Autos: A Bumper-to-Bumper Crop

Of all the year-end statements customarily made by U.S. businessmen, the most cheerful came last week from Detroit. The nation’s automakers have more reason than most to be pleased. Despite crippling strikes that cost them the production of more than half a million cars, it appears that the industry will have its first 8,000,000-car year in history in 1964. By Dec. 10 the automakers had already sold 7,139,135 passenger cars; barring disaster, they are virtually certain to sell another 465,000 by year’s end. With sales of 475,000 foreign cars counted in, total U.S. sales in 1964 will thus come to some 8,079,000, about 400,000 more than 1963’s alltime high. In achieving this record, the auto industry probably contributed more than any other single factor to the continued advance of the U.S. economy.

Up to 8,700,000. Now that a new record in 1964 seems reasonably certain, the big guessing game is about how well the industry will do in 1965. Last week the top men in Detroit took a look ahead, agreed that the industry will have another bumper-to-bumper crop, but disagreed—to the tune of about 700,000 cars—about just how good the year will be. Cautious but optimistic, General Motors Chairman Frederic Donner predicted that 1965 sales “could well exceed the long-term trend estimate of 7,800,000 cars and approximate the levels reached in 1964.” Chrysler President Lynn Townsend said flatly that “the industry is now in the process of putting two 8,000,000-car years back to back,” estimated that 8,100,000 cars will be sold in 1965. American Motors President Roy Abernethy agreed that 1965 sales will surpass 1964’s, predicted that the industry will sell 45 million new cars in the next five years. Henry Ford II topped them all: 1965 sales, said he, “may well be as high as 8,700,000.”

To demonstrate confidence in their predictions, the automakers scheduled the production of 2,600,000 autos in 1965’s first quarter—a record for any quarter—and announced vast increases over 1964 in their spending plans. By maintaining what Chairman George Love calls a “conservative dividend policy,” Chrysler was able to raise its capital-spending figures by $50 million to $350 million, 80% of which will be spent in the U.S. Ford hiked its program 50% , will spend $400 million at home and $300 million overseas, although President Arjay Miller said that strike-incurred losses had cost the com pany 10% of its potential earnings in 1964. General Motors’ Donner and President John Gordon raised earlier plans to spend $1 billion to $1.1 billion, 20% more than 1964; 75% will be spent in the U.S. Part of G.M.’s capital spending for the next few years will go into a new Eastern headquarters, a controversial 48-story Manhattan tower that will be completed by 1968 on the site of the tradition-encrusted Savoy Plaza Hotel; G.M. has bought half ownership of the new building from its British planners.

Decline of the Compacts. Just as distinctive as G.M.’s skyscraper are several significant patterns that emerge from 1964’s auto sales. Compact cars continued their decline, dropping to only 20.1% of the market from 29% in 1963. Their place was largely taken by the intermediates, which captured about 18% of the market. The Pontiac Tem pest, the Oldsmobile F85 and the Buick Special, all of which were upgraded from compact to intermediate in the fall of 1963, made sales gains of 72%, 41% and 26% respectively. Reinforcing this customer trading-up was a further proliferation of optional equipment, ranging from chrome-plated air cleaners to rear-seat speakers. “So many different combinations are available now,” says Pontiac Division’s General Manager “Pete” Estes, “that we could build 18,184,320 Pontiacs without building two cars alike.”

As usual, there were both winners and losers even in a good year. Ford’s highly successful Mustang, a quarter of a million of which have been sold since its introduction in April, helped boost the company’s sales 9.6% and increase its share of the market from 25.6% to 27.8%. G.M.’s Chevrolet Division, the industry leader, which sold nearly a third of all U.S. cars a few years ago, actually suffered a 5% decline in sales, dropping to 28% of the market. Sales at American Motors, the compact company that has failed to share in Detroit’s prosperity, were down 14%. Despite its plight, American is looking toward the new model year with just as much anticipation as its bigger brothers. In March it plans to introduce a fastback Rambler called the Marlin, hoping that it will serve as good bait for the customers who got away in 1964.