Evening star., 1945-08-28
Any Auto Price Rise
May Be Absorbed by
Dealers, BowIes Hints
The National Automobile Deal

The National Automobile Deal
ers' Association today studied
Price Administrator Chester
Bowles' broad hints that If any
general increase in the factory
price of new cars above 1912
prices Is granted, it may have to
be absorbed by dealers.
In setting new car prices generally
in line with prices Of the 1912 model
automobiles, Mr.. Bowles made this
observation:
1T should be wrong in my
present expectation and there should
be q general increase in factory
prices, our next step would be to
see whether absorption Of all or
part Of the increases could be
reasonably required of automobile
dealers. The courts have declared
that it is obligatory for OPA to do
this. President Truman's executive
order Of August 18 emphasized this
duty"
Complaints Are Heard.
Meanwhile, OPA officials met to-
day with representative retailers
who are dissatisfied with the agency's
reconversion pricing policy as 1t
affects other consumer durable
goods.
The retailers major complaint is
that the OPA's theory of price alb
sorption before the increase reaches
the consumer will not give them al
profit margin sufficient to supply
the flood of goods the Government
would like to see in the months
ahead.
OPA officials at today's closed
meeting are expected to stand firm
on their policy, however, and to
point out that it has the approval
of the White House.
Bowles Cites Attitude.
On the problem of pricing new
automobiles, Mr.. Bowles said.
During the past several months
We have been studying cost trends
affecting the automobile industry
and have gathered as much infor-
nation as the rapidly changing cir
cumStances have permitted. On the
basis Of this admittedly incomplete
information, it seems unlikely to me
that there will be any general in
crease in the factory level of auto
mobile prices"
Under the OPA ceiling formula
ceiling price adjustments for the
new cars will be based on costs in
each manufacturers last period of
normal production, to which will
be added increases in basic wage
rates and material costs plus "a
normal peacetime margin Of profit.
Based on 194l Models.
The rule provides that the base
costs be those on 1941 models. The
profit factor will either be the man.
ufacturer's own 1869 margin or
one-half the industry average for
that period, whichever is higher.
The OPA, incidentally, points out
that the auto industry increased
prices of their 1912 models from
10 to 10 per cent over the 1941
models. Therefore, with cost ad-
justments based on 1941 prices, the
1912 model increases will serve to
cushion the effect of the cost ad-
justment on the consumer, OPA
belives.
A slight drop in used car prices
was noted by the National Auto
mobile Dealers Association. The
trend began in July, when auto
makers received permission to begin
reconversion. Prices of some second
hand models have dropped from $ll
to $50 below ceiling prices.
Purchasers of new 1912 models
under OPA's rationing program dur
ing the war actually paid more for
their cars than the price planned
for the postwar car. This resulted
from the fact that dealers were al
lowed to add storage costs which, In
some cases, ran as high as $500.
The War Production Board, mean
while, issued new inventory control
order designed to protect all types
OF business against boarding, buyers
and accumulation of ex-
cessive stocks of still scarce ma
terials.
The regulation will afford equal
protection for little and big business
during the reconversion period
IL