Cars & Confidence

"I look at these daily sales reports," said Ford Division Assistant General Manager Matthew McLaughlin, "and see 6,200, then 6,500 and 6,800 cars a day. So I begin to tell myself what a good sales executive I am. Then I look at the rest of the industry's sales and my ego is deflated. It's amazing. There hasn't been anything like it since 1955."

Actually, there has never been anything like it, period. In recent weeks, the U.S. auto industry has been speeding along at better than its record 1955 clip. October sales of 728,552 cars were the highest ever for a single month, and the average of 27,753 cars sold each day in the middle ten days of November set still another record.

Going First Class. Except for Studebaker, whose mid-November sales were off 19% from a year ago, all the automakers were sharing in the bonanza. Ford's sales were up 18% over November 1961, and General Motors had scored a 20% increase, which gave the biggest of the Big Three an almost embarrassing 54.3% of the total U.S. auto market. Chrysler seemed to be writing one of the year's great industrial comeback stories with a 32% rise that boosted its share of the market from 9.5% to 11.5%. Part of Chrysler's gain was made at the expense of American Motors, whose share of the market has dipped from 6.8% to 5.5%. But American Motors' only trouble was that it couldn't make cars fast enough to keep up with the expansion of the market; its sales, too, were running 21% higher than a year ago.

No less significant than the quantity of '63s being sold was the quality: more often than not, customers were insisting on the fanciest, most expensive models. The richly appointed Impala was taking 55% of Chevrolet's sales at the expense of the lower-priced Chevy II and Corvair. Ford's Galaxie 500 was giving the same rough ride to the Falcon. And even at Cadillac's rarefied level, the Fleetwood 60 was snaring sales from the slightly less expensive Series 62.

Polishing Up the Prospects. To a man, U.S. businessmen agree that the auto-buying splurge deserves major credit for putting a bright new shine on the economic prospects for 1963. But none of them are sure just what set it off.

General Motors Chairman Frederic G. Donner reckons that a major factor in the surge is a long-term increase in replacement auto sales. Today, says Donner, cars are being scrapped in the U.S. at a rate of more than 4,000,000 a year, v. 3,200,000 in the early '50s. And this rate should continue to rise because every year there are more cars on the road to wear out.

Other automen argue that part of the explanation lies in the fact that the young people born during the wartime baby boom are now buying used cars. This increase in demand has driven used-car prices so close to new-car prices that many people decide to spend the little bit extra it takes to get a '63.

A more basic factor, some Detroiters insist, is that the consumer now has an uncommonly big backlog of spare cash; in 1960, savings accounts in the U.S., which had long been growing at a steady $10 billion-a-year clip, suddenly increased by $20 billion. This created a pent-up buying potential, which needed only to be triggered.

Ignoring the Charts. Automen like to think that they pulled the trigger by designing such appealing 1963 cars. That is certainly part of the explanation. Probably more important has been the mood of public assurance generated by the outcome of the Cuban crisis--a mood that has been reinforced by the boisterous five-week surge of the stock market, which closed last week with the Dow-Jones industrial average at 649.30. its highest level since May 17. Whatever it is that is moving him, it is clear that the ordinary American feels far more optimism about the U.S. economy than many of the chart-reading experts.

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