Radio Broadcast (May 1929-Apr 1930)

\ / The crux of the used-car problem, to the individual dealer, is expressed in the statement that he must take a loss in order to make a profit. The fist price of the new car allows him a satisfactory profit; but when he accepts a used car at an arbitrary trade-in valuation, he has decreased the amount of his profit by the amount of the trade-in valuation. The point on which he must make his decision, the consideration that should govern the size of his trade-in allowance, is "How much loss can the total transaction absorb and still leave me a satisfactory profit." Some dealers still feel that they are the best judges of that point, and that each individual case should be considered on its own merits. But experience has shown them that, for the majority at least, the used car problem is too big for individual solution with safety. Alfred Reeves, general manager of the National Automobile Chamber of Commerce, gives the following illustration of what the used-car problem has come to mean to the dealer. It is an actual case, and there have been altogether too many of them for the comfort and peace of mind of automobile dealers. A man, whom we might as well call Brown, decided to buy a car. He had never before owned a car, but he knew what kind of car he wanted, and he knew what it would cost him. He also knew that the trade-in allowance was a very important factor in buying a car. He went to an auto junk-yard just outside the city in which he lived, and asked the proprietor if he could borrow an old car for the afternoon. The proprietor, a friend of Brown and a good fellow not averse to making a dollar or two in rental if he couldn't make a sale, agreed; Brown drove away in a decrepit, but mobile, old ark. He drove up and parked in front of the salesroom of the dealer whose car he had decided to buy, walked in, and was an easy prospect for the floor salesman. He agreed to buy the model he wanted, and as the delighted salesman started to write out the sales order, Brown waved a nonchalant hand toward the broken-down wreck at the curb "Of course, you'll give me an allowance on that car of mine," he said. The salesman looked, swallowed hard, and not wishing to spoil a sale, agreed to allow him $150 on his old car. Brown seemed satisfied, and the deal went through. As Brown was about to leave the salesroom, he hesitated, and said, "Tell you what. I'm pretty attached to that old tub outside; it's given me years of good service. Rather than part with it, I'll buy it back from you at $75." YCJIDDinqS Y J. M. Skinneb (Philco) : "The radio fan of today who is careful in his choice of set should be able to get ten times as good performance as he was able to get a year ago." X C. A. Earl (Earl Radio) : " It is now an assured fact that radio is an allyear business." X Thomas A. Edison (Edison Radio) : "I have always liked my job." X Herbert E. Ives (Bell Telephone Laboratories): "Color television constitutes a definite further step in the solution of the many problems presented in the electrical communication of images." X M. H. Aylesworth (N. B. C): "We realize that the appeal over radio, in order to bring results, must be brief and interesting and infrequent." X Arthur Freed (Freed-Eisemann) : " More than three quarters of the population of the United States cannot afford to buy a radio receiver that is priced over SI 00 without inconvenience." X Gobdon C. Sleepeb (Temple): "Instead of hurting the phonograph industry, radio is now proving to the public the possibilities in reproducing phonograph records. The phonograph industry is now grateful for strides made in radio and in particular for the perfected electro-dynamic speaker." X Commander Edwabd Eixsbebg (U. S. N.): "It is one of the features of our age that, regardless of apparently insurmountable difficulties, what public opinion truly demands speedily becomes feasible." X Habold A. Lafount (Badio Commission) : "The number of receiving sets in use in the Fifth Zone has more than doubled in the past eighteen months." The salesman, glad of the chance to get. rid of the white elephant, agreed. Brown drove the ancient bus back to the junk-yard, gave the proprietor $10 for the loan of the car, and came out a clear winner of $65 on the deal. That is not an average case; but it has happened more often than it should. Now, what has the automobile industry done to prevent such dealer losses in handling used-car tradeins? A number of plans have been devised and tried by automobile dealers in all parts of the country. The more important of those plans are summarized in the table accompanying this article ; from one or another of the nine plans mentioned there, more than forty variations have been conceived and tested. Almost all of them, together with four of the basic plans, have been abandoned after costly trial periods. The one feature common to all the plans, and the point particularly important to the radio trade, is that the dealers of each city must cooperate in finding the solution of the problem. Until automobile dealers agreed to make peace among themselves on the trade-in allowance, the problem remained beyond solution, and was actually turning the expected profit on new-car sales into unexpected loss. A glance at the accompanying table will show that the important factor is the method of determining the resale value of a used car before accepting it in trade. If the dealer can know what he is going to get for the reconditioned used car, he can set his trade-in allowance on it so as to insure a satisfactory profit on the whole transaction. The first method of determining that valuation, the "maximum allowance" principle, figures theoretical depreciation on each make and model of car, and establishes a "maximum allowance" beyond which the dealer should not go unless he wishes to take a loss. The second, and increasingly popular, is the "market price information" principle, which declares that a used car is worth what it will bring in the used car market, not what it ought to bring. By posting current used car transactions in a given city or area, the current resale value of every make and model of car in that area can be accurately known. This is the principle on which the Windsor plan works, and the Windsor plan is considered the best solution of the trade-in problem. It is being introduced by dealers all over the United States, and has been in use in Canada for some years now. Under the Omaha plan, automobile {Concluded on page 368) :t2 2 • • OCTOBER 1929 •