AUTOS: Buyer’s Market

The nation’s auto dealers, at first unable to keep up with orders for 1955 models (TIME, Dec. 13), last week found themselves in the middle of the midwinter seasonal slump. All over the U.S., car buyers were demanding, and getting, fat discounts. While cars were still selling well, dealers were hard put to keep up with the busy assembly lines.

This week General Motors stepped in to keep discounting from demoralizing the industry as it did in 1954, when marginal dealers unloaded surplus stocks at less than cost to used-car dealers. Said G.M. President Harlow Curtice: “General Motors, for the balance of the 1955 model year, is prepared to repurchase [at the price paid by the dealer] or to arrange for the repurchase by other General Motors dealers in other areas any . . . new and unused passenger cars that might be considered excess supply.”*

The Bargain Hunters. Some dealers charged their troubles to bootlegging or the race for first place between Ford and Chevrolet rather than to their own lack of sales enterprise. Denver Chevrolet Dealer Bud Viner blamed his average $275 discount on bootleggers who take advantage of Denver’s freight rate ($150 from Detroit) to bring in cars by tow. Said he: “There are more new cars on used-car lots in Denver than in new-car dealer showrooms.” But the big reason for price cuts was that buyers became accustomed to them in the last year or two.

In Chicago, big-volume Stallworth Motor Co. came right to the point with prospects, offered a $2,495 fully equipped Customline V-8 Ford for a flat $2,000. Another dealer offered the $4,937 Lincoln Capri at an $800 discount. In Dallas, Los Angeles, Cleveland and Seattle, Plymouths were going at up to $200 off list, Pontiacs up to $500 off, DeSotos up to $700 off. Exceptions in the price war are Ford’s Thunderbird. the big Chryslers, the new torsion-bar Packards (just going into production), and Cadillac.

Discounting the Discount. Though the discounts looked like a windfall to the buyer, they were not always what they seemed. Many a dealer admitted privately that he added a “pack” to delivered prices, i.e., tacked on an extra $100 or so to allow more room for the discounts his customers expected. Moreover, the list sales prices also often included high-profit (up to 50%) accessories, e.g., air-conditioning or power-operated windows.

Actually, the price cutting was evidence less of overproduction than of a significant change in salesmanship. Dealers have found that they can make more money by discounting and boosting volume than by insisting oh full price. One Atlanta Ford dealer, who averaged 125 sales a month last year, is now selling at the rate of 175 cars a month. Half of the cars are selling at profits of only $100 to $200 each. He expects to boost his volume to 250 a month by March. Said a Southern Buick dealer, who offers a $300 discount on the Special: “For profit and volume, business is the best it’s been since the Korean war.” If Ford and Chrysler follow G.M.’s lead to curb bootlegging, dealers expect that business will be even better when the normal January-March sales slump ends and the spring buying surge starts.

Chrysler showed off its new 300-h.p. Chrysler “300,” the most powerful U.S.-built stock car. The hardtop “300” has a V-8 FirePower engine souped up with two four-barrel carburetors that give it a top speed of 140 m.p.h. Chrysler will begin production of the model next month, with a list price of around $4,500.

* Last year G.M. wanted to force all its dealers to sell excess supplies back to the manufacturer, was slapped down by the U.S. Justice Department.