Pub. 4 Issue 4

12  EARLY AUTO RETAILING IN LA — continued from page 11 skilled mechanic might be able to flag 100 flat-rate hours and be paid $.75 per hour (or $75). This modification of Ford’s piece-rate system proved to be flexible enough to appeal to dealers as well as mechanics that were paid based largely on their productivity. The flat rate system, as modified by dealers, became the standard method for compensating mechanics. Dealers Offered Used Cars for Sale Early dealers gave little thought to “second-hand cars”. Cars were a new phenomenon, demand was high, and a rather select group of affluent buyers were the buyers. At the second meeting of the newly formed Motor Car Dealers Association of Southern California, on May 31, 1905, the group approved the following resolution: “The members of the association agree not to trade in any second-hand cars, as part payment on any newmachines. This motion was made sweeping in its intention, in order that there might be no evading of this rule.” The key to this resolution lay in the phrase “as part payment on any new machines.” Dealers quickly learned that a customer who wanted to trade in a used vehicle expected the dealer to reduce the factory’s retail price of the new car by the perceived value of the used car. Salespersons anxious to sell a new car might easily over-appraise the value of the used trade, thus cutting deeply into the profit on the new car. Worse, the dealer nowhad a used car that took up valuable space in the dealership and had to be disposed of, more likely than not, by selling it for less than the allowance offered in trade or the new car. New car dealers sought to separate themselves from “junk- men” who specialized in second-hand cars. When the City of Los Angeles passed an ordinance requiring licensed new car dealers to obtain a used car license, Leon Shettler, a Reo and Apperson dealer who played an important role in the Motor Car Dealers Association of Los Angeles, objected. “I don’t object to paying the license fee,” said Shettler, “but I object to being classed with second-hand dealers and junk men.” Mr. Lord, president of the Lord Motor Company, representing Studebaker and two other brands, was arrested in 1912 for selling a used car without a li- cense. The Association agreed to provide funding to defend him. MotorWest , a biweeklymagazine devoted to automobile issues and headquartered in Los Angeles, editorialized against “junk-sellers” in Los Angeles who “gather together a lot of cars that are ready for the junk-pile, and with the aid of a little paint, a screw-driver and a monkey-wrench, get them into a condition where they will ‘go.’ Then they go to the owner of a down-town lot which is lying ide, and for a few dollars get permission to establish themselves and their wares for a limited time—and wait for victims.” • The manufacturers, concerned solely with new car sales, viewed this as a problem for dealers to resolve. Deal- ers tried to avoid taking in used cars on trade, but that meant losing new car sales. Dealers also attempted to limit trades to the brands they represented, but that also worked against new car sales for customers who wanted to purchase a different brand. Dealers contended that customers, if they wanted a used vehicle, were best served by purchasing from a licensed new car dealer. To back up this assertion, most dealers explored ways to “renew” or “recondition” used cars with comprehensive inspections and mechanical servicing and repair work. C. J. Welch, used car manager for Earl C. Anthony’s Packard dealer- ship stated that the best place to buy a second-hand car is from “an established and reliable dealer” so one can know “what the car is worth.” The cars are thoroughly inspected and repaired by mechanics who put it in “first- class mechanical condition.” Don Lee’s Cadillac dealer- ship expanded his used car operations to a new facility on 10th Street (later Olympic Boulevard) andOlive where he specialized in “renewed” used cars that had been thoroughly inspected and repaired by Cadillac-trained mechanics. W.S. Rhodes, manager of Studebaker’s used care department located at 10th Street and Los Angeles sold 50 used cars in less than amonth and claimed to have “solved” the used car problem ‘by establishing a depart- ment where these machines are handled exclusively.” The Winton Motor Company followed suit by setting up a temporary showroom for used cars on 13th Street and Flower Street. But as the volume of better-made, more reliable new cars grew exponentially, year after year, the number of used cars on the market increased from50,000 in 1905 to 1.5 million in 1915 and the “Second-Hand Car Problem” soon challenged dealers across the country. Members of the Motor Car Dealers Association engaged in a lengthy discussion on the problem in 1911 and established a com- mittee to make recommendations. The committee returned one month later with a comprehensive proposal to forma “Guaranteed Rebuilt Car Company”where associationmembers could send all their used cars for sale in one central location. The plan posited four objectives: 1) create stability for new and used car sales, 2) establish standard prices for used car makes and models, 3) obvi- ate dealers from investing money in used car facilities, 4) protect used car buyers with absolute guarantees. Discussion took place but ultimately the motion was tabled. Some members thought it was ‘impractical” while others suggested legal problems with “restraint of trade” issues that might violate state or federal laws.