PRODUCTION CUT={BACK LIKELY IN MOTOR CAR INDUSTRY based on Financial Times report
“Last year's car output exceeded most forecasts and much the same seems to be happening in 1964. Nine months ago.emost manufacturers were happily talking in terms of a further 5% increase in output."(But) Saige first holf of 1964 has seen production nearly 30% up on the same period of last year.ocebuteethe present boom has a narrow base. It is buiit on tho unexpectedly long upsurge in domesti¢ sales, which were a third higher in the first half of 1964 than in the corresponding per= iod of last year. Nerves were shaken..when production for the donestic market flattened out during May..Since then, the factories have resumed working eat capacity and June output was up a fifth om 1963. Now, however, there is another worrying 4 trend. Production is at last catching up with demand, and stocks seem likely to start rising once the present works holidays are over. .
"The vital question to decide is whether the upsurge in sales is mainly a oneefor-all occurrence or reflects a permanent upward shift in demand, Temporary factors have certainly played an important role. In particular, the availability of a wide range of new models has undoubtddly served to make many people change their cars soonere.sBut there does also seem to have been a basic upward shift in demand, i For one thing, car ownership habits are increasingly moving toward the American , pattern in which few people want to buy a secondhand caress
"What the car manufacturers are really afraid of is that a gemieinks worsening of the economic situation will compel the Government to introduce tougher financial policies..tighter credit is bound to cut back the demand for vehicles, Moreover, if this does happen, it will come at a time when the motor industry would anyway have expected a levelling off in sales for 'normal' reasons - the rate of growth has simply been too fast to be maintained..All this suggests that production for the home market will fall more than just the usual seasonal amount in the next few months...it may well be a seventh below the second half of 1963, and a half below the first half of 1964. And the outlook for next year is not much more promising, with few manufacturers looking for any growth in the domestic market...The export position, on the other hand, is more encouraging. It is true that progress will probably be slower than in the first half of 1964.. This is partly because to some extent the recent rise in exports reflected the fact that U.K. manufacturers had a lot of well-designed new models at a time when relatively few were coming out of the Continental factories..It is partly also because competition is likely to become keener,
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"Outside Europe, a further rise in exports also seems likely, but its extent ' is bound to be linited either by competition from Continental nanufocturerseeor by the lack of foreign exchange »nl the uneven distribution of incone..If this‘crystal- ¥ gaZing is anything like correct, it looks as though the industry will export some 330,000-350,000 cars between July and December, so pushing 1964 exports.an $ or more above last year.eit is unlikely to be enough to offset the decline in home markets in the next few months. Assuming that the winter sees a return to a seasong ah pattern..with no unusual stockbuilding, it looks 2s if the industry will make something like 760,000-800,000 cars in the 2nd half of 1964. This is less than in the same period last year, and over 250,000 fewer than in the first half of 19640. A levelling out of this kind is unlikely to hit ali the manufacturers in the same way, and as usual BMC and Ford are likely to be least affected..Vauxhall also seems well pitaced...Standard-Truimph and Rootes are likely to be hit, however, since these two have benefited in recent months from a short-fall in the availatility of some of their competitors! vehicles, Both of these companies have competed with larger firms in the market for mass-produced vehicles, but their smaller scale of production has generally tended to put them in a weak position whenever the market has falterede.,"