Squeeze on K-F

When sales of Kaiser-Frazer cars went into a slump recently, K-F cut production from 675 to 350 units a day rather than cut prices. Last week, its annual report showed why it had no choice. Though its sales had increased 24% to $341,500,000, its 1948 profit, before taxes, had risen only 2%. And after taxes, the profit of $10 million was little more than half that of 1947, when no taxes were paid. In effect, K-F could not afford to cut prices because it was making less than $100 a car.

With a buyer's market in cars fast approaching, K-F's General Manager Edgar Kaiser, Henry's nimble-witted son, knew he had to get his costs down somehow. Last week, he announced a $2,088 utility car, $136 cheaper than other K-F cars (it has no chrome and fewer frills). The utility car is a combination car and truck which K-F hopes to sell to small tradesmen, farmers and sportsmen. The rear seat folds into the floor and there is a station-wagonlike gate in the back.

Edgar also took steps to stop the $30-3-ton premium on steel which K-F has been paying. He made a deal to finance the building of a new open-hearth furnace for Republic Steel, buy all the output for five years at market prices. Under the agreement, Republic would continue to sublet the blast furnace at Cleveland which K-F had leased from the Government (TIME, Sept. 6), thus ending a squabble between the two companies and the War Assets Administration.

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