U.S. Company Offers Profit Sharing With Customers

Press, Volume C, Issue 29499, 28 April 1961, Page 11

U.S. Company Offers Profit Sharing With Customers

[Reprinted by arrangement with the "Financial Times")

f THE good reception x accorded to British cars at the International Motor Show in New York is one which U. S. manufacturers are regarding with some envy; for it comes at a time when they are going to unprecedented lengths themselves to capture the interest of a sluggish car-buying public.

During the month of January, 34.324 United States savings bonds were sent out by the American Motors Corporation to customers who had bought the company’s Rambler cars in the previous month of December. This rebate, dividend, or return of capital, whichever way the recipients preferred to look at it. was the customers’ reward for helping the company increase its car sales above the level of a year earlier. Initial Policy For an initial period this year, American Motors are continuing this profit-sharing programme. The plan is that in any month in which sales of Rambler cars exceed the figure a year earlier, by a minimum of 10 per cent., buyers of the cars in the previous month will qualify for savings bonds. The amount of each bond will depend on the margin of increase, rising from a 25 dollar bond for an increase of 10 per cent, to a 125 dollars bond for an increase of 50 per cent, or more. Included in the plan are the smaller Metropolitan cars made by the United States corporation by B.M.C.

The Rambler rebate programme is the most revolutionary departure from tradition in the U.S. motor industry to date. More typical are steps being taken to ease the often heavy burden of maintenance and running costs.

Guarantees Thus, Ford is selling its 1961 luxury Continental make with a guarantee of a full two years, or 24,000 miles (whichever occurs first», for the replacement of any part with a defect in workmanship or materials. including the cost of labour. Of more general interest is the same company’s innovation with its popular-priced Ford. The 1961 Ford car will require to be lubricated only every 30,000 miles, in contrast with standard practice of 1000 to 2000 mile regular lubrication. The new Ford has a seal-ed-in lubrication system to replace the conventional grease fittings. In adver. tising this innovation. Ford claims that lubrication costs at the 30.000 mile check-up point will be only an average of about 4 dollars whereas over the same period of time the motorist would have to pay about 45 dollars for regular 1000 mile checks. The new Ford also is said to clean its own oil, through an improved filtration system, so that oil changes can be post-

poned from 1000 to 4000 miles. In the recent past, U.S. motor companies have been extending the intervals advised between changing engine oil.

Such pampering gestures, which are expected to extend within this business, are a new experience for motorists in the United States. In the past, they have come in for often quite casual and even peremptory treatment both from the motorcar companies and their dealer-service organisaations. Standard practice in this business has been to guarantee new car parts (though not always labour) for only up to 3000 miles, or three months. A free overhaul after the first 1000 miles also is normal. More Revenue At the same time, the car companies have laid down quite specific recommendations for the regular servicing of their products, which has brought added revenue to those dealers also in the service end ‘ of the business. These have calle'd for a chassis lubrication and oil change every 1000 miles, at the cost of just a few dollars, and more thorough checks. including engine tune-ups. at the 5000. 10.000 and 20.000 mile levels. At the higher mileage, costs may run from 50 dollars to 75 dollars, depending on what parts may need replacing. The car owner does not have to follow the chart he receives with his new car. but it is a persuasive document New Attitude The new attitude among car companies no doubt is. in part, the outcome of the change in popular sentiment surrounding the whole motor industry in the recent past, and which has resulted in legislation requiring the listing of the price of all cars and their accessories in dealer showrooms. It also probably reflects the rise of

the compact cars and the popularity of imported cars in the past 18 months. These smaller cars are more simply built and with fewer and less complicated accessories than standard American makes. which often are loaded down with expensive gadgets to go wrong. For example, most imported and compact cars have a standard gear shift, while standard cars largely today use automatic transmissions. which are a constant and expensive source of maintenance and repair outlays. According to one recent estimate, a Ford Falcon compact costs about 40 dollars a year less to run than a standard Ford car. Competition Though this trend to better service will offer competion to imports on one of their most attractive sales points, it can also offer them the comfort that the merits of a small and simple car are well appreciated by the U.S. car buyer; and since there is already a contradictory trend for the compacts to get bigger and more complicated, the exporter of reliable and economical small cars to the U.S. need by no means conclude that his market has vanished The slump in car sales, after all. has hit domestic manufacturers extremely hard: it is far too early to claim that the recovery will show that they have recaptured all the ground recently won by imports.