TOPICS IN WALL STREET.

The New York Times
August 3, 1916
excerpt of automotive sections

A Whack at the Motors.

Henry Ford is at once the admiration and despair of other makers of automobiles. His company is so conservatively financed, so rich in cash resources, and so highly efficient that other concerns which have attempted to meet his product with a low-priced car have only served to emphasize the vast difference between their best efforts and his normal output. Several successful manufacturers have let it be known that they were going after the Ford business, but their low-priced cars have not met the test of the road, at least so far. The reason for this is that no other maker of low-priced cars seems willing to go before the trade with a machine that is not equipped with a self-starter. The competitors have added to their costs to make a modern car, while Ford continues to sell a model substantially unchanged for several years. The announcement of the new Ford prices made effective Aug. 1 was seized upon by traders yesterday as a piece of bad news for the other automobile companies. They started selling motor stocks with little regard to whether they were issued by companies trying to squeeze into the Ford field or not.

Putting Prices Back.

The motor stock boom reached its zenith with the successful flotation of Perlman Rim and United Motors, and began to wane with the announcement of the proposed quarter-billon-dollar merger which was to have united the Willys and Durant interests. Since the collapse of that ambitious scheme the automobile issues have been fair game for the short sellers. Yesterday they went after nearly every stock on the Big Board. Chandler dropped from 104 to 100¾ and ended at 101, with a net decline of 4 points. General Motors common did not sell, but the preferred dropped from 115¾ to 113½, and closed at the latter figure, off 4½ from the previous day's close. Maxwell, soon to go on a 10 per cent. dividend basis, ranged from 81¼ to 77, losing 3⅝. Studebaker swung between 127½ and 122⅝, closing at 123, with a net loss of 4⅛, while Willys-Overland broke from its high of 55¾ to 51½, and ended the session at 52, with a loss of 4½. On the outside market the smaller and newer motor stocks kept their heads lowered, and perhaps avoided a drive, but Chevrolet, which had sold on Tuesday at 208, sold from 196 down to 189, closing off 9 points. United Motors dropped from 67¼ to 63¾, at which price it showed a decline of 3⅜. White sold at 52½, a loss of ¾ for the day.

Trimming a Scare to Measure.

The trader is an opportunist. If the Ford announcement had come in the course of a bull market he might just as easily have turned it to account as an indication of the wide margin of profit in the manufacture of cars. Some maker assert that every sale of a Ford to a new owner means an eventual buyer of a higher-priced car. That is hardly true, but it is as true as the assertion that a further reduction in the price of the most popular cheap car means smaller sales of the higher-priced machines. The Ford does not compete to any considerable extent with the cars selling at from $800 to $1,500. Just as soon as sellers found that Maxwell, Willys-Overland, and Chevrolet, all making low-priced machines, sagged on the Ford announcement, they started seling other motor issues with almost as much success. They figured that in some way the reduction meant harder competition for all motor companies, and sold stocks without attempting to discriminate.