MOTOR-CAR BOOM.

Dominion, Volume 5, Issue 1360, 10 February 1912, Page 14

MOTOR-CAR BOOM.

■ AMERICAN OVER-PRODUCTION. PUTTING THE BRAKE ON. For the past year or two there have been abundant evidences (says the New York "ICveiiiiig Post") that the overproduction of motor-ears and consequent mania fur purchasing them have abated to an extent that predicates a general adoption (if a policy uf common mmims and prudence, by both manufacturers and users. I'robabiy, ciin'.inucs the I osl. there is mit an automobile m-in ot any consenueneo in the country Uwlay who will be inclined lo question this sl:n«liient, nor is there "no who iai s. lo welcome the new ftate of ailairs. All manufacturers of (-table, mind recognised lons ago that it would not pay them in the loiv run to sell cars to peuplo who really could not afford to use them, just as they recognised the foolishness of turning out' >--av, 20,0011 >■■■■!<'•■' lr0l » a P limt - "■' lC " there was a market for only 20,000 cars at the regular -ales price. What manufacturer-, agents, and to ttulmnubilo public alike have come to realise is that their bc-st interests are joiiirlv served bv the enforcement ot a pulicv of conservative development, following the ineradicable law of supply and demand. That is 10 say, there is no use for tho workshops to (urn out more ears than the public can use, and the public is fonlWi to try to maintain cars unless it can afford tlie pormal expenditures lor up-keeps and maintenance. n the m>l; bhHi of molar enthusiasm, thousands ot person? failed to appreciate that the liibucv they paid for their automobi.es was only tiie beginning of their financial The result was that they bought cars, kept them in a more or Ices continual state of disrepair, and then ceased to be automobile users. In other words, they no longer provided a market for automobiles or automobile accessories, lo a certain number of more or less unscrupulous manufacturers of cheap cars tins kind of buyer appealed as a ready means of money,'but the saner manufacturers soon appreciated, as has been said, that thev could make more money in the long run and establish themselves more surely in popular favour, bv keeping their business within n"»"al limits. IJence, he widespread, spontaneous, and thoroughly healthful movement against, over-produc-tion, which may now be said t<i luivo asserted its mastery over the entire country' UNTHINKING ENTHUSIASM. Another potent reason which compelled tho abolition of unthinking enthusiasm over motor-cars was the gradual opposition of bankers to the introduction of the automobile into their communities. Ilav in" in view the initial experience of reckle<=, unthinking men who mortgaged their homes so that, they might ride, around in one of the new "devil-wagons," bankers began to shut down upon loans to automobilists. To own a car was to put yourself at once under suspicion as a person of unsound finances. Similarly, when the big manufacturing firms applied for help now and then, they found the money market looked upon them with raised eyebrows. Consequently sanity became the fashion, for most men were able to realise that they had a sreat and growing industry under their fingers that needed nothing but careful nursing and tactful administration to remain profitable for years to come. Over-production stopped then and there, and the automobile market automaticallv readjusted itself lo the new condition of attaint. As a matter of fact, what over-production there was represented mainly the output of plants manufacturing the cheaper grade of cars. One year, it was claimed that 20 per cent, 'of the entire season's over-production represented the output of oho company alone. CHEAPER GRADES. It is known that a number of the companies making the cheaper grades of cars in large numbers have had difficulty in meeting thtii , financial obligations. Tho advico given by their bankers lias been very explicit, and ran something like this:"Y'ou need money and cannot borrow it. Ton havo a large stock of cars on hand aud must sell them." ' ' , ''But," answered tho manufacturer, "wo cannot sell them, for there is no demand." "Do as any other manufacturer or merchant would do under similar circumstances," replied the inexorable banker. "Create a (Icmnnil by making the price attractive. A good round reduction in your price will sell a lot of your cars and give you the money to meet your obligations." The banker's advice was taken, and a lot of cars were sold for cash, realising sufficient funds to enable the manufacturer to get out of his uncomi'ortablo position. . What is of special interest in connection with this enforced sale is that even at the reduced price the. manufacturer netted a profit on the cost of his firs. An authority on automobile affairs who has recently been making a special study of the "cos" feature figures that the cost of "marketins" or distributing an automobile from Hie factory to the consumer is equal to 80 per cent of its manufacturing cost. This calculation allows full profit for the manufacturers of the various "parts," which are "assembled" at the final factory. Thus, taking a manufacturers' cyst of lOOOdols. us a nominal basis, the consumer pays lSGOdols. This high cost of distribution is tho foundation for an interesting experiment that is just being made by what has been termed "a syndicate, of one hundred millionaires." This syndicate has agreed to take 100 cars on certain conditions that are now being tried out. If the plan works out it will mean the formation of a new company to produce the very highest grade of car at the very minimum of cost. The cost of distribution is, according to the originators of the syndicate idea, to be cut to a minimum; on the other hand, while no saving is to be attempted that will interfere with tho strength, durability, or quality of the machine, many unnecessary side expenses and commissions arc to be eliminated. Of course, this is merely a banker's experiment, and may not succeed. In one sense this experiment, considering the well-known names comprising the syndicate, may be considered in tho light of a revolt against high prices, and is to that extent a sign of tho times and of a reaction against high prices. Thus far no attempt has been made to manufacture tyres, but that is a matter that is receiving attention, and if proper arrangements cannot bo niado with the Tyre Trust, then there is money enough available to produce tvres entirely independent of tho Tyre Trust. "I really think 25.0C0 dollars would be quite sufficient capital to care for the tyre manufacturing end of the business," said one of (ho syndicate interested in the success of the now experiment. "Rut where would you get y.our rubber;-" inquired a caller who had been led to believe the rubber supplies in this country, as well as the rubber production, vero under absolute control of Rubber Trust interests. "Oh, I think we could get our crude rubber all right," was Hie puiet reply. "And you can depend upon it wo would put real livo rubber into our tyres and produce a tyro that would givo satisfaction. I don't think there is an owner of a machine that does not ma.ny times during the season curc-o the tyro manufacturers for the poor quality of tho tyres. Most manufacturers to-day seem ta bo trying to find out how littl" veil livo rubber they can put into a lyre and how much money they can net out of it. That is not the way to do a permanent business." SHU another indication of (ho moro conservative position of manufacturers is the determination to cut down production to the now basis of the demand. Thus dm' company, which produced ifillO cars in I'.lOil and cut down to VM in IIHO, will only produce 1000 cars next pe.ifon. Among ihe manufacturers of high-priced ears t.boro will bo a still stricter disposition to follow the present jiolicy of UKmiifacturins only to Till orders. In a word, tho continued growth of tho motor-car industry, which will unquestionably continue on an nctivp scale, will, fro jjnow on, bo of a calmer and more substantial character— -a solid business in which excessive enthusiasm will be less of a factor. One of the greatest, developments of tho near future, it is bcliovcd by close, students of the industry, lies in Ihe motor truck in tho business of distributing merchandise. This branch of the in-dii-try is one that is e.wrlcd' lo show ,11-livily fully up In tlie i<( Hi" piea-un. vehiolo of tho last few I year?.