Hot, Motorized War For U.s. Dollars

Beneath a soft-focus picture of a Volkswagen in a meeting room at the New York Coliseum last week was a typically Volksy inscription: "First Beetle of Spring."

Outside in the show arena glossy 150-mile-an-hour Jaguar XK-E sports cars, the hits of the fifth—and largest ever—International Automobile Show, had small windshield stickers bearing in minute but smug print the word: SOLD.

But for all the confidence shown in these cars, they were isolated isles in an industry awash with uncertainty. Imported car sales had dipped from 10% of the rich American market in 1959 to 7% last year. Dampened by gross overproduction overseas and the new, hugely popular U.S. compact cars, which now account for some 30% of the domestic output, the foreign car boom had not only reached a peak but gone into reverse. Said one British auto executive, between medicinal draughts of a pale, dependable British ale, "We knew it was going to happen some time, but we did't know it was going to be so bloody sudden."

Said another: "After the January and February sales reports I was ready to open the closet door and hang up the noose." But, he added, the first 18 days of March had brought his company U.S. sales greater than the total for the year's first two months. Spring, nature's season for opening buds and car buyers' pocketbooks, was thankfully here after a hard winter in which domestic and foreign car dealers alike had been forced to live off the fat accumulated in previous good years.

Despite the signs of an upturn, however, foreign car men were hardly bouncy. Cautious hope was the prevailing mood. They would surely never again take 10% of U.S. sales but, after all, 1960 had been the second-best year yet for the importers. In all, they had sold 498,785 vehicles for the year, and this meant rich returns in foreign currencies. Even if the 1961 total drops to 400,000, as many have predicted, it will still be a relatively good year.

What really worries the players in this global dice game is where the foreign share of the U.S. market will stabilize—if that word can be applied to so chancy a field. Last year's production cutbacks, price cuts and callbacks on U.S.-bound shipments by the hardest-hit firms will not have to be duplicated if they set more realistic goals. But what is realistic?

A longtime Detroit observer, Automotive News Associate Editor Robert Lienert, sees no prospect of a big foreign car rally. He says America's recent splurge on imports was in a fad market. "People wanted smaller cars," he says, "and the American-made compacts of the day weren't the type they wanted to buy. The Volkswagen triggered the fad market, but VW couldn't produce enough cars to fill it. People didn't want to wait. They went out and bought other makes, creating a false impression in foreign factories that the American market was bursting with enthusiasm for any imported car. Then Volkswagen hiked production and got a lot of the business it otherwise would have lost."

Obviously the tag "imported" no longer assures quick, easy sales. Apart from the compacts' counter-thrust and the importers' misreading of U.S. trends, there appears to be a substantial buy-American swing, stimulated by this country's balance-of-payments troubles and some union action. Importers are generally agreed that they now must stress:

1) The superluxurious cars, sports cars and ultra-small, ultra-economical family cars that have no American equivalent now and are not likely to have soon.

2) The individuality of small cars that compete with the compacts in size and price.