Packard Forum Index » General

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Steve, in 1949? When handed Ed the key over, that was a good year in Packard history. To quote the following snippet:

"Packard in 1948 made the greatest industrial and sales gain in the entire industry - a gain of 78% over the year before. And Packard is selling at record levels in 1949...."


sources
snippet - The Spokane Daily Chronicle; May 17, 1949
pic - ebay, item number 321333780908
Click to enlarge!

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Hi Guscha

"Packard in 1948 made the greatest industrial and sales gain in the entire industry - a gain of 78% over the year before. And Packard is selling at record levels in 1949...."


Got to love the positive spin to mask a lousy situation. According to Mr. Neal, pages 56-57 tells that 1,389 leftover 22nd Series cars were still in stock by November 1, 1949 even as the 23rd Series models were in the showrooms.

That number was major improvement over the 13,942 leftovers accounted for at May 1,1949. In order to move those cars, $3.6M was paid out to dealers as reimbursements on remaining stock so they in turn could heavily discount prices and produce the "miraculous" sales increase for 1949......

A basic tenet of marketing: No matter what the real situation is, make it sound good in the advertisements! Good thing I wasn't around then and in the market for a new car, I'd have been a push-over for a cheap price on a new Custom Eight!

From Mr. Neal, page 57: "It took until the end of the 23rd Series model year (August 21,1950) and slightly beyond to finally sell the last of the 22nd Series production"
Bet someone got a heck-of-a-deal on those last cars!

Steve

Steve, again thanks for the details.

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Wait a minute, this says that the cars were unmarketable at the planned retail prices but without knowledge of the calculation it is hardly possible to get an idea of the operative result. To successfully sell means, to regain the costs and to guess the accepted addition for making a profit. A subsequently change of the costs isn't possible but to correct a wrong assumption is usual pratice in every business. Measurements like reimbursements, discounts, option packages etc. subtracts from the profit the seller expects to make. But to conclude the above mentioned "lousy situation" needs more input.



[snippet source: The Lewiston Daily Sun, June 8, 1949] Click to enlage!

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Various Golden Anniversary items

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Hi Guscha

If I understand correctly, you're wondering whether their assertions of the positive uptick in sales was simply being genuine rather than spin to cover-up an undesirable market situation?

Over-production of the 22nd Series cars relative to demand was the crux of the problem. Christopher decreed the 22nd and 23rd Series tooling had to be amortized over two runs of 150,000 cars each. To meet his objective and because the market wouldn't absorb that many cars within the 1948 model year, he continued the 22nd Series unchanged into mid-1949 simply titled as '49 models.

He was following industry-wide practice for those immediate postwar years when any new car would sell regardless of whether it still looked identical to last year's or a two year older model. For example, the only way to tell what model year a 1946 to early 1949 Chrysler is, is by the serial number. This applies to practically all car makes in those year to some degree, until they presented all-new replacements for their warmed-over 1942 offerings.

If the strong seller market still existed, he might have gotten away with it, but that situation was quickly righting itself. Supply was meeting demand by three years plus from V-E Day. To further diminish demand for a hold-over model, the Big Three all had their completely new 1949 cars on sale.

The financial assistance to the dealers to sell left-over cars came right off the bottom-line ultimately. Essentially, selling a discounted leftover displaces the sale of the current models at a fuller price. It has the affect of devaluing one's car in the public perception as well. Some end-of-model year leftovers are always just part of doing business but they become a real problem when they're too great in number.

Steve

Steve, thanks for the effort. I'm trying to tell you that the application of marketing tools such as reimbursements, taken by themself, are first and foremost just tools.

Sales promotion is defined as a "...direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or ultimate customer with the primary objective of creating immediate sales." (Haugh, 1983; Marketing Communications)

If it takes longer to sell cars means that it takes longer to sell cars. A reimbursement is a tool but doesn't indicate a "lousy situation". It is just a tool. To come to the conclusion of a lousy situation we need a contrasting juxtaposition of profit and loss. The mentioned quantity of 13,942 cars, which needed sales support "sounds" like a big amount but compared to 1,200,000 sold Packards the importance shrinks.
Steve, do you have another (more substantial) figures of the finiancial situation in 1949, which include the military activities?


[snippet source: St. Petersburg Times, May 4, 1949] Click to enlarge!

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56executive, thanks for illustrating the driveaway event by various Golden Anniversary items and even a copy of a customer pickup. Sorry for getting lost in details. I have keept you and others waiting long enough for another pictures.

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John (JW), the time has come to use a magnifier. All of us will keep their fingers crossed for you!


[picture source:LIFE] Click to enlarge!

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Hi Guscha

To shed some light on the financial results, here's what Mr. Neal wrote, page 57:

"1948 production (98,897 cars) had been the highest since 1937 and the calendar year result was net profit of $15,109,439. Although this looked good in the annual report issued in April of 1949, management already knew they were headed for trouble. At the March 23 meeting the board had already authorized $2,027,927 set aside to aid dealers in selling the expected leftover cars. On May 25 they raised the figure to $3,650,000. (It was later reduced to $3,600,000.) This cost would show up in reduced earnings for 1949"

"The March 23,1949 estimated consolidated net first quater profit reported to the board was $5,295,867 before consideration of the $1,500,000 thus far used for clearing the leftover 22nd Series cars. The after-tax net cost of the $1,500,000 would be $835,500. Considering the eventual cost was $3,100,000, the direct after-tax cost was about $1,726,700."

There is also a report in a past issue of The Cormorant of profits generated separated by automotive and the defense operations. It'll take a bit of browsing for me to find it, so stand by, its quite illuminating. Perhaps another participant will have that issue at hand, if you do, please jump in with the figures.

The ultimate result of the over-production of 22nd Series cars reduced what could have been some of their most profitable postwar years from automotive operations before the long slide. The main casualty seems to have been George Christopher's career as president. His single-minded fixation on production above all other considerations brought about this costly need to clear leftover cars. As this clearance program went forward in the latter half of 1949 so too did the internal machination by a newly-created Operating Commitee that eventually usurped his presidential authority and replaced him in that office with Hugh Ferry.

Steve

When Lee Iacocca took over Chrysler, he found that they had numerous cars left over at the end of each month and that they then had a 'SALE' to move them. He changed the rules and did not build cars until he had orders from dealers. The sales stopped and the profit per car went up.

The same thing happened at Packard. Christopher was building cars without orders and that is what lead to the over supply! Just plain bad business practice.

Ernie

No luck identifying him in any of the group (crowd?) photos. There are a lot of people in those photos, impressive turn out.

(o{}o)