Mixed Cheers in Detroit

The 5,000,000th auto of Model Year 1966 rolled off the production lines last week--15 days earlier than last year. It was a solid sign that 1966 will turn out to be the fifth straight year of superlatives for the nation's most influential industry. Nevertheless, the cheers were mixed with a trace of concern in Detroit. The auto manufacturers, who not long ago were freely forecasting that 1966 would set another sales record, are now beginning to think that it may have to take a back seat to 1965, when Americans bought 9,300,000 cars.

Straight comparisons between the two years are tricky because General Motors squeezed so much production into the first two months of 1965 in order to make up for a strike. Yet Detroit is somewhat disappointed that production declined from 1,807,000 in the first nine weeks of last year to 1,740,000 in the same period this year. The first ten days of March seem brighter: though G.M. sales were down slightly from last year's rate, Ford Motor's Ford Division was up 20% to an alltime high for that period, and statisticians estimate that the industry as a whole sold 244,000 cars, up almost 5% from last year. On the other hand, dealers are complaining in several cities, notably Chicago, Los Angeles and New York. Says Chicago's biggest Ford dealer, Jim Moran (TIME cover, March 24, 1961): "Car business in this town is off 20% ."

Cooled by the Draft. The stock market's shakes have undoubtedly caused some people to postpone buying. Tight money has made it a bit harder for low-wage earners, job hoppers and other risky borrowers to get car loans. The military draft is cooling sales in the youth market. This has hurt sales of the souped-up, big-engine models that youngsters fancy--and it has markedly reduced the popularity of the four-on-the-floor shift.

Even if some sales are sluggish, the industry's income is rising because, as G.M. President James Roche says, buyers are continuing to demand "more car per car." Of the 1966 cars, 30% are sold with air conditioning, 39% with power brakes and 69% with power steering. Even more than last year, the fastest sellers are the luxury and sporty cars that are loaded with up to $800 worth of extras; slowest-moving are the stripped-down utilitarian models that offer only basic transportation. Intermediate-sized cars are the hit of the season, up from 23% to 24% of the total market, and they are eating more and more into sales of compacts, whose market share is off from 18% to 15%.

At General Motors, the big Pontiac is steady, while the intermediate Tem pest is up; the big Olds is slightly down, the F85 is up; the Chevelle and Chevy II are up, but sales of the compact Corvair are down by more than $100 million so far this model year, partly because of publicity about accident suits. Ford Motor can scarcely produce enough Mustangs and Lincolns to meet demand, but its Comet is a disappointment, and the compact Falcon is 13% behind last year's sales. At Chrysler, the compact Dart and Valiant are down, but the big Chrysler is doing well, the intermediate Plymouth Belvedere is up and the intermediate Coronet has surged 36% for the model year, best gain in the industry. American Motors is beginning to see some sunshine; after slipping for months, sales rose from 18,000 in January to almost 25,000 in February.

Spring Will Tell. Many factors favor the automen in the months ahead. The scrappage rate has risen from 5,000,000 in 1963 to 6,000,000 this year, vastly increasing the industry's replacement market. Americans have much more money than ever to spend on cars; the nation's personal income will rise this year by $36 billion--or about $630 per family. Though the draft may crimp the youth market, the number of potential buyers will grow significantly because the number of American jobholders will rise by 2,000,000. The key to the auto year is April and May, when sales usually spurt after a winter slump. This year more than usual, the size of the springtime surge will tell whether 1966 will be another great auto year, or merely a very good one.

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