Word: auto
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Dates: during 1950-1959
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...auto market, sales and production are down, but the output of ill will between car dealers and manufacturers has hit an alltime high. With a total of 647,000 unsold cars on dealers' lots, the National Automobile Dealers Association says that its dealers are "dying like flies," that some 1,800 have gone under in recent months. In turn, manufacturers complain just as sharply that dealers are falling down on the sales job. For the U.S. public, the bickering has been magnified to the point where the industry appears to be in serious trouble, and buyers have the idea...
Actually, the auto industry's troubles, while bad, are not as bad as they sound. Auto production for the first six months was 2,958,000 cars, only 298,000 under 1953. Sales are down approximately 150,000. But dealers' unsold stocks are now 44% higher than a year ago. Panicky dealers, resorting to suicidal sales gimmicks and price-cutting dodges, have let selling costs get out of control. Result: dealer profits have hit bottom at .8% of sales, compared...
...most damaging of the sales tricks is auto bootlegging. While comparatively few dealers resort to it, it has a widespread effect on the trade. To get rid of unsold cars, bootlegging dealers shunt them off to used-car dealers at bargain prices (as much as 24% below list). The cars are then put on sale at near-wholesale prices, thus undercutting new-car sales. In the resulting price chaos, local new-car dealers are forced to whack their own prices drastically or offer fantastic lures to sell their goods...
Many dealers also feel that auto prices are too high, and should be cut at the factory level so that dealers would not have to bear all the burden of present reductions. For example, a Chevrolet that sold for $800 in 1940 is now about $1,600. Automakers like to say that a 100% price rise in 14 years is no more than the general increase in prices. What they neglect to say is that the price they quote in ads is the stripped-down one. On some low-priced models, extra equipment...
Actually, manufacturers and dealers must share the blame for the trouble. When the auto industry caught up with demand after World War II, neither side was prepared for the new kind of market. Dealers hated to go back to the old, hard selling practices of prewar days, and manufacturers continued to pour out cars based on their economists' estimates of the market rather than on what the market actually would take...