The Economy: The Rattles in the Engine

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The decrease itself was not so drastic, but its suddenness was a shocker. And when it came to preparing the public and handling the announcement that it was going on short weeks in four out of 23 assembly plants, General Motors was in low gear. The company gave the news to the press in a routine weekly release of production figures. G.M.'s executives were dismayed at the immediate effect of the announcement on the sensitive stock market and were worried that press reports had conveyed a false impression that some plants were shutting down altogether. So G.M. put out the word that all plants would resume work last Monday—setting off a brief market rally—only to disclose later that the cutbacks would be extended as the month wore on. That sent the market tumbling 15 points in one day last week, the worst drop since the assassination of President Kennedy.

The Headache. For the year so far, G.M. is the only loser among the Big Three. Its sales through May 10 have dipped 6% to 1,640,296 cars. Ford has inched up 4% to 897,669, and Chrysler has sprinted 6% to 520,939. American Motors has declined 18% to 96,230.

The biggest difference between Ford and G.M. this year concerns small, sporty cars. Ford's spunky Mustang has climbed to third place among all types, with sales up 11% to 211,793, and its success will probably earn for its creator, Group Vice President Lee lacocca, the presidency of Ford some day. G.M.'s scarcely competitive Corvair has been damaged so badly by criticism of the safety of its 196,063 models that sales are off 55% to 38,156, and its flop has hardly helped the ambitions of its creator, G.M. Executive Vice President Ed Cole. Nobody in Detroit would be surprised if G.M. eventually should drop the Corvair altogether. General Motors next September will bring out a stubby-tailed, moderately priced (about $2,500) sports car, tentatively named Panther, to compete with Mustang. Latest joke at Ford: "Instead of Panther, maybe G.M. ought to call it Copycat."

Other than the Mustang, the best performers this year are sporty intermediate-size models and some luxury cars. The fastest risers—Chevelle, Chevy II, Tempest, Riviera, Fairlane, Lincoln, Belvedere, Coronet—were all restyled for '66. The largest numerical declines have been among some of Detroit's big, bread-and-butter cars—the Plymouth Fury, the standard Ford and G.M.'s Chevrolet. All of them had simply been face-lifted for '66, but they will be completely restyled for '67, thus may fare better.

G.M.'s Chevrolet division has been in trouble for some time, and last July G.M. turned it over to ex-Pontiac Boss Elliott ("Pete") Estes for some quick fixes. Chevy's styling was a bit bulgy, and its workmanship gave rise to widespread customer complaints about ill-fitting upholstery, rattling doors and leaking windows. Estes visited every one of Chevy's assembly plants, test-drove cars straight off the assembly line, and ordered repairs on the spot.