HIGHER PRICES FOR AUTOS.

The New York Times
December 5, 1909

Chairman Smith of A. M. C. M. A. Says Manufacturers Will Increase Prices.

A general rise in prices of motor cars is predicted during the coming year.  Several makers have already increased their prices, while others have announced that they will do so in the near future.  In discussing this impending increase, H. O. Smith, Chairman of Management of the American Motor Car Manufacturers' Association, yesterday said:

"The announcement comes as no surprise to those who are best acquainted with the conditions of the industry.  Notwithstanding the somewhat prevalent impression to the contrary, the margin of profit in automobiles has been very modest, and those makers who have shown good returns on the investment have made this possible by the large outputs.  The public's idea that the motor car manufacturer is becoming as rich as Croesus is quite erroneous.  Motor car prices have been constantly on the downward trend, covering a number of years.  Not that so many of the manufacturers have actually reduced their prices to any great extent, but on the other hand they have been delivering more of a car and a better car for the money each year.  Naturally the returns for a dollar on the list price of standard cars, as compared to what was given in exchange for a dollar a few years ago, brings about a comparison which is astonishing and amply proves the assertion that much better value is offered for the dollar to-day than ever before in the motor car industry.

"It is natural that the general public should disfavor any advance in prices, yet no individual desires to purchase a car from a dealer who is not reasonably prosperous, and, in turn, the dealer does not want to handle cars produced by a manufacturer who is not reasonably prosperous.  Without a fair return for the money and a legitimate profit, the dealer and, in turn, the manufacturer, is not able to give the best of service to the customer and keep abreast in the march of progress in producing a product.

"To-day we are confronted with a condition where a great deal in the way of returns in a motor car is given for the dollar, and while these returns for dollar have been increasing conditions have been steadily developing, which work directly against such conditions.  Almost before we have been able to realize it we find the country overcrowded with prosperity. Most every branch of industry is feeling the effects in the fullest possible way.  The labor market is being heavily drawn, and there is a shortage of help, not only skilled, but common labor as well.  The material supply has not kept pace with the demand, and the supply and demand being at the foundation of price-making is affecting the labor market as well as material prices.

"In the item of crude rubber, which is an important one in conjunction with an automobile, the price of this commodity alone has more than doubled in eighteen months.  The price of steel has risen rapidly, owing to the increased demand, not only from the automobile maker but in other lines.  The securing of upholstering leather is a problem regardless of price.  The automobile industry alone will probably consume  from 350,000 to 450,000 hides this year.  There is a shortage in curled hair, and in fact everything pertaining to the motor car.

"With the above conditions it is not so surprising that many of the makers have increased their prices, but it is surprising that they have been able to put off the changing of prices so long.

"It is evident that with the great increase in these items the automobile manufacturer cannot, in justice, to himself and to the buyer, sell his product at the prevailing low prices.  It is not at all likely that there will be any sensational rise in prices, but we can all look for a general slight increase to offset these items representing increased cost.