Pub. 4 Issue 4

8 Early Auto Retailing in LA, 1900-1925 BY DARRYL HOLTER  EARLY AUTO RETAILING IN LA — continued on page 10 T he automobile inf luenced nearly every aspect of American life in the Twentieth Century. During the first two decades of the century the industry overcame significant obstacles in production and merchandis- ing that allowed the auto to reach a mass market of consumers. This success rested upon two related developments. First, the manufacturers revolutionized the system of production from small volume, hand-assembledmotorized carriages to large volume assembly-line produced cars. Second, manufacturers and automobile dealers created a unique franchise system that provided a method for distributing and merchandizing cars to a geographically and economically diverse market. While the manufacturing of cars was concentrated in Detroit and the Midwest, the market for cars was nationwide. Supply was low, demand was strong, and most buyers were affluent. Manufacturers experimented with various ways to distribute their vehicles to customers. Some sold cars directly from factory- owned stores, by mail order, or by consignment with hardware or department stores. Others named individual agents to represent their brand or established a factory branch which distributed cars to individual dealers. However, they soon began to abandon the branch system and instead rely on wholesale distributors, usually a successful local dealer who was granted a “franchise” to sell retail to customers and wholesale to smaller dealers in a much larger territory. In most cases distributors and manufacturers signed a simple one-page contract with a term of a year or less, terminable by either party on 30-days- notice. Distribution was relatively simple since the main challenge was to produce enough cars to meet the increasing demand. Positioned as the critical link between the manufacturers and consumers, dealers began to invest in larger facilities to display moremodels to an increasingly sophisticated public. They experi- mented with new forms of customer financing and began to ad- vertise locally in order tomove customers to the dealership. They expanded service facilities, trained mechanics to provide qualify repairs and developed warranty programs for their service work. They expanded their parts inventory to provide interchangeable parts for their service departments. As the auto market grew the dealers confront an entirely new challenge, “the second-hand car problem.” Dealers Showcase Cars Dealers provided, at their own expense, showrooms to dis- play new cars. In 1910 the Southern California Automobile Club provided a Dealers’ Directory that listed 105 brands represented by 70 dealerships located in downtown Los Angeles (mostly on Olive Street). Early dealers usually had only one or two cars on