New-York tribune., 1920-10-17
Motor Industry
Searching for
Anew Normal
Orderly Readjussment Now
Leading Trade Leaders
TO Stress the Utility
Value Of Automobiles
Rasic Soundness Assured
Production Schedules To Be
Adjusted 10 Meet Natio.n's
Essential Transport Needs


-,erely easing up on the acceIerator,
.f.ot sharp turn ahead can be made
,:.ho,,+ skidding The industry is
s,y,ne,ing around into its next great
ecorT,Y.ic stage that Of fundamental,
nation wide utility as an essential
mart of the country's transportation
system.
The turn could not be made safely
~ the uuprccedented speed which the
industry was making six months ago.
!. was over stimulated, over produced,
oversold To-day it is getting back to
normalcy.
4 judicious slOwing-up is averting
tine Jolt and crash that would be
anplicati0n of the emergency brake.
When the dixie which damned up
automobile buying and curtailed pro-
duction during the war was lifted on
November II. 1918, with the signing of
the armistice. the pent-up orders of
TWO wears swept in on high flood.
Production schedules in the automo-
tive factories we're immediately pro-
iccted fer 1919 on the basis of this abb
normal demand.
in the calendar year 1919 the record
breaking total Of 1,97A0l6 passenger
automot les and motor trucks was pro-
duced. Even greater schedules were
set for 1920.
All along the line this expansion
program led to heavier and heavier
credit requirements, increasing de
r.ands for railroad transportation, for
raw materials, for money and for labor
Al time when all these basic elemen IS
were scarce.
Owing to railroad difficulties and
strikes. it became Increasingly difficult
to make deliveries; orders were pyra-
mided and overlapped; inventories
were unbalanced. and the pressure for
croGi, accommodate 20 finance this
abnormal development grew more
acute
From the banks came the first warn
ing signal
The abnormal conditions had brought
into the automotive industry countless
new companies hastily organized to
handle the orders which the older
units could not meet. They were the
first 10 get hit when the contraction
began.
Soon the mighty production sched-
ules and expansion programs were
translated into deliveries; almost i'm
pefeepu5.y at hrst supply began to
Outstrlp GemanG. The orGy OF spend
ing spent Itself
The aut9motive Industry refused to
accept the iHevitable until Henry
Ford dramatlzeD the law OF supply and
demand oy his now historic price cut.
Nlhln week or two score OF the
ot.cr automobile manufacturers, IN
Guiding at least one who said such ac-
tor was utterly cut Of the question,
41..oaed his lead and reduced, others
even Going 50 far as to slash.
In July the industry was working
on g. per cent basis IN relation to
It's original 1929 production schedules,
which were dcsi med TO surpass the
l'l9 figure by almost 5000 cars and
irdcns. THIS percentage has been de-
creaslng since July, until now it is
down lower than o0-~some estimates
running as low as 35. Defation is a
real thing TO the au -oinotiVe industry.
Orders have already been stimulated
somewhat by the reduction in prices.
But the significant thing is that the
readJustmert is under way, and it is
orderly. There have been few en-
barrassmenJs in the industry that
reached the stage of receivership or
bankruptcy, but they are minor in
character, with one or two exceptions.
1t is true that payments throughout
the field arc slow, and at the present
moment give no immediate prospects
o. strong Improvement. BY and large,
however, the recessions have been eff
tocted without affecting the fundamen-
tai bulwarks Of the industry
Close students of the industry-the
captains who direct its financial and
manufacturing destinies are not blind
ing themselves to the realities of the
situation. but in this adjustment they
lind nothing alarming. Instead they
see in it the healthy evolution of the
Industry into It's new and most impor-
tant stage. A considerable wedding
oat of the so-called weaker sisters"
is even expected by some leaders of
the Industry this they regard as a
constructive development. The state
ment is frequently made in candid ex-
changes Of opinion in automobile cir
cles that there are to-day too many
tae opinion of these diagnosticians
within the industry, the companies in
adequately financed, inefficiently man
aged and improperly merchandi ised will
not be able to stand the pace.
Summarizing the trends and cross
currents of the automobile industry
the following can be set down as the
next development that can be logically
expected
| The automobile will be sold to a
greater extent on its utility as q
transportation unit "Pleasure cars
nave been barred from the lexicon of
the trade.
y More conservative financing of re-
tail sales Will be stressed as abso-
lutely imperative.
2 Keen competitive conditions, to-
gether with the rcadjustmcnt in
prices viii bring real salesmanship
along intensive but sound lines into
developed both here and abroad.
4. Mergers and amalgamatlons within
the industry, both among the We
hicle and parts manufacturers, will be
accelerated. The combination already
eeonsumlnated by General Motors and
oy the WHY'S interests show the
enormous possibilities for intcgration
Production schedules will be at
tuned to the normal and basic
transportation requirements OF the
country, based on the steady replace
Nent business (Which is certain to be
'arge with about nine million auto
mobiles now in use) plus the healthy
a,mand for new cars and trucks. On
'nls foundation legitimate expansion
along sane lines can be safely
projected
f Based on these factors, a period of
genuine prosperity and firmness
lor the automotive industry seems as
sured