Evening star., 1925-07-12
BY /. A. FLEMING.

The automobile trade is in much bet
ter condition as to financing than 1t
has ever been. The lesson learned has
been acquired by bitter experience to
manufacturer, dealer and banker as
well as to finance corporations.
Moreover. the years that have pass
ed have eliminated many scores of
finance corporations, either not sound
ly grounded or that attempted to do
too great a business for their capital,
or whose methods were not backed by
sound principles. They have also wit
messed a change in methods and the
upbuilding of strong companies.
The Ford Motor Co. spiked a losing
game when they refused to permit
dealers in the products of the Ford
Co. to continue their practice of Civ
ing their Endorsements to customers
notes.
Licensing of Ford agencies was an
other boom to the company. The
gradual elimination of weakness and
the entrance of strength In its place,
With ability to finance in enormous
amounts and with more assurance of
safety, and at more reasonable rates,
drove many of the earlier interests
engaged in financing operations out
of the business.
Last fall there was a most interest
ing convention in Chicago, at which
representatives of finance corpora
ions, acceptance companies, banks
and trust companies from every State
east of the Rockies and from the Dis
trict of Columbia considered the au-
tomobtle financing situation from
every possible standpoint. They de
bated various problems as they were
brought up and then ''resoluted"
briefly as follows:
To insist on II months as the limit
of time payments; that the amount
be payable in monthly installments.
that on new cars one-third of the
amount OF cash price or 80 per cent
OF the sale price on time be paid, and
on used cars not less than 40 per cent
of cash and 81 per cent on time sales
On the new cars the payments in
clude cost at factory and In each
case in computing payments acces-
sories are to be considered as part
of the total on which percentage
payments are to be paid. The reso-
lutions also included a formula of a
report of condition, which. when cor
rectly answered, would put the
financing agent in perfect under
standing of the condition of affairs OF
the auto agency.
Used-Car Situation Improved.
The used car problem. the true
crux of the automobile industry. has
also solved itself. or the agents have
so handled it that it has ceased to
he menace to the trade. II it still
annoys. II Is an evidence of the lack
of backbone on the part of the agent
himself or of the agency
Time and practice have demon
strated the number of used cars that
may be handled with safety; at least
this has been demonstrated to capa-
bic agents. and they do not permit
their statesmen to increase the maxi
mum. If salesman has worked up
sale with a used car to be con-
sidered, he is simply told to get out
and sell used car to make room for
the one he desires to add to the
stock"
Rumor Credits MIR. Ford Again.
The Edison Co, undertaking the re-
sponsibility for the financing of the
sale of Ford cars, Is d Philad elphia
corporation doing business in very
many of the larger cities, including
Washington. This company has the
agency for a number of insurance
companies and controls the insurance
on all cars the sale of which it
This in itself furnishes a very fat
commission. 1t also maintains salts
factory balances through the banks
with which 1t places it's loans. There
is a current rumor. whether true or
otherwise remains to develop, that as
banks loans to the Edison Co. in
crease, the Ford balance in the same
institution apparently f1uctuates with
the credit line extended.
The Edison Co. also follows ac-
cepted lines of custom, furnishes
statements as desired by it's creditors
follows strict rules as to first pay
ments and subsequent periodical dis
tribution. 20
With each car financed for the Ed
son Co. goes to the bank taking
the loan a commission of So, although
not SO termed. This, with the inter
est and the compensating balances.
makes the Edison Co., as stated above,
a most desirable customer for any
bank.
Other Strong Companies.
There are other strong corporations
largely engaged in financing automo-
bile sales.
One is the Commercial Credit Co. of
d COIlSCA II Will oolAC S1o,
600 900 capital and much larger re-
sources.
1t does a large business in this city
and elsewhere, and recently acquired
control of the Real Estate, Mortgage
and Trust Co. Of this city.
The General Motors Acceptance Co.,
organized to finance sale of the cars
made by the General Motors Co., has
ramifications sufficient to care for the
immense business Of this great cor
poration.
There are thousands Of automobile
finance corporations that contribute
to the needed resources for the sales
department of one of the very largest
industries of the United States, aside
from local agents, in every large
CITY which are financially strong
enough in their own resources and
banking credit to take care OF this
great business.
There is no question but what these
no