Evening star., 1923-12-30
BY WILLIAM ULLMAN.


expense Of doing any kind OF busi-
moss constantly mounting, and with
competition encouraging many new
varieties of economic waste. 1T Is time
for the car owner TO appreciate what
the high cost of selling automobiles
means to him.
Automobile dealers associations, in :
cluding the national organization,
are taking up the question of selling
cost for serious consideration, fol-
lowing the news that the net retail
profits on the sale of motor cars have
averaged only slightly better than
per cent for the entire country.
While this is primarily trade
problem, lit is contended that the
dealers loss of Legitimate proht is
reflected In the cost of buying cars
through various indirect channels.
For instance, the low trade-ln
values on used cars are a. result OF
selling waste quite as much as mar
kAt conditions. The automobile deal
or is forced to spend SO much max
ing sale that he has reached a
point where he cannot possibly af-
: ford to take any more losses on cars
accepted AS part payment.
Putting it another way ecopomists
point out that much of the loss taken
by car owners when trading in could
be eliminated If the selling expenses
could be lowered and the savings ap-
piled to the allowance on the old car.
The unnecessary expenses involv ed
in selling new cars are lost so far as
the motorist and the dealer are con-
cerned. Afternoon spins in cars one
hasn't the slightest idea of purchas-
ing, long-winded conferences with
salesmen who have appointments
with live prospects and demands for
luxurious automobile salesrooms
serve no good purpose. They benefit
neither motorist nor dealer, and thus
represent useless expense that has
TO be met by somebody
Until recently the dealer should
cred this loss. but he has discovered
that, being squeezed with used car
losses at the same time. it is neces-
sary to call a halt. Having absorbed
all the loss he can reasonably be
pass the remainder of 1t back to the
car buyer through the handling OF
the used car transaction.
This process is already in full
swing, according to those who see a
need for more economical buying and
more waste the motorist encourages
the more difficult will 1t be for him
TO continue to motor economically.
Apportionment OF Expenses.
In paper read before a bankers
convention Il typical apportfonment
of dealer expense showed that seven
;y-five cents out of every dollar taken
in through his accounting depart
lnent went for the purchase of We
hicles from the factory which are paid
for spot cash. Approximately eight
cents went for administrative ex-
iny, hn n
slack periods. since a sales organiza-
ton to be effective must be kept In
tact. Sales expense took approx
mately thirteen additional cents
if the dealer had a successful season;
This is rather startling In view OF
the fact that the gross pront on the
sale of an average priced car repre-
sents a tidy sum.
It is largely because the facts are
not known that condition now
exists where there are almost as
many dealers handling 10 per cent
Of the automobiles manufactured as
there are dealers handling 30 per
cent Of them. These newcomers in
automobile row soon learn that there
is a wide margin of grief between
the commission and the actual profit.
if any. But In the meantime they
offer such serious competition to the
established dealer. and make such ex-
L D.
that all the dealers are largely az
fected.
1t is contended that if car owners
would give more consideration to
the dealers problem there would be
far less extravaganza In the buying
and selling of cars and better deal
for the motorist in the long run.
The truth of this has been pretty
we'll demonstrated to many motorists
who. paying no heed to this warning,
y = 1<.1 tr1
bankruptcy of their local dealers.
with the attendant annoyances and
loss due to lack of service and rep
resentation.
Great Economic Waste.
The demand of the motorist for a
constant display of, the dealers full
line OF models means q great. eco
nomic waste. which must be absorbed
at various points along the line.
Ten to twenty thousand dollars
worth OF motor cars standing idle in
a. dealers salesroom, and this condi-
tion duplicated by twenty or thirty
other dealers in the same territory,
ties up working capital.
Interest, depreciation and lnsur-
surance add to the cost. cutting down
tho net profit and forcing the dealer
TO go easy on the trade-ins. =
Even where he has been forced to
abolish trade-ins his excessive sell
sible to offer the customer salts
factory service for disposipg of the
old car.
1t requires money to handle used
car problems with any degree of
satisfaction, but one problem cannot
be successfully solved with the losses
Of another.
The demand for immediate deliv-
cries adds considerably to the cost
Of selling cars, since they must be
warehoused by the dealer and in
sured throughout the winter months.
A little more forethought in select :
ing cars, 1t is pointed out, would
render 1t unnecessary to carry these
cars at a loss. and would result in
enabling dealers to improve other
more important forms of service
which they would otherwise be in a
position to offer.
How Buyer Can Help.
Instead of suddenly deciding that
he must have a new car the motorist
delivery at the time when he knows
he will need the car. 1t is further
more shown that the national ad-
vertising employed by the motor car
manufacturers Is making 1t less Inn
portant for the prospective buyer to
see the particular model he is inter
ested in. Naturally he desires to
inspect the chassis in detail and have
a. demonstration in the machine, but
features of color, upholstery and
seating capacity may be considered
from catalogues and other descrip-
tive matter.
AS a matter of fact there. are many
who contend that almost every mo-
torist makes UP his mind what car
he is going to buy before he visits
the various salesrooms, particularly
where he knows that the dealers are
standing together in a determinati tion
TO avoid the folly OF making extrava-
giant and illogical allowances on used
cars.
Thus, TO a very large extent, the
elaborate salesroom and the many
other expensive details OF selling
play no true part in the sale of the
car. The result is needless expense