Autos: Detroit’s Fast Start

Meeting in their 54th-floor board room in Manhattan’s new Pan Am Building, directors of the Chrysler Corp. last week gave Wall Street some of the best news it has heard all year.

They agreed to split Chrysler stock 2-for-l and to maintain the quarterly dividend of 250 on each new share, in effect doubling the dividend. It was the second time this year that Chrysler had split its shares and doubled its dividend.

Autos, if anyone did not already know it, are having a boom year — and Chrysler, because of the management stream lining of Chairman George Love and President Lynn Townsend (TIME cover, Dec. 28), is reaping the rich rewards of a comeback champion. On a 40% sales increase, to $661 million, Chrysler’s third-quarter earnings were up sevenfold to $22.8 million.

When the good news broke, the Big Board halted trading in Chrysler stock.

Trading reopened briefly at the end of the day, and the price shot up a remarkable 9| points to 99|. A year ago the stock was selling for one-quarter as much.

Buying Mood. All of Detroit is in high gear. In the middle third of October—the first period in which all the new 1964 models were on the market —sales ran at a record 26,492 cars a day, up 6.7% from the same period last year. Production of the ’64s passed the million mark last week, earliest date that Detroit has ever reached that total.

“Right now we have an alltime high of unfilled orders,” beamed Pontiac Chief Elliott (“Pete”) Estes. Ford Division Boss Lee lacocca reported that Ford sales in October’s first 20 days were higher than in any comparable new-model period. Says American Motors President Roy Abernethy: “The customer is in the best buying mood we’ve ever seen.”

Next to total sales, automen care most about their share of the market, since a change of only one percentage point can mean a difference of $45 million in earnings. General Motors, surprisingly plagued by production problems in gearing up its intermediate-sized cars, slid from a 54.4% share in the first eight months of this year to 53.5% in the middle third of October.

Production bugs can be beaten, but what worries G.M. planners are early signs (as rivals predicted) that Chevrolet’s new intermediate Chevelle is cannibalizing sales from other Chevrolet models instead of bringing new buyers.

Ford’s market share rose significantly, to 27.3% v. 25.9%—and the increase came partly out of G.M.’s hide. Chrysler’s rapid sales rise of the last two years seems to have leveled temporarily with its market share at 12%. This week Love and Townsend will begin consumer-testing of the industry’s first turbine-powered car, which they hope will stimulate overall interest in Chrysler. American Motors climbed from 6% to 6.2%. Studebaker, whose mid-October daily sales rate fell behind last year’s, clung to less than 1% of the market.

Saving Trend. Demand for cars is rising faster than the growth in the nation’s population or in personal income. Moreover, it increases even though the percentage of American families owning cars remains constant at about 75% . The Chase Manhattan Bank says that automen are benefiting from suburban living and the fact that suburbanites have become convinced that a car is a necessity for almost every member of the family from teen-ager up. Twelve million families now own two, three, four or even more cars, a sevenfold increase in multicar families since 1949. “Were it not for this,” says the Chase, “automobile makers might be facing a saturated market.”

As it is, there is growing confidence in Detroit that sales this year (including imports) will top 1955’s record of 7.2 million cars, and that 1964 will prove to be the third big year in a row.