Final Departure

Studebaker, a 64-year-old name in the automotive world, is going out of the auto business.

In the U.S. car industry, where the big get bigger and the small tend to get squeezed out, the Studebaker Corp. in 1963 tried a brave departure. Bathed in $80 million of red ink after eight years of declining sales and expensive overhead at its antiquated South Bend plants, it moved assembly lines across the border to a more efficient subsidiary in Hamilton, Ontario. In its U.S. operation, the company needed to sell 115,000 cars a year to break even, was falling short of the mark. In Canada, with lower production costs, the make-money sales point was 20,000 cars a year, which ought to have been attainable. But it wasn't. Last week Studebaker announced that it was shutting down its Canadian motorcar assembly lines and would no longer make any cars.

The first move toward last week's decision was really made in 1961, when the corporation began to diversify into more profitable, nonautomotive enterprises. Nine U.S.-based divisions now turn out such products as tractors, refrigerators, generators, and aerospace hardware, which together last year accounted for 75% of Studebaker's $200 million in sales, and all its $10.5 million profit. Its stock, rising on rumors that outside investors were trying to buy it out, was up 11 points in three weeks and last week closed at 40 1/4. The outsiders have been turned down and, with autos phased out, the 114-year-old onetime wagonmaking firm should return at last to a stable position.

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