Running Fine, But...

Seldom in peacetime had the auto industry been so prosperous. But as most of the automakers brought out their first-quarter earnings last week, they kept their fingers crossed. They were afraid the figures were too good to be true--for long.

General Motors led the list with a net of $96.4 million on gross sales of $1,089,000,000, the best quarter in its history. Studebaker also hung up a record with a net of $4.2 million, up almost 162% above 1947's first quarter. Packard, which had been deep in the red in the first quarter last year because of steel shortages, totted up a $1.3 million profit, more than it made in all 1947.

Kaiser-Frazer, which had lost heavily in last year's first quarter, reported a $2.3 million net for the first quarter this year (but this was less than 3% on gross sales of $79 million). For all of them, the jump in profits was due to the 35% or more increase in their gross.

Only Chrysler was out of step. It furnished a prime example of how the profits of the industry--with a break-even point well above that of prewar--might melt if production had to be trimmed. Chrysler, nipped by shortages and wildcat strikes, reported a gross of $336,519,790, up only 6% from last year's first quarter. But its net profit was down 30% to $14.9 million.

Last week, the shortage of steel was pinching off production in the whole industry. After a drop of 3,000 units a fortnight ago, auto production last week fell 17,600 more to 85,345 units, the worst production week in three months. G.M. last week shut down eleven Chevrolet assembly plants, and this week closed the Buick, Oldsmobile and Pontiac assembly plants for a week. Plymouth also shut down for a week. Ford, which had closed earlier for model changes, had not got back to volume production. On top of the steel shortage were the threats of the rambunctious C.I.O.-U.A.W. to strike Chrysler and G.M. (see NATIONAL AFFAIRS).

The industry still had the biggest backlog in history, and cars were as hard to get as ever. Automakers had hoped to cut the demand down by upwards of 5,000,000 new cars and trucks this year. But last week the future looked dark enough to cause estimates to be shaved to 4,500,000 for the year.

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