The Washington times., 1936-11-14
BY LEWIS HANEY
Professor of Economics,
New York University

New York University
It looks like another good year
for the automobile business.
A year ago, in writing on the
outlook just prior to the new
season, I said that an output of
100000 cars and trucks would
not be surprising, and that 4,000,-
500 was by no means impossible.
Actually production will somewhat
exceed the maximum figure by the
end of 1886.
AS yet production on the new
models for what is now called the
1887 season has not quite attained
the level reached at the same time
last year. This lag, however, ap-
pears to be the result of mechan-
ical difficulties rather than
market conditions, and the output
has been gaining rapidly. There
seems to be no reason for any ex-
pectation that the production OF
automobiles will be any less than
it was IN 1886, and considerable
probability that it will be more.
Sees 4,5OO,OOO Year
In the same way in which I
haZarded a guess last year, lean
ing toward the conservative side, I
would say that production is likely
in 1897 to be at least 100000
cars and trucks, and probably
more-say 100000.
There is plenty of stimulus to
buy new cars. 1t is estimated, for
example, that the cars on the road
today which are eight years or
more old, number about 1000, 900.
Thus people who would have cars
which look queer and are increaS-
ingly expensive to maintain will
alone provide replacement
market for the larger part OF the
estimated production.
In this connection, I note that
since 1880 the annual production
for the domestic market has been
running steadily lower than that
of the eighth year preceding. This
fact suggests that a large percent
age of the cars now in use are
even older than the vintage Of
1929.
The rough background for a
guess at the demand, however, tells
only part of the story. A glance
at the annual statistics shows that
there was sharp lull in automo-
bile production from 1880 through
1888. This lull was followed by a
sharp squirt. The conclusion there
fore must be that there are on the
road today both many very old
cars and many very new cars. It
is my opinion that this unequal
distribution of age groups among
cars is likely to be an important
factor in buying.
Peak Not Reached
The average number Of cars
per capita which is somewhat over
one, is not yet up to the level which
it reached in 1923, 1929 and 1880.
Since the modern car is cheaper
and more convenient than was the
car of the New Era period, it seems
reasonable to assume that there
will be some tendency to add sec
ond cars"
The population has been increas-
ing. Moreover the tendency to "un-
double" in the matter of housing
probably suggests the possibility of
selling more cars.
To cap the climax, it will be as
true in 1899 as ever before, that
the automobile manufacturers are
offering more car for less money.
In addition to the stimulus to
buy, we can certainly count on the
will to buy. Whether it is favor
able social symptom or not, it is
true that the average American
considers his "car" more impor-
tant than most other material OBJ
jects. Americans will buy all the
cars they can. Recent calcula-
tions by experts have shown that
there is a tendency in this country
to spend one dollar on new auto
mobile equipment for every $25 of
national income. Assuming the
validity of this ratio, interesting
deductions follow. Thus if we es-
innate the national income for
1887 at $65,OOO, 100000. it would
follow that about $265, ,000 900
would be expended for new auto
mobile equipment. Then if we es-
innate the average price paid for
automobiles at $525, we arrive at
the conclusion that about 100000
automobiles of all sorts may be
bought next year.
Shows Trend
This is a very rough way of
guessing at the outlook and is
mere indication of possibilities.
In the third place, not only do