At Last: Prices

After two false starts, OPAdministrator Chester Bowles this week announced price ceilings on new cars. On the whole they averaged close to the 1942 prices, as expected. But Bowles did have one big surprise: General Motors, which in 1941 made 47% of all U.S. cars, had its retail ceilings set at about 2.5% below its 1942 levels. Thus, although other changes ranged from 1% to 12% above the manufacturers' 1942 price level, the overall retail change was nominal. Bowles ordered most of the wholesale increase to be absorbed by dealers.

Specific changes in retail price ceilings:

P: Fords can go up about 2%. Example: the super deluxe eight-cylinder sedan coupe can be sold at $977, as against 1942's price of $920.

P: On preliminary figures submitted by Chrysler Corp. (Plymouth, Dodge, De Soto and Chrysler) OPA will probably allow a markup of 1% above 1942.

P: Studebaker's ceiling is up most of all, with an increase of 9%. (Actually, the increase over 1941 prices is no greater than Ford's.) Example: the Studebaker two-door club sedan will now go for $918 as against 1942's $809 for the nearest comparable model.

P: G.M.'s 2.5% drop will keep Chevrolet the cheapest car of the Big Three. The prewar differential of $20 between the cheapest Fords and Chevrolets will now be considerably larger.

P: Price ceilings on other makes--Packard, Hudson, Nash, Willys, Crosley and the new Fraser-Kaiser are still to come.

The automakers complained that the new ceilings were too low. If the Big Three set their prices at OPA's maximums, G.M. will come out best, competitively. But if G.M. is forced to sell below 1942 prices, the others may have to shave their prices --unless G.M. is shut down by a long strike (see NATIONAL AFFAIRS).

Dealers came out better than they had anticipated. They had feared, and protested against, an expected cut of 4% or 5%, got a reduction of only 2.5%.

Said Bowles: "Dealers will actually realize considerably higher [profit] margins than they did before the war." His explanation: although 1941 list prices permitted dealers a markup of about 24%, cash discounts and losses taken on trade-ins actually reduced this to 12%. Since the present demand reduces the need for high trade-in allowances, Bowles predicted that dealers' actual markups "will be about 75% above the prewar level."

The new ceilings do not include excise taxes, transportation costs or slight increases which may yet be granted for engineering changes, extra-heavy bumpers, defrosters, and oil filters. The customer will still pay more for his car than the OPA prices indicate.

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