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Show I SITUATION IN AUTOMOTIVE INDUSTRY Buyers' Strike Counteracted by Manufacturers' Lockout; Dealers Not Heavily Over-S Over-S stocked; Factory Inventories Unbalanced, But Not Abnormal, Investigator finds. By J. H. COLLINS. H . I sfhe automotlv Indusln todaj l In ubatantlally the smie condition aa other big manufaoluiinK enterprises It Is suffering from the so-called "buy-, "buy-, s" strike " But one tremendous fact LH li'is been overlooked by the ever-pres- rut pessimists If demand has ben ptttcttcKliy at a standstill for to if months, so has production The tu-n-a- strike" h" been met in ins automotive auto-motive industry b the manufacturers lock-out. and tbr stalemate thus pfO-dUEed pfO-dUEed vas permitted such adjostntsntsi In tbc industry as have been necessary! lor safetv ;nd slahllltv Bellevi'ng that basic conditions In i he industry are sound. th Chilton company, through its commercial jMirvev Itepartmeni.- has conducted a, nation-wide survey eovorlng ihe blisl-l na of over forty leadm manufac-lureis manufac-lureis in thp payse;igei ar ,.ud nr r Kk industry, and more than 1 " distributors in nine principal distributing distribut-ing centers. This Work has just been . .mipleted. As most of 'he pessimistic i.imors nov going; the rounds deal u imi the quesitona of unsold cars and i-ng Inventories; particular attention .. heen devoted to th following nems. f. The number of unsold vary and trucks row in th- hands of dealers. I. The number oi unsold cars stored bv manufacturers 3. The condition of factor Inventories Inven-tories w Lth reference to parts and materials. ma-terials. 1'igurcs belore the writer lndicutc ClMrly that nothing that can be said abput the automobile and truck business busi-ness today will sound hsilf so optimistic opti-mistic as the actual facts regarding conditions in the industry. Th usual phenomena attending n period of depression de-pression are easily to he discerned today. to-day. The most astounding rumors are K ienicd :i roabel tv men u ho ordin- H urlly demand and v. ill accept nothing but facts. Stories of over-production H are taken at face value when fh most elementary Inevstlgatlon will disclose theiv fallacy a substantially correct H version of the tory of a large Invon- H tory of unfinished goods carried by H one of the leading automobile H lecturers ha.-; been Cited to the v. rlt H time and again a-s typical of the entire H industry, in spits of the tact that this H manufacturer is in a class by himself H so far as inventory ir concerned. H About 1,730, MOO pa-.-t-riK ' H-. been produced during the calcndai H 'year 1920. Part of these eonstltute H ' no addition to the number of cars in' operation, but serve only to replace H ' vforn out cars. The iv l.nu e apply to-, H ward an increased ragtstraUon- If vn M , estimate the average life of an nuto- H mobile at six year i.nd an iinalv.")- " H i eglStratlon and production date indi- H cates (hat thui estimate Is npproxlm- ately correct), we 'hid that in 1919 H those cars produced in 1913. plus im- ports and less exports, were replaced. H In other words, out ot the 1919 pro- H ductlon of 1.667.SS2 cars. 437;356 cars H were required to repine,. thoSS which. H were scrapped (based on 1918 pro- ductlon figures). 07,145 were exported.! H and 1.143.552 Tver added to total I H registration figures. (See Pig. in H 1920, if we estlnii:e thai 7.ooo curs H have been exported, vco flnd thai 616.- 600 car to replace those made In 191, H and 1.1G4.400 left to be aJlded H i ejrist radons. (See - H ,'t I ff we turn now to next year's busi-, ues! and assume thai the some nuni- Iber of automobiles will be produced; as in 1920 (and conservative manufacturers manu-facturers are planning no appreciable' increase), we find thai about 795,000 cars will he required kt replacement alone, probably ((0,000 will suffice for! xpert trade, and only nboul 905 000 will le required for new car owners i The point to be noted is this at the present rate of increase in psscnger car production, the ratio of increase! in the number of new owners oT cars I Is dropping appreciably on account of the greater number or ir. required each year for replacement. With this analyst ne can dismiss all talk about the abnormal increase In the number of ears ir oner.mon duriiiK tin- nast veai ITf anything, the increase Is subnormal. IXTENTORlES n VBNORMATj A-t us now consider manufacturer's Inventories. Last xummc-r when the tightness of the money market began to affect operations, most car manufacturers manu-facturers had badly balanced inventories. inventor-ies. The entire spring had bet n tiyen over to a Wild scramble foi p'a.rts and materials with which 10 continue the hip production schedules rhtfn under way. The business depression caught many mar.ufacturers with ionic Inven-tories Inven-tories in some lines and Inadequate supplies of other essentials Thesi conditions havo been adjusting them-sehes them-sehes through k four-month period.' ji Today there Is another story to tell about factory inventories In spile of! tbrlga to the contrary, it im definitely definite-ly be t-tated thot except in t wo or i hi t o caasa there is not an ovsrsupply of parts or materials in factory store ges (f normal production schedules in"l augurated this spring mi SI Bl 1 PARTS n j.- clearly to be seen, therefore, i that if anything approaching normal production is attained during the next three months the supplies of parts, and materials now on hand, will he .:sed up promptly. This, In turn. Will bring about demand for parts and later for raw material-. Which muy possibly find some of the nails maker! unprepared It would he particularly unfortunate If therp should be temporal tempor-al tie-ups In ceitaln lines because provision for operation on a normai basis has not been made In advance of the sprinK market. Under pre i nl Inventory conditions such temporao shortage may easily be brought aboui and the full advantage of the sprint: market be lost if 'he public demand for cars is up to tn expectations oi many dealers and distributors. Thai! In turn brings us to another phase of I i the subject how many cars are now in the hands of distributors unsold? A careful Investigation of the number num-ber of unsold ears has been made In 'the following distributing centers: s;i Louis. Chicago, Cleveland, Cincinnati, Cin-cinnati, Pittsburg, NCW York, Boston, Pllllsdelphla and Atlanta. I I.W i RSTCM lv D W I CB TtS. In each of those cities the leading car distributors were interviewed, and actual figures secured, In most cases from the books, covering (lie number of each of the principal makers of cars on hand unsold In the tcrrlt 1 bd . from the city in question. The results ' are, to say the bast, surprising In 'the Judgment of the bigg unrih ulois of passenger cars in the cities mentioned, there Is not an Oyersupply ot cara on hand ccept in a few lines. , and unless the factories swimr Into production shortly after ih beginning begin-ning of 1921 there is a possibility that there may be a temporary shortage ilnrmr the -mrmir i carl summer buying period Admittedly the short-, age would be of a temporary charac- ; ter, and could not be clarsed . with the. fair!) acute shortage which existed during the past two spring seasons, it is worth) of note ihat the financial finan-cial burden of caring for unsold cars has largely been can led by the distributors dis-tributors rather than by the smaller dealers. Getting down to facts as they stand at present, it has been found from hi actual census of the number of unsold! car in various lines In each of these! principal distributing territories that the supply is sufficient on the average! to care for only about one month's) normal spring demand. Naturally,! conditions vary in different sections! and for different makes of cars Cc:-- ;am distributors carrying sor.i popular makes arc loaded fairly heavily, audi are making every effort at thl tliht to move curs In advance of the usual Spring demand In Other lines there j are not enough 'ira on hind :.. .-up-! ply even a reasonable demand this sprlnjc. and if tin re is a fair resumption resump-tion of buying, distributors In a number num-ber of-lines will find !' necessary to-put to-put m nurry-up orders to the factor-1 ies NOT OVER M l H S SUPPI1 . In spite of the fact that the New I York diMributor of ,t popular car i has about 400 cars on hand, he foelsl tnat this supply i not ul all abnor-! mol if the spring demand Is what they are all expei ting. Two or three lints at low priced avs. wnjch liaye noi been.' moving well for several months, are fairly "long as regards supplies In the principal distributing C4 Qtsra It is probable that the stocks of these cars on hand will be sufficient to meet a reasonable spring demand This condition, however, u nol pica and Ihe only basis on which to reacii conclusions regarding spring business i" to arrive at. an average Mgure for ail stocks of cars on hand. -" contrasted con-trasted with the fairly long stocks of two or three companies we find that i In the case of one popular Line i moderate priced cars there are very few on hand In any of the distribut-I distribut-I ing centers, and prompt resumption of norma production by the factory I 111 be necessary if the spring demand ior tnis car is to be met. Kenmdingl anofher popular make. ,.)n he said that there are not enough cars oi ' hand In the principal di-.: nmg Centers Cen-ters to last two weeks under normal I spring business Conditions informal Ion Becurod (Tom ar manufacturers' manufac-turers' sAles records indicates that there are probably more unsold enrs In tN ' slate weal of the Sdisstrfiippi .river and south of the Manon and Dixon line Mian In other sections ( the country- It hard- I I) hcr.ix worth while t,. consider Ha-i Ha-i as os of the principal distributing at m Individually, aa In each case, the average of all cars on hand Ls Just about suffl- i-nt to last fov 3U days under a normal -IrinK demand CONDITIONS In truck fielo. If we assume that 3&0.flu trucks will be 1 the total output fur tiir i ad miar year 1920. we must consider how muny ot these mum replace "scrapped ir,ik-' i and how many actually i Mi.Mltute an in-I in-I crease In truck ii-.-l ion. IVoba'ji: ft Is fair to estimate tha-. the averags life of a truck under normal conditions j bdav is four year. If we make an analysis of tbl aneumptior., ,-.c ilud thai' 00.004 trucks wert rettnirSd to replaci tlifis- made In l'JK- and scrapped in ISIv, 19,516 'Aero exiHrted. and Cn,7T3 Were' added to the total registration for tho j country. In 1920. if ,c e.tiniatt that, to. 000 trurkx have been exported, we find that 88.700 truck? wore re nulrcrl for replacement, and onh 26".- 800 left to be added tho iota! rcgis- tiatlnn AMiiuiInc that production uf trucks in 1981 will b" the "ane as hi 1510. I. e., '.il.iliii' it r,-n be Jliowii MiJ' about lli.'MH' trucks Will b required foi feplsjcement .f worn out trucks. Io.t'00 probably will cover export business, and a)out 328,'-. 328,'-. 000 hr a.iiieil lo total rni k registration 1 ll should be note1 that Ihe number of 'trucks required for i -placements In-. In-. reasea each year and the lncrea 'or I -120 and HIM is proportlonntely greater than Increases 'in production That brings us again to the question or factor inventoried. Accurate ugur.. .rink; 'ihe SvOCkS of most of the large ; tru k cimipanlen show that conOitiona are not cssenllallv different than In tho pa-aeneer pa-aeneer oar field: Those trucl omtanles who closed up suddenly when mone became be-came scarce have rather luidly unbal-.incfH unbal-.incfH Inventories. wttHe those who have i'cni.i.i ' !-.-. mi.l.ii ' rcrma' profluctlon hv succeeded In brinin;fj ihelr Inventories to u fair balance, condition-, a- muht be supposed, are -'spot- t " Two 1 1 inrec companies havo In- ventoriea suftcieni to permit hormaj o-j oration for five 01 l3t nionilis. tB , otliers ar- literally living from hand U I mouth ami are purposely kceidng stocko 1 erv short to take advantae of any I possible dccllnea In the eosts of parts i h nil materials. n the whole, tiiere In only a normal aupply at parts and ma-1 ma-1 rerlala on iiami In truck ractor'.cs. TRUCK DCALERS NOT OVERLOADED Lei IK' now consid r I he stork of trucks I unsold in the hands of distributors and. I dealers. First-hand information aecured iin most cases from the records of the ' principal tradl: distributor.-! In the cIIIch previously mentioned, indicate that opn-i opn-i dltlons In this flehl are not Materially different than In the passenger car field. it la admitted iha.1 trucks of certain makes are beginning- to pile up In a few places. To offset this condition, It has been found that Bupnlles at other point ro Inadequali to till even a reanonabie nprinp demamJ In th- territory covered by this Investigation. It was found tha' stocks " one particular line of fairly high-priced trucks are sufficient to lu.l for more than si Weeks under a normal nor-mal spring demand, or. the other hand, tin output of another factory producing practically the same number of trucks at.nuallv has moved so readily tha! the nipplv "n hand !n the r.-i,ual ab-s territories is not sufficient to las'. evn Iwr. weeks. ii we Average the figures for the eninc area covered, we find ihat .hero arc enoufih trucks on hand unsold t" Us: f.JT about 30 days or . 1'nder such conditions condi-tions It can be seen that there is every llkehlu'l Ihat tli-re will he j. lemanu . deaJera for more trucks this ainrmc. I .ni faralghted manufacturers w ill re-1 suine gradually and im; be forced into, sudden production to fill n demand which, him net been anticipated. THE BUSINESS OUTLOOK FOR 1921. ' A number o: manufacturers of cars and trucks Indicated to the writer that they hone to Increase production fer 191 over 1!2 If there sems to l o any likelihood j thai the market will prrmlt. Many sound conservative lumiaalo however, are plannlnir to imld production down (0 the 1080 level, but expect to sprca i ; ihl. prodm Hon over a tw elve-month I period. The latter policy stems the wis- , ' est one for several reasons. Probabp. . ihr most important of these reasons Is, I that the Industry will unqnest Inna oh. Ik-I Ik-I In a tetter phvsical and financial con- j I dltiun with a "slight shortage of cars .1.-. ,. ok n nimhiM Mrsi manu-l facluVers Iirvo had sufficient experience! this year with a temporary surplus Then, j loo. Chert doe? mt seem I" be a ioe!- I hiiitv foi reaumpilon of the orgy f spending which characterised the early I part Of 1S20. , The spring market promises to be 1 good, but it doe nl premise io be phe-I phe-I oomonal. On the other hand, there ! : every Indication that a production equal 1 to tha; of 1;'20 can readily be absorbed ! if sitread over the year and not ebteri I in a f-w months' Intfnalfe effort. The wise manufacturer Is ttie one who plar I to get Into production early tins eai with a modcsl schedule whtcli can gradually grad-ually be expanded P bring the years production up to a total approximating thai of 1U20. The public lolnd Is gradually beeqmlnaj adjusted to the price cluinges which have been mad-i in the business. Ever) sign points lo the fact that the ' buyers' . .. ... I Willi Ka siriKO is eei'""S ' ..... proper balancing of business i?2l should be a prosperous year for every manufac-turer manufac-turer of cars and trucks who hss not imdnb eicnaoded hi- legitimate mudness. Tiie automotive lndustr) Kn spent the i ia.t five months cleaning bouse The public should be no advised and should bi mpreased with the 'set ihat there is no advantage to be gained by further toMmi: no th'' nun-hae of'iars and I ruck which are actually needed Manufacturer tj If rar for almoSl he first time will be able to distinguish be- tween the words "prosperity" and "binm." 1 RUMORS MOSTLY UNFOUNDED. Summing ii(. Ihe essentials of the In-, In-, v estimation. 1 " have: ii The drop In demSnA for cars and I ; trucka has boon met b) an equally i prompt reduction In the output of most 1 I manufacturers The manufacturers' r-I r-I ply to the "tu: era' strike" has been a loi-kfiul so far as production is concerned. (2) Tlio great mass of hearsay evlden :e 1 and rapiOT regarding over-t.xxanslon has Onlji the silghtesi foundation in fact; there Is Just sufficient proof in certain I .n- to render credible stories which '.-re totally misleading. In view of the' ' facts, and with reference to the industry as a whole. |