Mohave County miner and our mineral wealth., 1922-06-30
|QABSON, statist;c;an htmScS ID on Business Conditions

Wellesley Hills, Mass, June "A, 1922. In discussing the general sit uation for the week Roger w. Babson the statistician today made the fol- lowing analysis of the Automobile ln- dustry.
 Many persons have been surprised at the recent rebound in the automo- bile industry and in the price of auto- mobile securities. Those, however, who have been carefully watching the situation are not surprised. The price cut in automobile developel new buying; the extension of the goud roads movement increased the point of saturation; and the reduction in the cost of tires and general supplies encouraged more people to use cars. The man who has never had any car now drives one; and the man who was content with one car now has two or three. No, the saturation point has not yet been reached. Moreover, as our system of good roads is extended, this saruration point is pushed far ther and further away, The satura- ten point for automobiles in :his countrv will not be reached until our syst-in of highways has Leen connp'et- ed and perfected.
 "The great factor, however, which is today making business for the auto- mobile companies is the silent and in &iStant purchasing Of parts" by the present users of cars. People have no idea of the tremendous business existing today in automobile parts. It is generally estimated that about ten billion dollars is invested in auto mobiles and their accessories. 1t is further estimated that man spends about 5f6 year on repairs and that a large proportion of this for new parts. This means that from three hundred to four hundred million dol lars of automobile business per year exists in the manufacture and sale of new parts for cars already sold. Not but there is as much net profit in this business as in double or treble the same amount of automobile busi- mess. If you have any doubt of this take the parts" catalog for any car and add up what it would cost to buy all of the parts of the car separately. Not only are the companies getting f high prices for these parts, but there is practically no expense connected with the selling of these parts. When buying complete car may buy from any one of hundred companies, but when buying part to one car of my present cars l must buy of the com pany which manufactures the car. NSale of these parts is bringing into the older companies tremendous in- come.
 Investors will therefore see that the automobile business has graduat- ed from the experimental stage and has became a great settled industry, at least so far as the older com ,any is concerned. The good will as- set of every business should increase as years go on, provided it manufac- lures honestly useful product. The older automobile companies, however, possess the additional asset; of being able to sell parts for existing cars.
 Many of these companies could pay their dividends, certainly their pre- ferred dividends, from the profits from sale of parts. If Ford did not manufacture another car, he could do a tremendous business for years to come in manufacturing parts for the cars already sold. If the saturation point is ever reached in the automo- bile business, the profits from the re- placements of machines and the sale of parts will still be tremendous.
 of course, new automobile com panies do not possess this asset. Hence, conservative men purchase on- ly the stocks of the older and more stable concerns. Wise investors also look carefully to the capitalization. Before buying an automobile stock, divide the capitalization by the. an- nual output both in cars and yin dol lars. Certain popular makes of cars are over capitalized, and certain com panies with small outputs have very conservative capitalization. There fore, one should consider both the out put and the capitalization. Neither factor by itself is sufficient in judg- ing an automobile stock.
 q want to emphasize particularly" concluded MT. Babson, "the fact that