Autos: Buying Up but Selling Down

"There said is a pause in the auto market,"said Ford Motor Group Vice President Lee Iacocca last week.

"There's uncertainty about a tax increase and the Viet Nam war — but there's nothing to get alarmed about."

There was nothing for the automakers to get very happy about either.

Compared with the equivalent periods of fabled 1965, sales of the new models were off 6% in October and 5% in November's first ten days. Detroit in siders estimated that fourth-quarter production will decline from last year's 2,600,000 to 2,400,000. American Motors scheduled production cutbacks, and General Motors reported that it will reduce the current rate of output by 3.7% in December and by still an other 4.4% in January. Though G.M.

carefully broke that word after the stock market closed late last week, there was enough disquieting news about autos and other sectors of the economy (see THE NATION) to cause all auto stocks to sink to 1966 lows.

Slow Trio. Some strange things are happening in the nation's most influential industry. G.M. has actually increased its share of the industry's sales, from 50.1% a year ago to 51.3% last month, but its volume is down because of a 10% lag in its Chevrolet Division, which accounts for half its output.

Chevy Division Manager Elliott ("Pete") Estes has fallen behind his competitor (and Bloomfield Hills neigh bor) Don Frey, whose Ford Division in October outsold Chevrolet 194,000 cars to 192,000. None of the regular "lower-priced three" cars are burning up the track, but racier, higher-priced models are doing splendidly, and auto economists point out that "the sales mix is very rich."

During the first third of November. Cadillac, Buick and Pontiac shattered sales records. The tendency of customers to trade up from lower-priced cars cheers most automakers because costlier cars bring fatter profit margins. But what worries the auto companies' big-picture men is that once a customer hankers to trade for something fancier, he may jump to the other firm's line. In October, sales of Ford Motor's middle-priced Mercurys fell 11%, to 33,000, and its Lincolns dropped 18%, to 7,300. For that reason Ford shifted drivers at its Lincoln-Mercury Division: to another job in the company went Lincoln-Mercury Division Boss Paul Lorenz, and in came Vice President E. F. ("Gar") Laux, an aggressive protege of Iacocca's.

Nailed to the Floor. Of course the pattern of trading up has two sides. While sales of the bread-and-butter Chevy tumbled in October from 172,000 to 135,000, the breezier-looking Chevelle rose from 24,000 to 33,000. Sales of the regular Pontiac declined by 4,000, but the fancy Tempest increased 7,000, and the Grand Prix and GTO were also way up. The standard Ford slipped from 114,000 to 99,000, but Fairlane and Mustang both increased.