Romney's Second Crusade

The evangelist of the auto industry, President George Romney of American Motors Corp., announced last week that he was "lighting the candle" for his second crusade. (His first: the compact car.) The new crusade, he declared at a New York press conference, is a "progress-sharing plan to aid the neglected consumer." As of Dec. 1 through March, customers who buy American Motors cars will get rebates of U.S. Savings Bonds if sales increase enough over the year-ago levels.

Each buyer of an American Motors car will get a $25 bond for every 10% increase. The effects will be cumulative. Thus if December sales increase 10%, and there is another gain in January so that the two months' total rise is 20%, the December buyer who has already received one $25 bond will get another, and the January buyer will get a $50 bond. The most any buyer can get is $125 in bonds for a 50% increase. Romney said he would probably renew the plan after the four-month trial.

A 10% increase in sales during the trial period would cost the company $2.8 million; a 50% increase would cost it $18.7 million. The first Wall Street reaction was one of suspicion. By week's end A.M.C. stock was off one point. What the sellers failed to realize is that Romney cannot lose. He pays nothing if sales, down slightly in December from November, do not increase at least 10%. But if his gimmick makes them rise above that, the profit on the extra cars sold will more than make up the rebates.

Romney attaches altruistic motives to his second crusade. He says that he wants to show industry a way out of the wage-cost spiral that is pushing prices up, hurting the consumer and driving business out of the U.S. Ford and G.M., said Romney, have been moving production out of Michigan and even expanding abroad "rather than facing the problem and doing something about it." They will soon produce parts abroad for use in cars assembled here, he predicted. "It is a cold, calculated effort to become exempt from national boundaries. I hope our candle will help the others to see the light."

All the other automakers saw was red. Furious G.M. officials pointed out that their Michigan employment, instead of being down, is 11 % higher than ten years ago, their U.S. employment 13% higher. Far from shipping foreign-made parts into the U.S., G.M. actually ships U.S. parts to overseas plants.

Romney's is not the first made-in-Detroit rebate. In 1915 Henry Ford rebated $15.4 million to customers at the rate of $50 a car. The United Auto Workers union has suggested similar plans to automakers. Romney himself put one forth in 1957, but attached so many conditions that it never got started. This time, he says, he is going to pay off.

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