New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1922-08-05
Price Reductions
Unsettle Detroit
Automotive Trade
Keen Competition Seen;
Many Companies Will
Suffer Unless They Are
Able to Widen Market
Special Dispatch to The Tribune

Special Dispatch TO The Tribune
DETROIT, Aug 5.--Price reductions
Of the present week have brought about
an unsettled condition in the industry
which is causing considerable concern
among factory officials over business
for August and the fall months. The
reaction of the buying public to the
price changes is being closely studied
so that factory plans may be speedily
adjusted to meet the newly arising
conditions.
| July was one of the most successful
summer months the industry has
known and August schedules, as
whole, were mapped out to meet a
similar run of business. Though
these schedules are being maintained
there is feeling expressed that the
| number of orders now on factory
books may be greatly reduced under
the influence Of unsettled prices. In
dications at this time are that the
output of most factories will be con-
siderably lower in August than in the
four preceding months.
Reductions IN price were generally
forecast by The heavy production Of
the year, but these reductions have
proved to be rQore extensive and COM
prehensiye tEan anticipated. The
Topping off of from $3.50 to 5000 on
open car models cannot be explained
by production economies. Reductions
of this amount in closed cars could
have been made by many companies in
the middle class field, owing to the
increased business in those models,
but the open car reductions can only
lead to the conclusion that an effort
hn1 IN IN h,,ei
ness in fewer hands.
General Motors has announced
rather frankly a policy of increased
sales and lower profits for the incom-
ing fiscal year and has set about Great
ing demand based largely on price
which will give it a production of
about 100000 cars. President P S.
du Pont. in statement on the price
reductions said: General Motors is
endeavorng to deal literally with the
public, contents itself with a satisfac-
tory margin of profit upon capital en-
ployed in its business and believes that
the buyers of its products are entitled
to the advantage of reimbursement in
prices when conditions warrant"
The normal tendency of the indus
try following a price reduction of the
kind made, is to match it as closely as
the business condition of the ndivid-
uai companies will permit, and then
scramble for increased business to
make up larger production. With all
companies on lower price level it
will be necessary to speed up sales.
Unless the market can be widened suf-
ficiently to absorb the increased num-
Der of cars, there will be many COM
panies whose earnings will be per-
ceptibly lower. The situation, as a
ole IL
tions in the used car field.
Unless there is some measure of re-
lief afforded in the railroad strike stu
alton, the Detroit district will be fac
ing critical period during the month.
Coal supplies at best are not sufficient
to maintain factory operations over
period of thsrty days more The De-
troit Edison Company has declared that
another ten days may witness the issu-
ance of rationing order under which
the automobile and parts plants will be
curtailed in their use of power.
This situation finds the larger COM
panios with independent power plants
conserving their coal supplies against
such an emergency, and fastening it at
the same time by drawing on the Edi-
son Company for practically their full
load Of power at this time. Under
their own power they will be in posi-
ton to operate from thirty to sixty
days, provided they are able to obtain
supplies of smaller parts and material.
Many of the small companies are pre-
pared to operate with gasoline motors
| if necessary, to keep their shops pro
ducing in at least some quantity.
Questionnaires have been issued by
| the larger car and truck manufacture
ing companies to their sources of sup
ply seeking information on the ability
Of these companies to maintain opera
tons during the next few months.
Every effort is being made by the man
ufacturers to strengthen their supply
sources so they may be assured of OBJ
tanning their requirements for the fall
market. Forsthe greater part the parts
men are we'll situated for at least thirty
days.
Steel is difficult to obtain owing to
the rail situation, and many of the De-
troit companies are resorting to trucks
to bring in supplies. Commitments on
steel are being placed on longer time
basis than formerly, companies finding
| this necessary to be sure of getting
supplies when needed. Traffic depart
ments of all companies are working
night and day to get shipm ents through,
J and though delays of days are being
encountered they have been uniformly
successful in keeping the delays from