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Through his talkathon, George Romney has brought off singlehanded one of the most remarkable selling jobs in U.S. industry. He has taken a company that only three years ago was on the brink of the grave, the butt of countless jokes ("Did you hear about the man who was hit by a Rambler and went to the hospital to have it removed?"), and given it a new and vibrant lease on life. More remarkable, he has done it all by selling an "economy" car that, in 1956, actually cost $4 more than the Big Three's cheapest car (it is now $311 cheaper), and that takes an expert driver to get the company-boasted gas mileage (more than 30 miles to the gallon). Snorts a General Motors executive: "Romney's been selling a dream—price and economy—but he's done a helluva good job at it."
Just as remarkable, Romney has proved a powerful competitor not only against the Big Three but against a flood of small imported cars, whose chief selling point is even lower cost and greater economy than the Rambler. This year the 60-odd foreign cars coming into the U.S. are expected to account for 560,000 units, or more than 10% of the U.S. market. But Rambler's sales have risen faster than any of the imports.
Fifth Place. Rambler has done so well that it is in fifth place in U.S. auto sales (after Chevrolet, Ford, Oldsmobile and Pontiac); its share of the market has risen from 1.6% to 6.2% in two years. This week it made its 20th successive increase in production in 1½ years. Yet the public is still ordering Ramblers faster than American can produce them. Romney is in the midst of a $10 million expansion program that will lift the company's capacity to 440,000 cars a year.
For all Rambler's success, the Big Three are not hurting much. Last week the auto industry showed promise of the first spring pickup in sales since 1955, chalked up a record near two-year, midmonth high of 174,780 new car sales. Automen are confident of a 5,500,000-automobile year. That is good news for George Romney; the more car sales, the bigger the share he expects to get.
Rambler's success is writ large in the company's books. American's earnings after taxes for the first six months (ending this week) of its fiscal year will reach almost $35 million, or about $5.80 a share v. $26 million for the whole twelve months of the last fiscal year. For the entire year, American should earn upwards of $50 million, and may easily earn as high as $64 million, or about $11 a share, if Romney's confident expectation of 350,000 Rambler sales holds up. Earnings are piling up so fast that Romney is expected to ask the company directors to declare the first cash dividend since 1954, when it was 12½¢; this time it looks as if the dividend will be about 50¢.
Pat Answer. All this success has raised an important question: Has George Romney won a quick victory at the price of losing a war?