Out of the Market?

Ford Motor Co. last week posted its second round of price rises in less than two months. Blaming increased costs and "material shortages which cause production interruptions," it added $75--about 5%--to the price of Fords.* Lincolns and Mercurys were boosted proportionately, and other manufacturers were sure to follow suit--Nash, for instance, when their new models come out this fall.

A Deluge. With the demand for new cars apparently limitless (the backlog of orders is still around 6,000,000), there had previously been no question about customers paying the price, any price. But the new boosts, partly the result of steel price increases, posed the question at last.

In a survey of finance companies, the weekly Automotive News found that many thought the industry was beginning to price itself out of the market. Associates Discount Corp. reported that monthly payments "now run almost as high as two weeks' pay for the average factory worker." Gene Pratt, vice president of Detroit's Contract Purchase Corp., figured that 70% of potential new-car customers had been "absolutely" frozen out, thought the market could crack overnight.

One sign of buyer resistance was cited last week by Charles D. Henderson, executive vice president of New York State Automobile Dealers. The dealers, he said, were squirming under a deluge of vituperation from customers forced to buy unwanted "extras." The extras include fog lights, seat covers, lap robes, special steering wheels, powder-puff holders, radios with rear-seat speakers and up to $350 worth of luggage to match the baggage compartment. General Motors and Ford promptly denied that they were adding unordered extras, passed the blame back to the dealers.

A Shakeup. Ford also denied the possibility of a slump: "How can you be pricing yourself out of the market when your car is selling in used-car lots at a premium of from $500 to $1,000?" But Ford's own figures showed that each new price boost caused a significant shakeup in orders--with prospective Lincoln buyers shifting to Mercurys, Mercury prospects to Fords, Ford customers to used cars.

Some used-car dealers were already beginning to feel a slump. Swamped by offers of new cars (many from owners who could not keep up the payments), Rochester (N.Y.) lots were buying cars for $100 to $300 less than a month ago, despite new markups at the factories. On Detroit's Livernois Avenue, center of the used-car market, one dealer offered a month-old Lincoln coupe, which he bought for $3,559, for $3,350--with no takers.

*Except the six-cylinder business coupe, which was reduced $5 to bring it $2 below Chevrolet's comparable model, thereby giving Ford the chance to crow that it had the lowest-priced car put out by the "Big Three."

This file is automatically generated by a robot program, so reader's discretion is required.