Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-24
STOCK CRASH HITS
MOTOR INDUSTRY
Dealer Win Feel Effects More
Than Manufacturer, Says
Automotive Expert.

That the recent collapses in the stock
market will have some effect on the au-
tomotive industry is inevitable, accord
ing to 3. H. Cram, president Of Grams
Automotive Reports, Inc. No such de-
bacle, hurting prices from dizzy heights
to nearly rock bottom, could occur with
out producing vibrations which would
he felt the length and breadth Of the
land.
Because of the many and varied fac
tors involved IL Is difficult to foresee to
what degree of intensity the blows will
strike the automotive industry. Yet an
analysis Of the situation enables one to
determine what direction the force will
follow.
AS regards the manufacturers, the
breaks could have occurred at no more
propitious time If their effects were to
be made the less consequential. Pro-
duction already was in the midst Of a
seasonal recession and output was be-
ing curtailed with increasing rapidity.
A few plants had closed for inventory.
Others were planning to do so shortly.
At many factories preparations for new
models to be introduced next year had
reduced activity almost to a minimum
and in several instances employment
had been lowered.
Industry Fortified.
Latest statistical information released
prior to the disaster revealed In viz
tuall- all companies satisfactory balance
figures. earnings and inventories. The
industry was fortified with sound
financial structure to stand the shock.
However, dealers will not be so for
tunate. Because Of the heavy produc-
ton they have had q hard struggle all
year Even prior to the stock market
breaks heavy inventories burdened them,
and few appeared on the way to ex-
coed 1923 profit records. Indications
were that on the whole they would
show less earnings this year than last.
And now the situation Is still more
trying.
Actual reduction in buying power in
the automotive market resulting from
losses suffered in the stock market is
problematical and difficult to arrive at
definitely. In such market collapses
there are always those who gain while
many others lose. Still, the bears are
largely big operators, fewer in number
and with a greater individual resource
Of wealth behind them in proportion to
those who constitute the bull side. The
general public is not on the bear side.
There is no question but that the buy
ing power OF those who we're involved
in the bull market is momentarily at
the lowest ebb to which it has declined
in a long time. On the other hand, it
must be remembered that the number
Of persons caught in the flood of selling
was small as compared with the entire
population or the potential buying
power of the Nation.
Dealer Is Concerned.
However, that lesSering Of purchasing
power will exercise some limitation on
future new car buying cannot be doubt
ed. The amount Is anybody's guess, but
it Is the dealers greatest concern. With
stocks already heavy, his possibilities Of
moving them, to the extent that salts
faction will be obtained are consider
ably reduced.
The automotive industry has proved
itself an exceptional one, in that It
RECEIVERS more easily from stock market
blows than do many other industries.
The condition produced by the COM
bined results Of unprecedented produc-
ton during the early part of the year
and the effects Of the stock market on
new car buying during, the. next six
months probably will cause the indus
try to get under way and proceed at
the first part Of 1890. In fact, it Is
quite likely that both production and
sales for the first half of the coming
year will be below the levels Of the cor
responding period Of the current year.
1t is the dealers who will face the
immediate effects of the stock market
crashes, and these effects will be to
some extent adverse. Their influence
on the manufacturers, while not Of i'm
mediate consequence, can very well re-
suit in q considerably changed program
for 1880.