industry meltdown.

"A lot of people are finding themselves in a position of reduced affordability and that has had an impact, not just on us, but across the industry."

A number of economists have already warned that the weakness in the US mortgage market, which is part of a general slowdown in the housing sector, could hit the wider American economy.

General Motors (GM), which is continuing with an ongoing turnaround plan, returned to profit for the final three months of 2006, but made a loss of $2bn (£1bn) for the year as a whole.

Like fellow "big-three" US car firms Ford and Chrysler, GM has struggled against falling sales in the face of higher petrol prices and increased competition from Japanese rivals.

Toyota 'world's largest carmaker'

Japan's Toyota has overtaken US rival General Motors to become the world's biggest carmaker, a spokesman for the company has said.

According to company figures, Toyota sold 2.348 million vehicles in the first three months of 2007.

That compares with General Motors' sales of 2.26 million cars and small trucks during the same period.

Japanese carmakers have been boosting foreign sales and making gains in the US, the world's largest car market.