Selling Them Big

The strongest factor going for the U.S. economy is that one in every eight American families will buy a new car in 1963. Any lingering doubt about the value of this stimulus disappeared last week, as Detroit added up sales figures for the first quarter. The industry is now selling cars at an annual rate of 7,500,000--a bit above the alltime high set in 1955, the year that automen still speak of in awed tones. The basic reason for the car-buying surge is that the U.S. consumer, who loves a bargain, is getting a lot of car for his money. Even discounting Detroit's usual enthusiasm, the '63 models are better than those of any previous year in terms of styling, quality and variety. While prices have barely increased since 1958, the manufacturers' now-standard warranty of two years has added about $50 to the value of each car by lowering repair costs. Another inducement to buying comes from the strength of the used-car market; two-year-old models, when traded in for new ones, bring $50 to $100 more now than they did 18 months ago.

Trading Up. Borrowing to finance a car is also easier because bankers are overstocked with deposits on which they pay 4% interest, and are eager to lend out at an auto loan rate that, in effect, amounts to 8.2%. Though some lenders are accepting many credit risks that they once thumbed down, they estimate that the rate of car repossessions has shrunk to a remarkably low 590 per 100,000 sales--one-third less than in 1961--while total auto installment credit hit a record of close to $20 billion in February. One reason: personal income is up 4% from a year ago.

Buyers are universally trading up to costlier and sportier cars (see MODERN LIVING) and shifting away from the compacts, which have leveled off at 32% of the market. Says Los Angeles Oldsmobile Salesman Ed Sarafian: "Nobody asks how many miles to the gallon any more." The buyers are also showing a price-swelling preference for such extras as air conditioning and adjustable steering wheels. "People want luxury cars, not basic transportation," says Chevrolet Chief Semon Knudsen, who recently reported that only three of Chevy's 6,800 dealers failed to make money last year. So far this year, more than half of Chevy's sales are top-of-the-line Impalas (average price delivered: $2,850), and almost half of Cadillac's buyers are choosing one of its higher-priced models, the de Ville. In the first quarter, Pontiac sold 19,600 of its expensive ($4,200 and up) Grand Prix models, which Detroit considers to be this year's "In" car.

Many Winners. All the major automakers have shared in the overall 10% sales rise from last year's strong first quarter. Ford was up 1 % despite some competitive shortfalls in styling; American Motors advanced 5% to a first-quarter record, General Motors 10% to hit a record also, and Chrysler Corp. an amazing 45%. The only dangerously troubled manufacturer is little Studebaker, whose sales of 18,067 cars in the first quarter were down 12.9% from last year's slow rate.

Detroit's automakers are so confident of rising demand for cars that they do not expect a drop-off such as followed the 1955 auto boom, expect 1964 models to sell well also if the economy remains healthy. The surge in car buying, of course, is doing more than its share to help guarantee that the economy will stay healthy. One out of every twelve U.S. non-farm workers--in autos, metal, rubber, glass and other industries--is in some way dependent on the nation's $20 billion a year in car sales.

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