Making Mileage at Chrysler

Detroit's biggest outdoor signboard is devoted, fittingly, to keeping a minute-by-minute tally of the year's auto production. Sometime this week, the sign's revolving numerals will register their 2,290,000th car in 1965, thus breaking an alltime quarterly record for the auto industry; before the month is out, that figure will rise to some 2,500,000 for 1965's first three months. As the industry drives confidently toward what it believes will be its first 9,000,000-car year,* one company is gaining faster than all the others. Though third-place Chrysler is still far behind General Motors and Ford in total auto production, it is building the biggest success story of the year.

The industry's overall sales are up a healthy 18% so far this year; Chrysler's have climbed 37% . Chrysler's share of the market, which fell to 8.3% as recently as 1962, has now risen to almost 15%. Chrysler's sales are so good, in fact, that the company is hard pressed to meet the demand. In a $1.6 billion, four-year expansion plan, Chrysler is now building new stamping and assembly plants, a new foundry and other facilities that will increase its yearly production capacity by 200,000 cars, to an annual total of 1,400,000.

A Poor Inheritance. Chrysler's road to success was paved with gradually improving styling and quality in the company's 1962, '63 and '64 models. This year, for the first time since he was appointed in 1961, Chrysler President Lynn Townsend has a car that he can call completely his own; he has finally been able to rid the entire Chrysler line of the last traces of the garish fins and ornamentation that he inherited from L. L. ("Tex") Colbert. Chrysler's cars are also being pushed by a revitalized dealer organization, which increased from 6,000 to 6,300 dealerships last year. The most prestigious dealer gain was made recently when the only Ford dealer in Grosse Point, Mich.--Henry Ford II's home--quietly switched his franchise to Chrysler.

Encouraged by these improvements, many traditional Chrysler owners who switched brands in the late 1950s and early 1960s have returned to buying Chrysler products. Sales of the slab-sided big Chrysler have increased by 69% this year, and Plymouth, boosted by the sleek, lengthened Fury, has gained 47%--the two greatest increases in the industry. Dodge sales are up 19%. The racy, fastback Barracuda, carved out of the compact Valiant as a quick and inexpensive answer to Ford's Mustang, has more than compensated for a decline in Valiant sales.

A Rich Reward. Last fall's introduction of the hot-selling 1965s helped make 1964 Chrysler's most profitable year; it had earnings of $213.8 million on record sales of almost $4.3 billion. The year was also profitable for Chrysler's directors and officers, who were awarded a total of $2,110,254 in salaries and $3,780,000 in bonuses. Townsend himself set a personal record, improving his 1963 salary and bonus of $423,567 to $555,900 last year.

Success has brought problems too. Although Chrysler last year paid only $1 a share in dividends on its earnings of $5.46 a share--plowing the balance back into new plants and equipment--the cost of expansion and new model introduction reduced its net working capital from $557 million to $385 million. Townsend has instituted a new company-wide cost-cutting program, but he realizes that economy alone will not suffice. In April Chrysler will float a new stock issue of 5,611,000 shares that should bring in another $308 million to help pay the price of success.

* To stimulate sales even more, the auto companies are lobbying hard for the repeal of the 10% excise tax on autos, which adds an average of $225 to the cost of a new car.

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