Lower Targets

U.S. automakers, whose sales have a prime effect on the U.S. economy, last week lowered their targets. Chrysler President Lester Lum ("Tex") Colbert, who only a few months ago was the soul of confidence as he predicted a 6,000,000-plus year for autos in 1958, told a Harvard Business School audience that the entire auto industry is in for a poorer year than he expected--though still a good one. "We know that the people have the jobs and that their savings-bank accounts are at a high level," said Colbert, "but the consumer has lost the desire to buy."

American Motors President George Romney also had reservations about 1958. He noted that industry sales for the first two months of the 1958 models are running at an annual rate of only 5,800,000, but he still had hopes for a 6,000,000 year. The reason U.S. auto sales have leveled off for the past few years, said Romney--with a bow to his hot-selling little Rambler--is that the automobile industry as a whole has ignored "fundamental changes occurring in automobile use and demand," i.e., the increased popularity of smaller, more compact cars.

Across the U.S. the sales picture was mixed. "There is simply no business," said an Atlanta Plymouth dealer. "We aren't even able to attract window-shoppers." Said a White Plains, N.Y. Cadillac and Oldsmobile dealer: "Sales are very excellent this year--at least 15% to 20% better than a year ago."

The same unevenness showed up in Detroit's output, which is being closely geared to expected sales. General Motors, which took a drubbing in the 1957 model year, is coming back fast, this month will produce 310,000 autos v. 280,000 for December 1956. Last week Chevrolet scheduled production of 46,400 cars, which would be an alltime weekly production record for the division. Although Ford insists that its sales are up, it has cut its production to 26% of the industry's total v. 31% for the first eleven months, is laying off about 5,000 production workers, principally at its Detroit-area plants. (But it hired workers in Dallas, where sales are surging.) Chrysler, which captured more than 20% of the nation's auto trade during the first eleven months of this year, may slip to 16% of industry output in December; last week it put its Dodge division on a four-day week. As a result of the cutbacks, the industry's output for December is 6.8% under production originally planned for the month.

One of the big reasons for the industry's cutbacks is the fact that as of Dec. i, the latest count, an unwieldy backlog of 1957 model's--some 90,000 cars--was still on hand. They pushed the total of dealers' unsold cars up to 510,505 v. 398,243 on Dec. i last year. With those sobering statistics in mind, the industry last week also slashed projected first-quarter output --by 5.6% of production originally scheduled.

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