Motor Competition

Since 1900, over 1,000 companies have entered the motorcar business. Most were of the mushroom variety, and soon vanished. By 1920 only 77 companies remained active; in 1924 only 74 active makers remained, 28 of which did 96% of the business.

Now motor competition is entering still another phase, with drastic price cuts by Buick and Studebaker. Makers are now divided into two classes: those who manufacture their car parts, and those who assemble parts purchased from other concerns. Naturally, production costs of the first group are regularly under those of the second-- a fact which is now beginning to spell disaster for assembling companies. Recent Studebaker advertising directed public attention to just this situation. Apparently the process of the big fish eating the little fish is to be resumed with increased force.

There is also another side to price-cutting, apart from this threatened abolition of assembling concerns. Long ago, Ford and Packard discovered that even though cars were sold below cost of production at first, sales were increased rapidly, quantity production economies became possible and presently they were making more money on cheaper cars than before with higher prices. Motor manufacturers cannot stand still. Their motto is and must be: "Quantity production or bust!" The corollary to this process is the elimination of the unfit, and cheaper and cheaper prices to the car buyer.