The Palm Beach Post from West Palm Beach, Florida on December 12, 1976 · Page 138
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December 12, 1976

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The Palm Beach Post from West Palm Beach, Florida · Page 138

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West Palm Beach, Florida
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Sunday, December 12, 1976
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Page 138
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m mr m m ' Palm Beach Post-Times, Sunday, December 12, 1976-FF9 Gas Guzzlers' Still Attract U.S. Car Buyers T , MywBM-.jt' -I.;- ft X vj -v.w i'h Tin rn i DETROIT (UPI) - Fickle American car buyers have thrown the auto industry another curve. They've decided that small cars may not be that great after all. Everyone claims to know the reason for the small-car sales slump. "Attitudes toward small cars must change gradually, like women's attitudes toward instant coffee changed. It took more than 20 years for instant coffee to take hold," said Professor John Howard of Columbia University's Business School. "The market is like a pendulum. If gasoline prices go up again, interest in sub-compact models will increase," said William 0. Bourke, Ford Motor Co. executive vice president for North American automotive operations. "A lot of small car buyers have been priced right out of the market. That's why we cut the price of our Gremlin," said American Motors President William V. Luneburg. But Joe Girard, an East Detroit salesmen who sells more cars than anyone else, sums it up simply: "Americans are spoiled." Girard already has sold'nearly 1,-200 cars this year. Most have been the larger, well-equipped models. "A guy comes in and says he wants a Vega and then he sees a Chevelle on the floor and asks how much more that model costs," Girard says. "When I tell him $350 to $400 more - about $15 a month more on his payments - you know what he's going to drive out in." Girard says many of the customers who bought the tiny models during the 1974 energy crisis, when American auto makers couldn't build the cars fast enough, brought them back within six to eight months. "A lot of people said way back when gasoline cost 25 cents a gallon that if it ever hit 50 cents a gallon, they'd consider a small car," he said. "Well, it's above 60 cents and they still won't consider them. They want their comfort, the air-condi tioners and all the extras we've told them they want." Whatever the reason, the small car market is the drag on the industry's hopes of record sales year in 1977. Big car sales are holding up reasonably well, though they're not as hot as what industry executives had been predicting. But the only cutbacks so far have been in the small car segment. General Motors and Ford have been running their "big car" plants overtime trying to meet the demand. At the other end, American Motors is cutting back production of its Pacer model and - memories of 1974 and 1975 - putting 500 workers on indefinite layoff in Wisconsin. The small car manufacturer also is offering cash rebates of $253 and has trimmed the price of its sub-compact Gremlin by S253 - triggering memories of 1975, the last time the industry resorted to price cut gimmicks. In September 1973, before the start of the Arab oil embargo, there were 12 different small car models. Now there are 21 models, and their share of the market is slipping. The sub-compacts took 9.2 per cent of all sales in October 1974, at the tail end of the energy crisis. They slipped to 8.1 per cent in October 1975 and are down to 6.2 per cent this year. The entire small car market, including imports, was at the 48 per cent level in October, compared with 52.8 per cent a year ago and 48.6 per cent in October 1974. What does that mean? In a 10-mil-lion-car sales year, a single percentage point means 100,000 sales. A change of that magnitude can play havoc with production schedules and workers' lives. Howard said the primary buyer of foreign small cars are the well-to-do, not the working class. But if working-class people ever take to the small car, it will take over the market the way instant coffee pushed out ground coffee. divisions, admits some of the imports make the U.S. product look silly-He recently had his engineers take apart a new Honda Accord and said he couldn't believe some of the standard equipment and some of the manufacturing tricks used to achieve high quality. When you talk about small cars not selling, leave the Japanese out of your conversation. They can't get enough cars to meet the demand -especially Toyota, Datsun and Honda. In October, the three reported mammoth sales g?ins - 51 per cent for Toyota, 36 per cent for Datsun and 85 per cent for Honda - to take the first, second and third spots among imports. Volkswagen, the traditional import leader, fell to fourth spot as the Japanese accounted for 57 per cent of the import market, compared to 40 per cent two years ago. Norman D. Lean, Toyota's vice president in this country, says, "My personal view is that our most significant edge is the quality of our products. They have an outstanding reputation." "Because of upward pressures of costs, small car prices have risen over $1,000 in the last five years," AMC's Luneburg says. "These price increases have, in turn, driven the price-conscious small car buyer out of the new car market." But in a few years, about the only ear the "price conscious" buyer will be able to choose from is a small model. That's the kicker in the up-and-down small car market. By 1985, the fuel economy fleet average of any automaker must be 27 miles per gallon. About the only way that's going to be done is by building a whole lot of small cars to offset the few "gas guzzlers." '--t-it i--tit -ti - irrm-i i' c -- '-in run r - - riwuam iiieiiniin-mii- 'i inimnhi in ntinili -mi -n'- UPl Telepnoto Potential Buyer Inspects a Toyota Leading Small Car Seller in relation to the larger models. "A large proportion of people who were expected to go for small cars are no longer able to afford any kind of new car," Smith said. "And a significant proportion of those who should be logical customers for small cars are buying pickup trucks and smaller four-wheel drive vehicles instead of the small car as not comfortable for an extended trip." As for the quality of American small cars, even a GM vice president who heads one of the five car A survey in the late 1930s showed the average housewife thought "any female who served instant coffee was lazy, a spendthrift and didn't love her husband," Howard says. A similar survey in 1968 found women justifying instant coffee as necessary because so many had jobs. "But it took more than 20 years for instant coffee to take hold," Howard said. "Compact cars had a normal and gradual growth in their share of the market until the 1973 oil crisis. "Then demand for them spurted until the past year when people decided gasoline isn't really going to be scarce or too high-priced for the next few years. So the growth rate of small cars dropped back to normal." Both Howard and Joseph G. Smith, a psychologist and president of Oxtoby-Smith Inc. in New York, made the same point about the seeming unpopularity of the small American car as was made by Girard they're not as well made as the imports and they're overpriced Meet Our Man mm MMtto-ay Prestige Shops and Professional Offices now being leased for immediate occupancy. Directly located on U.S. Highway ! at Juno Road, just one-halt mile north of PGA Boulevatd, this two-story, Spanish style shopping plaza is ideal for retail stores including: Clothing, Furniture, Hardware, Patio, Pharmacy, Travel Agency, etc. Shop space from 460 to 2,400 sq feet. 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Free Tax Seminar: WHAT EVERY INVESTOR SHOULD KNOW ABOUT THE NEW TAX LAW The new tax regulations on capital twins ami kisses demand new year-end strategy. And since careful planning is required now, you should know what to do, and how to do it. lo help yon, we're holding a special tax seminar to show you how to plan your year-end strategy. You'll hear a specialist from the accounting firm of Ernst & Frnst, and a llornblower Account Executive, explain the essential changes affecting your investments. How the new tax bill will change capital gains taxes. The effect on capital losses. And various investment strategies to consider. DAI I and Pl.ACF: Thursday, December 16 at 7:30 I'M, The Breakers Hotel South County Road, Palm Beach Plan now to attend (his informative seminar. It's free but seating is limited. So make your reservations now bv calling or returning the coupon below. J I'lease reserve ( I se.ils (or me al v our lax seminar. 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