Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-08-05

With thousands of used automobiles
piled up In salesrooms and dealers try
ing vainly to dispose of them, there
has developed in the automotive retail
ing industry what has been termed the
'used-car problem But officials OF
the Department of Commerce automo-
tive section say analysis has shown
that there Is no such trouble: that
there is only "new-car problem The
Cutting of the market with used cars
is an evil born of competition of deal
ers and price cutting.
1t is pointed out that If it were sug-
gested to a dealer that he was cutting
the price Of the car which he sells ne
would become indignant. This, how
ever, is the case, say officials OF the
Commerce Department. who have been
studying the question with hundreds OF
dealers and scores of dealers organiza-
tions throughout the country. When a
dealer considers a used car while at
tempting to put one of his new ones
on the market, he allows price higher
than he knows he can get back when he
tries to dispose of the trade-in. The
amount that he allows over the fair
value of the car equals the price cut
he has given on the new car. Until
there is an awakening to the reality
of this question there will be the PROB
lem of used cars and the failure In
business of dealers.
Competition Is Cause.
Competition is the basic cause, and it
| is not only prevalent among dealers
| handling different makes of cars but is
| found among groups Of subdealers toi
| the same car. Agreements have beer
| made between such Subdealers and thell
| distributor In a territory that when one
| of them has given an appraisal to
| prospective purchaser on the latter
| old car, none of them would raise the
| appraisal to get the sale. But with
| saturated market many subdealers. be-
/ lieving they must turn out the bust
ness, raise the ante in order to make
the sale.
A continuance of this business grab
bling eventually showed the dealers tina
while new cars were being sold. money
was not coming in to pay the bill. Wher
the, dealer began to study he found tina
| he had a great many used cars fol
which he could get nothing like TIT
price he had allowed.
/ Many plans have been worked on
for meeting this problem. but 1t appear:
they fail to heed that dealers canno
continue to spend for used cars ant
have the money too. Many schemes
have been tried and buried. including
plans designated as the Troy plan. tn
Saginaw plan. the Appleby. the Atlanta
the Boston. the Cincinnati, the Cleve
land. the Noyes and, the latest. tn
Windsor. plan, which is said to be work
ing with some success in Canada.
Until the problem is settled there al
ways will be used cars and more used ca
dealers When prospective purchase
plans to buy a new car. he prepares u
sell his car. He auctions his car to tn
highest bidder and the dealer who give
the highest price, gets the sale. Ant
This dealer adds to the problem. Tn
manufacturer seems to be sitting vel
by the side lines. for he gets cash fol
his car at the time of delivery and take
no part in trade in.
| New Plan.
One method used by some dealers
it was learned at the Department o
Commerce, Is that by which the deale
will not accept. a used car at fla
trade-in price. but will take 1t in TO
sale. After the sale he deducts from
the price received the amount for re
conditioning and sales cost. and APP