Business: Counting the Cars

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As the auto industry tooled down the last lap of its second-best year in history, the annual numbers game of forecasting 1961's production and sales was in full swing—with automen taking the high road and Washington economists the low road.

A drop to 5,800,000 cars in 1961 production was predicted last week by the Business and Defense Services Administration of the Commerce Department. The BDSA's reasons: "The unemployment situation and unsettled business conditions," plus the fact that dealer inventories at the close of 1960 will be bulging with some 1,000,000 unsold cars, about 500,000 more than a year ago. (The BDSA also forecast that compacts would rise to 35% to 40% of all U.S. cars made next year.) A year ago, the BDSA scored a bull's-eye in predicting the 6,700,000 units assembled by the industry in 1960.

Detroit also refused to be infected by Washington pessimism. General Motors Chairman Frederic G. Donner pointed out that consumer incomes are at an alltime high, predicted industry and G.M. sales would "be matched or even exceeded in 1961." Ford Chairman Henry Ford II agreed. Donner argued that current dealer inventories are no drag on the market but a necessity, if the dealer is to supply buyers with the wide choice of cars available. This year the car shopper has a choice of 54 name brands and more than 300 models.

Automen also sharply criticized the Government's failure to forecast sales as well as production. At week's end the Commerce Department did just that, issuing a second report forecasting sales of 6,500,000 cars for 1961, only slightly below this year's total. This cheered Detroit somewhat, though—allowing for inventory holdovers from 1960 production and imports—it altered the 1961 production estimates not at all.