Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-17
AUTO TRADE FACES
USED CAR PROBLEM
Disposal of Machines Taken
in on Sales Concerns
Industry.
BY DAVID J. WILKIE,
Associated Press STAFF Writer.


DETROIT, April 1.-THE used car
and the problems it presents in mer-
chandising are coming in for increas-
ing recognition in the automobile indus
try. Many of the leading manufactur-
ers have organized used car divisions in
their sales departments, devoted to the
development of efficient methods of
merchandising trade-in vehicles.
Just what immediate effect the appli-
cation of highly organized merchandise
ing efforts in the handling of used cars
may have on the industry as whole
has been conjectured at in many quar-
tiers. That the "used-car problem"
never can be completely solved is agreed
by manufacturers and merchandisers
alike, for any arbitrary action bearing
upon trade-in allowances Is bound to
affect new-car sales.
Credit Allowance.
Resigned to the fact that almost
every new-car sale involves the accept
ance of a used car as part payment,
dealers face the problem of allowing as
much on the old car as a competitor in
the same price range may offer and at
the same time keeping within figure
that will leave reasonable margin OF
profit on the transaction.
EXorbitant allowances on trade in
cars was one of the elements that fig
ured in the heavy dealer mortality i'm
mediately after the crash of late 1929.
Many dealers, trying to keep up with
heavy factory deliveries of new cars,
were forced to offer a new machine for
q used one and relatively little actual
cash, hoping, rather than believing, that
the trade-in vehicle later might be con-
verted into cash.
While 1t might be expected that
liberal trade-in allowances would pre-
vail at a time when the industry was
making every effort 70 stimulate the
buying Of new cars, a survey Of the re-
tail field indicates that most dealers are
exercising considerable caution in this
respect. In fact, some of them in the
low-price field are reported to have
gotten together informally and agreed
to reduce allowances by 10 per cent.
Perhaps no problem faced by the
industry presents as many facts as does
that of the trade-in car. The most i'm
determination by the dealer of just
what constitutes reasonable" allowance
under varying conditions and at Diff
ferent seasons of the year.
Freight Rate Reduction.
An experiment being watched with
considerable interest by leaders Of the
industry is the freight rate reduction
on automobiles and trucks that became
effective April 10. Through this revision
Of rates on shipments from Detroit and
other automobile centers In this terri
tory the railroads hope to recover some
Of the tonnage lost by the development
of motor truck transportation, the drive
away of finished cars from the plants
and water transportation.
It has been called an experiment"
because automotive circles generally ex-
pect that If the reduced rates fail to
regain some of the lost tonnage for the
rail lines, some further revisions may
be made. AS illustrating what the re-
duction means in the final delivered
cost Of automobiles at points distant
from the factories, the Detroit Board
of Commerce points out that on
freight car containing 10000 pounds OF
finished automobiles shipped from De-
troit to Buffalo the saving Is $20.5O
per carload.
Considering q single Detroit-made
automobile, q sport phaeton weighing
1926 pounds and retailing at approx
mately $4,000 can now De shipped to
Cincinnati at $1l.57 less than under the
former rates.
Benefit to Buyers.
Delivered prices are not expected to
be reduced until such time as dealers
have disposed of cars stocked before re-
auctions in rates became effective" the
Detroit Board of Commerce says in its
current publication. Nor will they be
expected to reduce prices until freight
reductions are actually in effect in their
locality.
Eventually reductions in delivered
prices will reflect the freight rate re-
auctions, and while vehicle manufac-
turers' profits will not be impaired, the
public will enjoy savings estimated to
amount to between 80 and so million
dollars a year"