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"The one great factor in the difficulties the manufacturers and retailers find themselves in at the present time involves the implications and repercussions attendant to the so-called contract that is entered into between the manufacturers and their retail outlets. It is a misnomer to say that this is a contract, because it is nothing more than a permit to do business . . . under the threat of cancellation. . . . This so-called contract is interstate in character. . . . Therefore, if those engaged in the automobile industry are to have relief, that relief must come from the Federal Government. . . .
"I am convinced that the manufacturers have been ruthless in pursuing their objective, which has been the selling of new automobiles regardless of the consequences and that the contract entered into by the manufacturer and the dealer is the most efficient weapon they have at their disposal in seeking their objective. . . .
"I am firmly convinced that as long as . . . [the manufacturers] . . . retain in the form of a contract the power to threaten, the power to cancel the automobile dealer out, just that long will these gentlemen force upon their automobile dealers unreasonable quantities of new cars. ..."
In thus hammering home the theme that "high-pressure salesmanship" of the manufacturers has contributed to the present automobile glut, Gardner Withrow several times used phrases direct from a press conference of Franklin Roosevelt's along those lines four months ago (TIME, Jan. 17). According to Mr. Withrow this forcing of the market amounts to more than 1,000,000 used cars a year and largely accounts for the annual mortality of from 17% to 25% of dealer establishments. His words brought cheers from the dealers, though a few of them voiced fear of "bureaucratic Government control."
Though the dealers thus took Franklin Roosevelt's word for it in one case, they repudiated him in another. He was largely responsible for getting the industry to switch its annual show from January to November four years ago; last week the N. A. D. A. recommended returning to the former arrangement on the ground that the present basis has accentuated the glut in used cars by counteracting the normal upsurge in spring sales.
As for the unfair trade practices, 24 of these were speedily agreed on and outlawed, the list ranging from defamation of competitors to tampering with speedometers. Only major point the dealers refused to concede was the price-fixing of trade-in values. This FTC is eager to forbid and may still do, but the dealers maintained that this stabilization of trade-ins was all that prevented ruinous price-wars.
Final excitement of the N. A. D. A. gathering was the annual banquet, graced this year by General Motors Chairman Alfred P. Sloan Jr. In a long speech he made only one oblique reference to Gardner Withrow's charges.
On the subject of Government regulation of the automobile industry, GM's boss had emphatic comment: