There was no one reason for this setback. The general trade recession was, of course, a potent factor. Another was the series of international Crises; for motor sales, like those of Other luxury and semi-luxury goods. naturally decline when the outlook is uncertain, when the public does not know what the next week will bring forth. Again, the motor industry, unfortunately, but of necessity, increased its prices—the price of the more popular models was raised last year by about 5 per cent.—just at the moment when the general sales trend was turning downwards, And although this price increase may not have had the importance which has been attached to it, there is no doubt that it had a considerable influence on sales. It must be remembered that more than 50 per cent of the industry's sales are today replacement sales which can easily be deferred for a year or even more, and that the industry has now penetrated for its market to the lower income levels to whom an increase of £10 in the price of a car means a great deal.
Those were the three main reasons for the sharp fall in sales. But neither the trade recession nor the uncertain political outlook apparently caused any reduction in the number of cars in use. In fact, the number of cars licensed last summer—the summer is the peak period—actually showed an increase of about 175,000 Over the corresponding figure for 1937. That increase is quite equal to the expansion in the number of cars in use during the boom years for the motor industry, 1934-37. So it would seem that the drop in new sales was almost entirely, if not entirely, the result of deferred replacements. In other words, the average life of a car increased in 1937-38 from its norm of about seven and a-half years, Those were the main developments in the industry's markets. Internally, the car manufacturers suffered from higher costs, both of wages and raw materials, and from very keen competition, The intro-[duction of the new Vauxhall 10, for instance, caused' some dislocation in the sales of this range, which is one of the "bread-and-butter" lines of the mass manufacturers.
Text read from the printed page and cleaned; old type leaves the occasional error.