Learn about Life in the 1920s

The Dominant Position of U.S. Car Manufacturers

THOSE who are worrying about the automobile business ought to keep in mind the fact that this American industry occupies the commanding position in the world market and that, even so, our export trade in motor-cars is at the very beginning of its development.

In a recent bulletin the Stock Exchange house of Dominick and Dominick calls attention to this point, adding that the foreign trade in American cars "has apparently developed a romance which, unlike most romances, is likely to be profitable and of very great economic significance."

At the recent international automobile exhibition at the Grand Palais in Paris, twenty-four makes of American cars were represented. Last year we exported almost as many cars as were produced in all of Europe, with a total value of $424,000,000. In order to show our predominant position, the writer for the New York brokerage house first tells us what. Europe has been doing recently:

In 1926 Europe produced a total of passenger-cars, trucks, and buses amounting to 560,213 as compared with 462,120 in 1925. Of this total 132,802 units were exported. Four countries were responsible for the great majority of these sales— France, Great Britain, Italy, and Germany. France has an export business second only to the United States, but recently the sales of the Fiat Company in Italy, which accounts for about 85 per cent. of all Italian production, have been rapidly gaining on the French figure. Citroen is responsible for over half the total French output.

Germany's domestic market is seriously handicapped by internal taxation, and the industry is the least efficient of those enumerated. Great Britain has been making strenuous efforts to develop its sales to the Dominions, and despite the general strike of 1926 British production showed an increase over 1925. The figures of these four countries and of the United States are given in the following table:


                            Production       Exports
France. .................. 200,000         54,675
Great Britain. .......... 198,700          33,137
Italy. ..................... 64,760           34,194
Germany. ................ 75,000           2,081
United States*. ....... 4,428,286       487,289
*Including American cars made in Canada.

The table certainly reveals the marvelous American development of the motor-car industry. It is shown in another way by the Department of Commerce census figures recording a world total of 27,650,267 motor- vehicles on January 1, 1927, of which the United States owned 22,137,334, or about 80 per cent. of the total. Or, to put it in another way, "over 95 per cent. of all the automobiles in the world to-day are of American manufacture." One reason why our manufacturers can outsell foreign competitors everywhere despite higher labor and material costs is the development of mass production:

A factory which turns out 500 cars a day (the Ford production has at times amounted to 8,000 cars a day) is able to sell more cheaply and more efficiently than the factory which produces twenty-four cars a day, even at a lower unit cost of materials and labor. In mass production of the light car, the United States completely dominates the market. Citroen in France, Fiat in Italy, and Morris in England are the only manufacturers who endeavor to compete in the large-scale production of the smaller automobile with the large number of manufacturers in this country.

Other interesting facts bearing on American domination of the world's automobile markets are set down as follows in the Dominick and Dominick bulletin:

The export of automobiles now ranks third in the value of the exports from this country, and considering the fact that the two leading exports—raw cotton and oil— do not pass through the hands of American factory labor, the automobile export is easily the most valuable of our manufactures. In 1926 the total exports of American motor-vehicles amounted to 487,289 with a value (including tires) of $423,500,000. This amounted to 11 per cent. of the production.

Current figures show an even more rapid progress. Eleven countries bought more American automobiles in the first half of this year than they did during the whole of 1926, and the latest figure for the eight months up to September 1 shows an increase of 24 per cent. in American exports over the corresponding period of last year. The ratio of exports to production is steadily growing, and in August of the present year the export amounted to 10.6 per cent. of the production as compared with 4.8 per cent. in August, 1926.

There is no market where American automobiles do not sell, altho in countries which have extensive local industries the market is of course considerably narrowed. In France, for example, 8 per cent. of all oars are of American manufacture, in Germany 8 per cent., and in Italy 2 per cent.

The records of the Department of Commerce show the amazing extent of American automobile sales, reaching into remote corners of the world. In such places as Aden, a British military outpost on the Arabian Peninsula, with a population, chiefly illiterate, of over 50,000, and two modern roads, there are 755 automobiles, of which 90 per cent. are of American manufacture. The inland empire of Ethiopia, formerly known as Abyssinia, completely cut off from any outlet on the sea with only a few miles of navigable road, has only 100 automobiles, 80 per cent. of which are American. The Island of Dahrein lives almost entirely by pearl- fishing with an export of pearls amounting to $15,000,000 a year, and owns sixty automobiles, practically all of which comprise three of the popular lower-priced American cars.

South America is, of course, one of the most likely markets, and a large proportion of United States automobile exports go to that region, amounting to about $46,000,000. These markets are interested in the American production, and the percentage of American-made cars amounts to about 90 per cent. of the total. Since most of these countries are building new roads, the purchases of American automobiles should steadily increase.

Source: The Literary Digest for November 5, 1927



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