Evening star., 1942-03-15
Auto Dealers Face
Grim Prospect in
Coming Months
Many to Close Down
Despite Efforts of
Manufacturers
BY DAVID J. WILKIE,

WlQe WOrlQ Aut0motlVe EQltOr.
DETROIT, March 14.-The fu-
ture of something like $4,000 retail
automobile dealers is a major con-
Germ of the nearly a score of manu-
facturers who formerly made the
Nations passenger cars and gave up
that job to go 100 per cent into war
implement production.
According to latest authoritative
figures there still are that many car
retailers; there won't be by the end
of the present calendar year, despite
efforts of the car manufacturers to
keep them in business.
The first major step of the auto
mobile maker seeking to maintain
their sales organizations was in
itiated by General Motors Corp. in
an offer to buy back from dealers
any unSold new cars, and a pledge
of preferential treatment in car
distribution in the postwar period
to those retailers who remain in
business through the emergency.
Post War Problem Seen.
The concern of the manufacturer
for the retailer, of course, Is not
wholly altruiStic. To no small de-
gree the very postwar existence of
many car makers depends upon the
extent to which they succeed in
keeping a retail sales organization
together.
The task is no minor one for the
manufacturer: the outlook for the
retailer is about as gloomy as it
could be. Last year the dealers sold
3.73l, ,166 new passenger vehicles.
This year they will have only 34O,-
900 to sell under a rigid rationing
program that ultimately may be
extended also to used cars.
Dealer stocks of used cars prob
ably are no greater today than they
were in 1941. and the increasingly
dubious outlook concerning tires
and fuel availability makes the sec
ond-hand units a very uncertain
factor as revenue producers for the
merchandisers.
There has been marked in
crease in the demand for car serv-
icing; it may continue heavier than
in normal times. but here. too. the
possibility of enforced restrictions
on car use looms as a deterrent to
net income from that source. The
manufacturers have been promoting
service operations as major op-
portunity for dealers hoping to re-
main in business through the war.
Represent Years of Work.
In every instance the present
dealer organizations were built up
over period of many years. There
Is at least one instance in the in
dustry's history where a big car
manufacturing company changed
hands at a price that included
something like s50000,000 for good
will" 1t could have been even
more accurately described as for the
dealer organization.
The extent of dealer mortality
this year has been variously eSti-
mated at 25 to SO per cent with
trade sources generally agreeing the
latter figure may be somewhat eX-
treme. The same sources say, how
ever, the chance of survival must
depend not only on servicing opera
tions Of the dealers, but their abil-
ity to get along on curtailed net
income if not actual losses in many
instances.
The industry still is building up
the stockpile of replacement parts
designed to provide all requirements
Of the next 18 months. In esti-
mating the necessary volume, con-
sideration has been given to the
fact that the limited availability
Of new vehicles will place heavier
load on replacement stocks.
Difficulties Studied.
At the same time trade authori-
ties hold that much of the profit
from service operations must come
from the labor factor rather than
from the markup on parts. Thus
factory representatives have found
it advisable to attempt study
of the problems of the dealers in
insofar as that can be
done with $4,000 retailers of vary
ing size.
Whatever may lie ahead in the
effort of car manufacturers to con-
vert their dealer organizations into
gigantic servicing enterprises, 1t ap-
pears certain that from the stand
point of both availability and of
cost there never will be a better
time than the present for car recon-
ditioning.