Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-26
INDUSTRY PROFITS
BY 1929 MISTAKES
Automotive Lessons Prove
Last Year Record Period for
Upsetting Traditions.

Lacking the perspective which only
the lapse of time can give, 1t Is per-
haps difncult for the motor car in
dustry TO see in the developments Of
the past IL months anything but a
truly calamttous situation, and yet q
sane analysis of the travail through
which the industry has just gone will
lead to the conclusion that 1929 over
production Of cars may prove TO have
been blessing in disguise. This Is the
opinion Of Clarence z. Eldridge, general
sales manager of the REQ Motor Car
Co., who continues:
Important among the constructive
developments is the fact that many
time-worn theories have been exploded
during the year. Some Of them were
theories that never were tenable;
others, equally fallacious now, were all
right in their day. but the changing
conditions within the industry have In
validated them for the new conditions
and for all time to come.
Used Car Problem Solved.
FOR example, it was assumed that
the used car problem was one of the
basic problems of the industry, and that
somewhere within the used car problem
itself would be found its solution.
1T has taken Just such an expert
ence as that through which the coun-
try passed recently to prove that the
used car problem was not a basic prob
lem at all, but q symptom. an in
evitable growth Of a problem which
heretofore had been completely ignored
The industry learned during 1929 that
the production of too many automo-
btles was the alpha and omega of the
used car problem, the problem of auto
mobile bootleggers and of all kindred
evils, and that precisely as overproduc-
ton was and is the cause of these
problems, just so, the cure for those
problems must be found in the correc-
ton Of the basic evil"
1T Is Q matter for profound graft
dcation," Eldridge says, that the in
duStry has come within recent months
to face the facts frankly, and that
many Of the leading manufacturers
have gone on record to the effect that
their production during 1880 will be
regulated by their retail sales.
Even as recently as IL months ago
any person, especially If he happened
TO be connected with one of the manu-
been stoned as a traitor to the indus
try, as defeatist, as a peSsimist who
would have had the temerity to do so
much as suggest that all was not well
on the automobile horizon, that there
was danger of overproduction and that
the manufacturers would do well to
heed the signs which were even then
In plain sight"
Says Mistakes Can Be Corrected.
There again an ancient prejudice
has been removed" to the ultimate
benefit Of the industry, Eldridge be-
lieveS. The automobile industry Is not
so precariously situated that it need
hide its head and pretend there is
nothing wrong. There is nothing
wrong that cannot be corrected, he con-
tends, and the very fact that the in
dustry itself is finally willing to listen
70 constructive criticism, to heed con-
structtve suggestion, is one of the de-
yelopmentS for which the crisis of 1929
Is to be given credit.
Until 1929 produced proof to the
contrary It had been believed that
there virtually was no limit to the DO
Genital market for automobiles, either
here or abroad. That is another fall
lacy that has exploded with a resound-
ing defamation. There Is a very def
mite limit to the absorptive power of
the market, and that limit can no
longer be avoided or even deferred by
the simple expedient of reducing prices
still lower, in Eldridge's opinion.
There was a time" he says, when
the lowering of the prices of automo-
biles automatically broadened the mar
ket Tor automobiles, for the simple srea-
son that 1t brought the automobile
within the reach of many additional
thousands of income"
Not so any longer" he continues.
The low prices at which automobiles
have been available to the public for
several years past means that the abil-
ity to own an automobile Is no longer
determined exclusively or even prirn-
arily by the price Of that automobile.
II Is no serious exaggeration to say that
every one who can afford to own or ia
operate an automobile now owns one /:
that even II automobiles were to be
given away substantially as are certain
SAFETY razorS. such a procedure would
have little effect in increasing the total
number of automobile users. because
the people who do not own an automo-
Pile are in that category, not because
they can't afford the price of an auto
mobile, but because they either don't
want one or couldn't afford to operate
1t II 1t were given to them.
The lowest economic stratum has
Been plumbed for the time being. No
further expansion of the market can
he hoped for from that quarter. And
this Is one Of the lessons learned in
1929. -
so with the fallacy that the export
market might be relied upon to take
up any slack that might exist in the
domestic demand. Export business Is
an important factor, especially in the
truck business. It is debatable whether
IL viii ever be q really stabilizing factor
In the passenger car business. At any
rate 1t offers no such potentialities as
20 justify the hope that 1t can absorb
the difference between domestic de-
Mand and total production capacity"