Nissan and Honda have entered a war of words over whether America has plunged into recession.

The split between the chiefs of two of the world's largest carmakers coincided with a warning from analysts that an unexploded bomb beneath US car loans will “inevitably” blow up and could become the next funding crisis to hit global markets.

Carmakers in Japan and the US have used increasingly aggressive financing techniques to shift vehicles, creating what many observers believe is a mountain of credit with significant risks of defaults.

In Tokyo today, Takeo Fukui, president of Honda, appeared bullish on the prospects for car sales in the US, stating: "I don’t foresee a recession. There are plenty of business opportunities."

However, only a few days ago Carlos Ghosn, Mr Fukui’s arch rival at Nissan, revealed an altogether more bearish outlook on the US.

Mr Ghosn, who jointly runs Nissan and Renault, said that the problem with American car sales was deepened by the accompanying pressures of the soaring cost of raw materials, especially iron ore and aluminium.

Mr Ghosn said: "We are very lucid on the situation of the industry that there is a recession in the United States, at least in the car market.”

Industry figures suggest that US car and lorry sales have already begun their slump, falling by nearly half a million vehicles to 16.1 million in 2007 — the worst annual performance since 1998 and the Asian financial crisis.

Nissan is understood to be assuming a similar fall-off in demand during 2008.

But even as the sub-prime destruction spreads, efforts to shift vehicles in the US have created greater incentives for people to take out long loans.

Christopher Wood, a CLSA strategist who warns of the “demise of credit” as the US housing crisis deepens, described car loans and credit card debt as the next areas of finance likely to generate big shocks.

Ten years ago, normal terms for a car loan in the US ran at about four years. Today, dealerships have begun to offer eight- and nine-year loans.

Even Toyota’s financial services arm has begun offering 84-month loans, which account for 4 per cent of its vehicle financing business.

Car analysts described the new super-long financing terms as “bubble-inducing” — the value of cars depreciates quickly, shedding about half their value after their third year.

About three quarters of the way into an 84-month loan, therefore, the car owner owes considerably more than the vehicle is worth.

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