Condition of the Automobile Industry

December 10, 1929

Report Outline
Growth of the Automobile Industry
Evidence of Recession in Automobile Industry
Condition of the Automobile Market
Competition. In the Automobile Industry
Effects of the Stock Market Collapse
Special Focus

The Federal Reserve Board's index of industrial production declined from 126 in June, 1929, to 117 in October, the month of the stock market collapse. This decline of 7.1 per cent in a period of four months, coming after an almost continuous rise since January, 1928, may be compared with the decline of this index in 1927, the last year of business recession, from 112 in March to 100 in December, a decline of 10.7 per cent.

The Federal Reserve Board's index of industrial production does not include building construction, which was less active during the first ten months of 1929 than in any corresponding period since 1925. Analysis of the decline in building has shown that it was due almost exclusively to a falling off in residential construction during 1929. In the November issue of the Federal Reserve Bulletin, an analysis of the figures that make up its index of industrial production was presented by the Federal Reserve Board, which showed that almost the entire responsibility for the decline after June lay with the automobile industry and closely related industries. These industries, which make up about 30 per cent of the total, were chiefly responsible also for the increase in the general index in 1928 and the first half of 1929. The following table shows the changes in the general index and in the indices of automobile, automobile tires, and iron and steel, all of which showed a much more rapid advance up to last June than did total production, and since that time have shown a much more rapid decline.

1928 Total Production Automobiles Rubber Tires Iron and Steel Manufactures
    (1923–25 avera = 100)  
January 105 93 124 107
February 109 101 135 113
March 109 111 134 114
April 109 108 134 122
May 109 107 133 116
June 109 117 143 115
July 110 119 149 124
August 112 133 151 121
September 114 139 169 128
October 114 122 167 126
November 112 94 155 120
December 113 103 143 123
1929        
January 117 154 147 117
February 117 152 152 126
March 119 163 152 132
April 128 157 161 135
May 123 151 139 145
June 126 166 162 155
July 124 146 141 151
August. 123 146 114 143
September 121 136 117 139
October 117 116 114 124

The decline in iron and steel production since June appears to have been due chiefly to a curtailment of orders from automobile concerns, for the railroads, which are the second most important users of steel, have been buying equipment at a rate exceeding that of any other recent year. In August, September, and October, the railroads bought seven times as many freight cars as during the corresponding months of 1928, and three times the volume of rails and locomotives. Aside from the construction industry, the condition of the automobile industry is acknowledged to be the most important element in present industrial uncertainty.

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Mar. 23, 1954  Automobile Liability Insurance
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Aug. 21, 1945  Automobiles in the Postwar Economy
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BROWSE RELATED TOPICS:
Manufacturing and Industrial Production
Motor Vehicle Industry