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Buyers choose longer financing for cars like rsquo40 Chrysler
<p><strong>Buyers choose longer financing for cars like &rsquo;40 Chrysler.</strong></p>

WardsAuto Flashback – June 2015

Arms-Building Increases; GM Contract Approved; Post-War car Allotment; More Trucks Sought; Dealer Earnings Up; Ford Averts Strike; Car Sales Post Record; AMA Asks Smog Delay; Ford to Build GT; GM EV Detailed; Iacocca to Stay; Chrysler-Fiat Deal Possible&nbsp;

75 Years Ago (May 1940): Arms Building Increases; GM Contract Approved; Citizenship Questioned; Car Financing Detailed; Canada Taxes Cars

Packard likely builder of Rolls-Royce Merlin engines.

Federal agencies have informally asked automakers to be prepared for a bevy of orders for military equipment such as cargo, troop-transport and tanker trucks. Work also is under way to assign production aircraft engines to various automakers. Dodge, GM Truck, Mack, Studebaker and White are seen as the primary beneficiaries of the truck orders. General Motors likely will be the primary supplier of Allison aircraft engines. Packard is expected to be licensed for the Rolls-Royce Merlin after Ford backs away from a deal, leaving the source of the French Hispano-Suiza powerplant undetermined.

Workers at GM plants represented by the UAW-CIO approve a new labor agreement establishing precedents for paid vacation and an independent arbitrator to decide disputes arising from the pact. Wage increases are seen costing an additional $6.0 million, while vacation pay is pegged at $7.0 million. The union is expected to seek similar contract terms when it bargains with other automakers in the fall.

GM to supply Allison aircraft engines.

Manufacturing plants being readied to take on new orders for military equipment are setting deadlines for workers to submit proof of citizenship or be dismissed. According to Ward’s Automotive Reports, “Considerable numbers of men were cut off from a few plants for failing to provide evidence of citizenship by the deadlines.” They may be able to regain their jobs if they can produce the necessary documents. The FBI is checking on those employees who have been dismissed, as well as some who remain on the job, to ensure against sabotage or other subversive activity, the newsletter says.

Longer term financing is making inroads in the automotive market, according to information from the auto finance industry. Contacts with a maturity date of 1-12 months accounted for 24% of auto financing in 1939 vs. 28% a year earlier. Those stretching 13-18 months fell to 35% from 47% in 1938, while contracts extending 19 months or more increased to 41% in 1939 from prior-year’s 25%. At the same time “substandard” contracts, those with less than a 33% down payment, rose to 29% in 1939 from 19% in 1938.

Exports of vehicles and components to Canada are expected to be curtailed if, as seems likely, tax increases are enacted. Under the proposed regime, the tax on the sale of cars priced at $700 or less will be 10%. In the $701-$900 range the rate is 20%. Those with a selling price of $901-$1,200 will be hit with a 40% tax, while units above $1,200 will be taxed at 80%.

’46 Chevy among first post-war cars.

The Office of Defense Transportation and War Food Admin. are pressuring on the War Production Board for the “most liberal material allowances possible” for production of light trucks. The agencies are seeking to avert a “desperate” shortage of such vehicles in the farming and urban-delivery sectors.

According to WAR, Ford, Chevrolet, International Harvester and Dodge are the likely beneficiaries of increased production of store-delivery trucks and pickups, among other models, due their vertical integration. The WPB reportedly is ready to allocate output of between 188,700 and 268,000 additional units for this year, on top of the 245,000 already assigned.

Ford proposes to build a new assembly plant and parts depot in Atlanta, GA, as soon as post-war conditions permit. The 500,000-sq.-ft. (46,500-sq.-m) plant will serve the Atlanta to Jacksonville, FL, region with a capacity to build 350 units daily.

The WPB has allocated production of 691,018 cars between July 1, 1945, and March 31, 1946. Of the total, 241,016 are to be built this year and 449,102 in first-quarter 1946. GM, with 285,288 units, is the prime beneficiary, followed by Chrysler, at 148,905.

Packard allotted 20,188 ’46 “builds.”

With significant military contracts still in force, Ford ranks third with 119,730 cars assigned. Studebaker’s 27,825-car allotment places it first among the independent automakers, followed by Hudson’s 21,602 units, Packard’s 20,118 cars and Nash-Kelvinator’s 19,550 units. Willys-Overland, Graham-Paige and Crosley each have been assigned output of 16,000 cars.

The cancellation of a machine gun contract, effective July 31, will displace a large number of workers at GM’s AC Spark Plug Div. “The males will be absorbed in the resumption of automotive processing. Most of the females will be dropped from the payroll,” Ward’s says. As part of the change, AC is moving spark plug production from its Ionia, MI, facility back to Flint and the Ionia plant will be acquired by Fisher Body. 

60 Years Ago (June 1955): Dealers Earn More; Ford Strike Averted; FI Research Gains; T’bird Soars; Car of the Future Seen

U.S. dealers are having their most profitable period in two years, according to data from the National Auto Dealer Assn. Gross profit in first-quarter 1955 equals 15.3% of total pre-tax sales, up from 14.8% in full-year 1954. It is the strongest take since 1952’s 17.2% margin. January-March operating profit of 3.1% represents a dramatic increase from just 0.6% in all of 1954, and again was the highest since 1952, when the average was 3.6%. Used cars, however, continue to be a drag on earnings averaging a gross $112 loss per unit in the first-three months of 1955, up from a $93 loss in entire 1954. The last profitable year was 1952, when dealers earned an average of $22 per used unit sold.

In a “frenzied” effort to avoid a labor strike, Ford’s latest contract proposal calls for establishing a $55 million fund over three years, from which laid off workers could draw pay after exhausting state unemployment benefits. The plan is intriguing enough that the UAW has extended its June 1 strike deadline while it studies how well the proposal meshes with its demand for a guaranteed annual wage. It also appears the union may be on the verge of relinquishing its demand for a single-year contract in favor of a multi-year deal. An offer from GM, whose contract ends June 7, reportedly is similar to that of Ford.

Citing ongoing research into fuel injection, WAR says a leading candidate is “pressurized injection” that takes gasoline from the fuel pump and meters it into each branch of the intake manifold. “Care is taken to inject far enough away from the intake port to make a homogenized air-fuel mixture.” Experts, according to the story, say feeding fuel into individual manifold branches offers an 8% improvement in fuel economy at three-quarter and full throttle, while benefits accrue in all speed ranges compared with prevailing multiple-carburetor applications. Earlier experiments consisting of timed injection into the combustion chamber, proved too costly for production cars because that system incorporates “too much machinery.”

’55 Thunderbird production lags demand.

Production of the Ford Thunderbird will total 11,500 units in the ’55 model run through June, based on current schedules, averaging 1,500 units monthly. Still, that is barely enough to put a dent in the order backlog, WAR says. Rival Chevy Corvette, with just 4,100 units built since its 1953 launch, is set for a significant increase in the ’56 run, when roll-up side windows and an optional removable hardtop will widen its appeal. A redesigned body and improved V-8 powertrain also are expected to enhance Corvette’s standing with sports car buyers.

Future cars to abandon “slab-side” look of ’55.

The headline story in its June 27 issue, WAR tells readers “The automobile industry is preparing an abrupt and radical departure in passenger car design. The changes will be so radical, the next time the 7.0 million buyers of ’55 models purchase a new car, in two- to- four years, that car will bear no resemblance to the cars of today.” The slab-sided look of ’55 will be replaced, as soon as ’57, with “graceful, lower-silhouette automobiles with smaller diameter wheels as well as curved windows and side panels, opening exiting new avenues in body contours and interior treatments.” The story concludes, “In any event, the car of the not-to-distant-future, bearing no counterpart today, will be unmatched as to airiness, visibility, styling and all that is required to establish a new era in automotive design.”

50 Years Ago (June 1965): Ford Builds GT; Car Sales Record; Replacement Engines; AMA Asks Delay

With 20 days left to go, the 4,020,000 domestic-make cars sold in the Jan. 1-June 10 time frame already has set a new January-June record, besting the prior peak of 4,015,000 cars sold in first-half 1964. Sales for the entire month of June are seen as sufficiently strong to propel the industry to an any-quarter record of 2,350,000 units in April-June, topping the 2,195,605 cars sold in January-March.

Meanwhile, January-May sales of new imported cars total 158,781 as against 155,860 units a year earlier. Volkswagen accounts for 75.9% of this year’s volume, compared with 62.7% in like-1964. Standard-Triumph is a distant second with 4.7%, down from 5.8% a year earlier.

Ford builds race cars based on GT prototype.

Ford says it will build 50 of the 95-in. (2,413-mm) wheelbase GTs it debuted a year ago at races in Daytona and Sebring, FL. The $16,500 cars will be constructed at Ford’s Advanced Vehicles facility in Slough, England, but Shelby American will handle race-tuning the 289-cid (4.7L) V-8 engine, as well as marketing. Designed to compete in FIA’s Grand Touring Prototype class, the GT features semi-monocoque construction, a rear-mounted V-8 with Webber carburetion, ZF 5-speed manual transmission, 4-wheel disc brakes and a 200 MPH-plus (322 km/h) top speed.

Chrysler’s Industrial Products Div. says it is moving ahead with a “revolutionary” replacement-engine program to repower older light and medium-duty trucks at less expense than rebuilding an existing engine. Chrysler reckons it can provide a complete “drop-in” replacement powerplant for an average $136 less than a rebuild. In addition to retrofitting Dodge trucks, the engines can be used in 1948-1962 Chevrolet, Ford, GMC, International Harvester, White and Mack vehicles using the supplied adaptor to mate the new engine with the existing transmission. Four engines are available: a 120-hp 225-cid (3.7L) Superduty Slant-Six; 189-hp, 318-cid (5.2L) Chore-Master V-8; Brute Power 200-hp, 361-cid (5.9L) V-8 and a 423-cid (6.8L) Max-Haul V-8 rated at 215 hp.

Testifying before a House Commerce subcommittee on a bill establishing federal emissions standards for gasoline-powered vehicles, the Automobile Manufacturers Assn. asks legislators not to “rush” the legislation. AMA also asks for an advance notice of “at least two model years” prior to the implementation date. While admitting there are no longer any technical problems to overcome, the organization says automakers need time to develop and test emissions control devices before installing them on production vehicles.

According to AMA, a reduction of 30%-40% of total vehicle emissions already has been achieved through the use of positive-crankcase ventilation devices that recycle crankcase vapors formerly vented to the air via the road draft tube. However, under California regulations, all ’66-model cars sold in that state already are required to have approved exhaust emissions control devices.

GM to build Impact electric concept car.

Some details are emerging on General Motors’ new Impact electric concept car. Chairman Roger B. Smith tells WAR that engineers “are going flat out on it now, because there is no question in my mind that we have a technological advantage right now, and we want to take advantage of it before everybody catches up.” Except to say Saturn is not a likely candidate, Smith refuses to comment on which division will sell the car, although he says he envisions distinct electric vehicles being sold by all GM divisions in the future.

Asked where Impact will be built, Smith cites Saab as a possibility, adding “it makes more sense for that car (to be built) in Europe than in the U.S. If it is built in the U.S., the Van Nuys, CA, plant, set to become a “flexible manufacturing facility” when Chevy Camaro/Pontiac Firebird output ends with the ’92 run, is an “obvious candidate.” Sales are likely to be restricted to “smog-filled” areas like Los Angles and whether the Impact will be sold outright or leased depends on advances in battery development, Smith says.

Iacocca to stay as Chrysler CEO.

After months of speculation and a recent change in the upper echelons of Chrysler management, Chairman Lee A. Iacocca says he plans to stay on as CEO when his employment contract ends in December 1991. His decision to stay fuels speculation as to why his “heir apparent,” Vice Chairman Gerald Greenwald, resigned in late May to head a team putting together an employee buy-out in UAL, parent of United Airlines.

American Isuzu Motors has high hopes for its all-new Rodeo SUV, forecasting an increase in sales from 10,000 this year to 60,000 annually by 1992. Isuzu’s stated goal is to become the top-selling Japanese brand in the compact SUV segment. Rodeo production began in May at the Subaru Isuzu Automotive plant in Lafayette, IN, with sales commencing in the fall. The new model slots between the automaker’s Amigo small SUV and the larger, more upscale Trooper, the latter slated for a ’92 upscale redesign enabling it to compete against the Toyota Land Cruiser and Jeep Grand Cherokee. 

Will Fiat Tipo be next Sundance/Shadow?

Despite vigorous denials, speculation of a Chrysler-Fiat linkup increases after Chrysler pulls out of an agreement with Renault to jointly build and sell an all-new small SUV code-named JJ. Insiders say Chrysler and Fiat may form an equity link after they “test” their working relationship with joint development of several new models. It is suggested that “working relationship” may include a new small car, based on the Fiat Tipo platform, to replace the aging Plymouth Sundance/Dodge Shadow in 1994.

In addition to accessing Fiat platforms, Chrysler would be privy to Fiat’s manufacturing expertise and benefit from the Italian automaker’s swelling cash reserves and wider international distribution channels. For its part, Fiat would gain access to the U.S. market it abandoned in 1983, as well as Chrysler’s quality-control expertise and its relationships with North American suppliers. Fiat reportedly is anxious to test its products in North America before Japanese makes gain free access to the European market, on which it is excessively dependent, in 2000.

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