Evening star., 1916-10-01
FACTS FOR MOTOR CAR BUYERS
No.. p

f all enlightened knowledge. T
plain why and how Studebak
9O% are assemblers and only lOg manufac-
turers in the true sense of the term. This
means that consumers are paying 23S premium
to 90% of the automobile concerns in the coun-
try, over and above what they could buy the
same cars for, and in fact, much better cars,
from the large manufacturers.
Quantity Production of Automobiles
Vague statements are frequently made con-
cerning the effect of quantity production in re-
ducing manufacturing COSTS To illustrate this
truth to uninformed persons, it is necessary to
state the elements that enter into costs and
selling prices of automobiles. Many people
will be astonished at the number of these ele-
ments. Primarily, the basic cost of an auto
mobile is:
CD The raw material contained in it.
(2) The wages of the workmen who fashion
the material into finished car. The sum of
these two items is the prime cost and the actual
car value the customer receives. All costs and
expenses beyond these are of little, if any, value
to him.
(3) Factory overhead expenses should be
included providing the manufacturing methods
are simple, direct and economical.
Factory overhead expenses include sup
plies, supervision and factory organization ex-
penses which, according to the intelligence of
the personnel, determine whether the output
I'll = Il
the proper material is purchased and at the
correct and the manufacturing methods simple
and effective. Hence we may say that factory
overhead expenses are legitimate part of the
actual car value received by the customer, and
if we admit this, these three items, representing
manufacturing cost, are all the actual car value
the customer receives. In making up the sell
ing price, however, other items are added, as
follows:
(4) Administrative, advertising and SELL
ing and general expenses.
(5) Discount allowed automobile dealers
who sell the customer and give him service
afterwards.
CO. Manufacturer s or assembler's profit
Quantity Production Distributes Expense
The total of these six items comprises the
selling price. 1t may be astonishing, but it is
true that every one of these six items must and
does vary with production. Every small pro-
ducer, whether he is a manufacturer or an as
sembler, necessarily suffers an increase in every
one of these six items, and must therefore
charge more for his car than the large producer
Illustrating this, we will take the cars of
manufacturer (A) producing $4,000 cars per
annum, and either small manufacturer or the
usual assembler (B) producing 10000 cars
Commencing with item y, raw material, it
should be obvious that (A) can obtain much
lower prices than (B) for the same material,
because his buying power and purchases
seven and half times greater.
In item (2), labor, it is obvious that (A) can
employ skilled mechanics in specialized single
operations to greater extent than (B), and
consequently obtain better work and more
work from the same men.
In item (3), factory overhead expenses, it
is obvious that (A), owning the hig CHEST priced.
most modern labor-saving machinery, can elm
mate excessive labor and supervision; that ex-
penses of non-productive departments, such as
experimental, engineering, laboratory, pur-
, in 1914 to 45,OOO in 1915 and from, Is. 600 IN
ce of the Six .uas $1575; in 1915, SI385 to
ar .Oas better than the preceding year. These
lie only by the increase in production.
ced and sold more seUen-passenger SKIES and
1nufacturer in the yorld for a like period, thus
nufacturer of fine cars