Rethinking Small

In West Germany's deepening business downturn, few areas of the economy have suffered more than the auto industry. Production, which increased 12% in 1965, rose a bare 3% last year (to 3,000,000), and automakers entered 1967 with a worrisome 360,000 unsold cars. So severe is the slump that mighty Volkswagen, fourth largest automaker in the world (after the U.S. Big Three), is learning to think small again. Off Volkswagen's assembly lines at Wolfsburg last week rolled the first of its new Model 1200 sedans, which VW executives call the Wirtschaftskrise Kaefer--the "economic crisis beetle."

Graced with the same snub-nosed design that has characterized the basic bug since 1948, the new 1200 is as much a throwback as an evolution. It has the same chrome trim and many, though not all, of the improvements built into the current 1300 and 1500 models, such as wide-track wheels and automatic choke. But the new car resurrects the pony 41-h.p. engine which VW dropped in 1965. It will hit 70 m.p.h., as against 78 m.p.h. for the 53-h.p. 1500, will cost a bare $1,121, compared with $1,287 for the 1300.

Volkswagen President Heinz Nardhoff hopes that the smaller car will meet Germany's straitened "economic realities." With Germans uneasy about a developing recession and, in many cases, going on shorter work weeks, new-car registrations plunged 14% last November, and VW's sales at home fell to a record low of 16% of its production. The measures imposed by the hard-pressed government pushed gasoline prices up by 40 per gal., and German car-insurance companies this month raised their rates by as much as 121%.

Actually, VW has been rather slow in meeting the new need for spartan transportation. While the company was busy promoting its relatively new 1500 fastback sedan, G.M.'s and Ford's German subsidiaries were challenging the beetle at its own game. Sales of G.M.'s small, $1,360 Opel Kadett soared 28% last year, after a 6% drop in 1965. Ford last September successfully reintroduced its $1,322 Taunus 15M, a model it had dropped in 1959. When his 1200 gets into full production, Volkswagen's Nordhoff plans to skip the rich U.S. market, which accounts for 25% of VW's sales, export it only to other countries "where the money does not roll as freely as before."

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