4A

—~%,

THE REVIEW

In -spite of. four - critical un-
_ certainties, auto sales. in 1971
could reach 9.5 million units, Roy
D. Chapin jr., American Motors
chairman, predicted at the
company’s press preview of '71
products.

Chapin, the first industry
executive to make a forecast of
“new-car sales fer next year,said
‘It's reasonable at this time to
expect. new-car sales for 1971 to
be more than half a million units
higher. than the’ approximately
nine-million level we are moving
toward this year.”

He said .virtually. all. of -this
increase should’ come from
domestic models—these. in. the
below: standard-size categories:
“It looks as though domestic
“subcompacts, compacts, sporty
cars ‘and-intermediates -will
‘claim, between them, more than
45 percent of the total market,’
Chapin added.

‘“Foliowing this projection,
imports would claim between 8
and 9 percent, or about 800,000
units, as compared with an
‘estimated 1.1 million for the
current year,” he said.

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“Chapin said he expects AMC to.”

sell 350,000 units in the '71 model
year, an increase of 30 percent
over the 270,000 sdles anticipated
for the current model year,

He estimated that the com-
pany’s subcompact Gremlin and
compact Hornet each would
account for 109,000 of the ‘71
model-year sales, with the
remaining 150,000 units divided
among Javelin, AMX, Matador
and the Ambassador.

The four areas of uncertainty
which Chapin .-mentioned were:

e..Consumer confidence —
how far will it rebound?

e..The labor situation: — will
there be a strike, and would it be
a long one?

e..The cost-price squeeze _
how much will costs rise?:

@..What about profits with the.
‘emphasis on; low-priced cars?

Chapin said he didn’t feel he
was being overly optimistic in
believing ’71 sales could hit the
9.5-million mark ‘‘because
pressures. building up in the

“economy clearly “point in .that

direction.”
But he did say that the outcome

‘of the labor negotiations “‘is the

really principal question mark,”

‘change

‘‘The short-term replacement
demand, which. reflects many
buy. decisions that were post-
poned this year, is alone enough
to paint a strong picture for the
coming year,” Chapin said.

‘The difference between an
average and an outstanding sales
period is consumer confidence,
and not only is there considerable
pentup demand, but the level of
disposabie income has been
rising.

“If consumers decide that 1971
is the year to buy a new. car, they
have the money to do it.’ he said.

Chapin noted that the policy
shift -of the ‘Federal ‘Reserve
Board toward expansion of the
money supply is having an effect,
and he said this may be all that is
needed to inspire a marked
in consumer: attitude
before the fall is over.

-As . for ” the contract

negotiations, he said that “‘if-the
“negotiations are the toughest our

industry has faced in the past 25

years, it’s also certain that there .

will be a greater effort to avert a

shutdown than we have seen fora
_ While.”

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Chapin said the auto industry
has borne a ‘disproportionate’
share of the job of combatting
rising consumer prices.

“The industry hasn't begun te
recover the whole range of costs
in new-car prices — and it will be
hard to this fall,"’ he added. “Car
prices will have to go up; there's
ho question about it.

“But when you add’ higher
labor costs to materials costs that
apparently will continue to’ rise,
and then also add higher
engineering expenditures for
safety. quality and emissions
control, it’s clear that the cost-
price squeeze is going to remain
with us." ;

The increased demand for the
less-expensive small cars,
Chapin pointed out, ‘‘means

gearing to the realities of. the.

market with lower unit profit

margins. But it also provides
opportunities ‘for American
Motors, at least.”’

He. said. the company. has

moved ahead of schedule on its:

product-developing program,
and remains ‘‘zeroed in on

gaining a volume level of 500,000:
units a year by the mid-1970s.”’

“ts at least different,

There will be a lot of profit
opportunity in the low-margin
cars because of the size of the
demand. he continued.

“As more profitable cars in the _

small-car segments attain some
momentum — as they should next
year — that will be frosting on the
cake.

“Volume is the only final an-
swer to the cost-price squeeze.
and profitable volume is there in
the small-car market — not in
spite of the increased. com-
petition, but» partly because of
it.’ Chapin said.

AMC, he. pointed -out, will
continue to feature styling ‘‘that
if not. con-
troversial.”

He added that in’ the sub-
compact, compact and. sporty-
car sigments, “‘our cars will not
look like versions of.-something
somebody else has done.’

The small-car market, Chapin
said, is an area in which conquest
sales are most likely. to’ occur.
The percentage is twice as high in

the market segments below

standard-size as it is in those
above, he noted. —

“This is accounted for in large
measure by the fact that younger
buyers — those under. 35 —- are

“easier ‘to lure away. from com-

petitors than those who have

reached establishment: age — ~

almost 100 percent easier.
- “Younger drivers now. pur-

_ chase more than half of all below -
standard-size cars sold,” Chapin ©

said, “and by mid-decade, they

“will buy almost. two-thirds. of ©
“them .”’: :

- Starting this year he continued,

AMC dealers have been getting a —
‘significant number of younger

buyers into their showrooms.
buyers,’’. Chapin’ ‘said,

owned an American Motors | car;

- who ‘had — “never before even |

co sidered. us.

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“The vast majority of Gremlin
“were
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