A. S. of L.

For the first three decades of the century the upward trend of automobile production continued at a staggering tempo. Its momentum was only slightly retarded by the deflation of 1921 and its renewed burst of vigor in 1922 speedily regenerated business throughout the land. Each successive year of growth heightened the American Standard of Living and added to the nation's wealth. Cross sections of that upswing showed:

Cars: Wholesale Value: 1900 4,000 $5,000,000 1905 23,000 37,000,000, 1910 72,000 206,000,000 1915 854,000 541,000,000 1920 1,763,000 1,644,000,000 1925 3,413,000 2,268,000,000 1930 2,140,000 2,607,000,000

It was, of course, always obvious 'that such a trend would not continue unchecked. But instead of flattening out, the curve of production turned abruptly downward. In 1932 only about 1,100,000 passenger cars were sold. Their wholesale value of $605,000,000 barely exceeded the $541,000,000 of 1915 and was only a little more than one-quarter of the $2,268,000,000 of 1925.

The very fact that 1932 was so fantastically bad makes the industry hopeful for 1933. Motor cars are not eternal. Indeed their average longevity is pretty well plotted as just a little more than seven years. If you divide by seven the number of cars which are on the road, you have an average minimum "replacement" demand. The question then becomes: how many cars will the U. S. keep on the road? And that becomes a question of the American Standard of Living--the automobile being a simple statistical symbol of the A. S. of L.

At the height of the boom, the U. S. had become a 23,000,000-car nation. During 1930 and 1931, there was a slow falling-off in the number of cars in use. But during these years, while consumption of everything else was falling fast, the evidence of gasoline and tire sales showed that there was almost no decline in the consumption of automobile mileage. Thus there was reason to hope that there was no great surplus of cars on the road. Furthermore, there is a close relation between road-building and car-use; and new roads, bridges, tunnels continued to be opened.

Nevertheless in 1932, gasoline and tire sales dropped sharply. Oldest rattletraps were junked--and not replaced. The U. S. now finds that it has dropped precipitously to a 20,000,000-car nation./-

In that figure lies plenty of hope for the industry, which confidently expects that the A. S. of L. will not retreat much below the 20,000,000 figure. For it means a replacement demand of nearly 3,000,000 cars a year. Counting the replacement "arrears" of the last three years, 1933 could be a 5,500,000, car year simply for the U. S. market. Of course no one expects any such bonanza. But the figure illustrates what a huge backlog of replacement is piling up--provided the A. S. of L. holds to null cars in use.*

+A year ago the gloomiest predictions were that if the bottom fell from all business, the automobile industry would reach a bottom 1,820,000 cars. That bottom was escaped by a hair. Between that bottom and an average replacement demand of 2,800,000 cars lies the difference between a market in which all companies stand to lose money and one in which most of them could be run profitably.

The motormakers see a greater significance in the tempo of their industry than the loss of dividends to their shareholders. They consider that they are the custodians of the one & only true barometer of the U. S. pulse, that motor prosperity can vibrate into every corner of the land. Automobiles use 85% of all gasoline, 57% of all lubricating oil, 83% of all rubber. Their manufacture and upkeep provide the bulk of buying in numerous important commodities and into an automobile go scores of minor commodities the driver has probably never heard of. The stuffing for its cushions is apt to be "vegetable hair" which is made of Spanish moss. Arsenic, bismuth, carbon black, molybdenum, cadmium, glue, cork, turpentine, silicon, talc and butanol are among the many products the industry must buy. The manufacturing companies employ 270,000 men. The parts, tires and accessory companies, all dependent upon the motor-makers, employ another 175,000. Every eighth freight car is laden with automotive freight. Last year the industry bought less than it had for many years, but its position as a buyer was still tremendous as the following table shows:

Proportions of Total U. S. Consumptions Used by Automobile Industry

Steel* 16% Iron 54% Plate Glass 55% Upholstery Leather 51% Nickel 26% Copper 15% Aluminum 20% Hardwood 14% Tin 12% Lead 14% Mohair 28% Cotton 7.6%

*These figures show what is of main concern to the U. S. manufacturers: the production of passenger cars in the U. S. for the domestic market. They should not be confused with the usual production figures which include trucks & busses, Canadian production and U. S. and Canadian exports.

/- A year ago three out of every four passenger cars were in the U. S. Registrations in other countries were: Canada, 1,024,000; France. 1,249,000; Germany, 449,000; Argentina, 257,000; Australia, 407,000; Belgium, 108,000; India, 113,000; Italy, 211,000; Japan, 59,000; United Kingdom, 1,154,000.

*During 1932 the Automobile Industry led in the consumption of finished steel, regaining the dominance it held in 1928. In 1929 railroads led, in 1930 and 1931 the 'building 'industry. During 1032 railroads slipped to fourth place, being overtaken by the can industry.

This file is automatically generated by a robot program, so reader's discretion is required.