Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-10-27
LAST-PER|OD DROP
IN AUTO INDUSTRY
Decline to Furnish Breathing
SpeII-Not Expected to
Affect Profits.
Conditions in the automotive indus.

Conditions in the automotive indus
try during the last quarter of 1929, a
subject provoking much discussion and
speculation in the earlier periods of the
year and now capable of being predicted
fairly accurately by close observers, are
likely to produce effects having gen.
orally unsupported benefits, according to
B. H. Cram, president of Grams Auto
motive Reports, Inc.
Briefly. they will present the SEEM
ingly anomalous situation of a decline
in activity resulting in stimulus to
the general structure.
AS has been forecast and analysed
previously by Mr.. Cram, production and
sales, which already have taken a
rather precipitous drop, are scheduled
to decline gradually for the remainder
OF the year, with the monthly totals
below those Of the corresponding periods
Of 1928.
Heavy at Opening.
This will be the result anticipated of
@ year the first three-quarters of which
have witnessed the heaviest production
in the industry's history, for It, has
come TO be an apparent fact that after
all there is limit to the number of
new cars and trucks which can be alb
sorbed by the United States and Cana
dian markets in one year.
At first glance alarmistS and pessi-
mists would pounce upon this condition
Is one to be deplored and one that will
do much to undermine the prosperity
of the first nine months. And super
ncially 1t does seem that a marked ces-
sation of activity inevitably would re-
duce earnings to such a marked degree
and leave the manufacturers and deal
ers with such. heavy stocks on their
hands as to find the industry in an I'M
wieldy position at the beginning Of
1880.
Paradoxically, however, it is this very
relaxation which is going to enable the
industry to get under way In the COM
ing year In as good, If not better, shape
than 1t was In previous years.
Benefit to Retailers.
First, it will afford a breathing spell
and give the retail market the neces-
Sary rest to dispose of accumulated
stocks. With the number of new cars
being received from manufacturers suf-
ficiently reduced, the dealers can con-
centrate their attention to selling those
on hand.
For several weeks now strenuous sales
efforts have been under way through
out the country and reports indicate
results are being obtained, not offsetting
the general market decline, but never
theless improving the inventory situa-
ton. The latter achievement Is to be
much more desired than the former.
Second, the slackening Of production
will enable the manufacturers to get
their new models ready to better meet
the requirements of the market when
1t swings again into renewed activity
with the opening of 1880.
Since many producers this year with
held their customary midseason intro
auctions and will bring new models and
lines out about the time Of or imme-
diately following the national automo-
bile shows, the sponsors will find plenty
OF opportunity during the remainder Of
1923 TO analyZe the trend Of public de-
Inand for motor car design and speci-
fcation.
Although more new models may be
offered in the automotive market at
the beginning of nextyear than in 1929,
they will be better adapted to absorp-
ton than most OF the previous intro
auctions.
Third, and perhaps most important
Of all, the decline In earnings during
the last quarter will not, as many have
questioned, be SUFFICIENT to lower manu-
facturers' profits for the year to any
great extent. So great has been the
prosperity during the first nine months
that almost without exception COM
panies will show satisfactory earnings
at the end OF the year.
Certainly the profits win compare
favorably with those of 1928. In many
cases earnings will greatly exceed those
of last year. Therefore, with O salts
factory year already assured, manufac-
tuPers can devote the remainder of the
period toward re-establishing them
selves and enhancing their possibilities
for successful operation in 1880. Need
ed attention can be turned to increas-
ing manufacturing facilities, perfecting
the dealer organization and making
any required changes of financial ma
ture.
Acute Situation.
The used car situation Is now acute
and likely will continue so in 1880
There is little that can be done to I'M
prove this condition during the re-
Haainder OF the current year. The
heavy production and sale OF new cars
has burdened the used car market with
q competition the keenness of which it
has been unable to meet, and the peak
Of used car buying is sometime past.
A large and active replacement mar
ket Is anticipated for the coming year.
In view Of this fact, only the most
drastic of steps by manufacturers could
preclude a recurrence of the used car
situation and nothing of such q nature
can be conceived at the present time.
In view of this analysis, one sees the
automotive industry not becoming slug
gish with inactivity during the remain
ing months but enjoying a much
needed recuperative spell ss it gathers
impetus to launch another vigorous
year
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