:OLE OF GIANT CORPORATIONS HEARINGS BEFORE THE SUBCOMMIHEE ON MONOPOLY OP THE lELECT COMMITTEE ON SMALL BUSINESS UNITED STATES SENATE NINETY-FIRST CONGRESS FIRST SESSION ON THE ROLE OF GIANT CORPORATIONS IN THE AMERICAN AND WORLD ECONOMIES PART 1 AUTOMOBILE INDUSTRY— 1969 JULY 9, 10, AND 11, 1969 M>iS rA \ Printed for the use of the Select Oommittee on Small Business IfOLE OF GIANT CORPORATIONS HEARINGS BEFORE THE SUBCOMMITTEE ON MONOPOLY I OP THE SELECT COMMITTEE ON SMALL BUSINESS UNITED STATES SENATE NINETY-FIRST CONGRESS FIRST SESSION ON I THE ROLE OF GIANT CORPORATIONS IN THE AMERICAN f AND WORLD ECONOMIES PART 1 AUTOMOBILE INDUSTRY— 1969 JULY 9, 10, AND 11, 1969 <^.,.,=a^ \jy]%ri\\j(l ■^lm-^*^T5" V *•'*;. 9'J''',"*'^^^'"'?,'"^ ^" P""'^ stability. "Industrial Structure and Com- *Ibk" '^'' ^*"*^^ Vfi\)^v No. 2, pp. 45-46 of collected study papers (January 1969). wi"nVoT?QrQ^'i^i^^'"'"l""-^^.V "^"E^'"-^'*'^"* ^"""s i° t^e Future," Wharton Quarterly, Winter 1968. The text of the article will be found in appendix IX-M. There are copies of my report available in the room, and it will be printed in the record, along with other materials,* so I shall not re- peat the seven questions now. There is, however, one point that I want to make clear at the outset. We are here to try to learn something, not to teach or preach some sure gospel that we already know. We have sought and will continue to seek a wide range of views from a wide range of backgrounds. We expect, as a result, to get a wide range of quite varied perceptions on what the role of giant corporations is and might become ; but it would be quite impossible now to predict what this subcommittee's own ulti- mate view may be, if, indeed, it ever forms one. At one extreme, the ultimate conclusion might be that giant corporations pose a serious threat to democracy, peace and freedom. At the other, the conclusion might be that the giant corporation is a logical and necessary develop- ment in our evolution from a competitive to a cooperative mode of human existence and therefore may be man's last, best instrument for building a peaceful and abundant world society. Or we could find something in between, or touches of both. It is worth noting, however, that the trend so clearly projected does not leave much room for small business, as we have known it, in the most significant parts of the economy — manufacturing, especially. That will be true whether the conclusion is that the growth of corpo- rate giants and economic concentration is a benign or malignant development. There is just no avoiding the fact that as big business becomes more important, small business becomes less so. And that, for what it is worth, is my answer to the question I have been asked : "Wliy should a Senate small business subcommittee hold hearings on giant corporations?" To the next question that springs to the mind of some — "Why start with the automobile industry ?" — ^there is an even shorter, simpler answer: that is where the very largest corporations are. General Motors and Ford are perennially Nos. 1 and 3 on Fortune's list. Chrysler is currently No. 5 and has never been lower than No. 12. Even American Motors, the midget of this industry, has ranked be- tween Nos. 38 and 131 during the 15 years Fortune's directory has been published. (See appended table.) If we cannot understand the role of giant corporations in this compact industry of four giant cor- porations, we cannot understand it anywhere. In the hearings this week, we shall use the panel session form. Witnesses will sit together. To the utmost extent feasible, all will complete their statements before any are questioned, and then we shall, as the group dynamics people like to say, interact — witnesses and committee members together. * The materials intended to be appended to the record Include : excerpt from the Senate Small Business Committee's 18th annual report, summarizing the 1967 hearing ; my re- port to the Senate Small Business Committee summarizing the 1968 hearing ; my invi- tation to Mr. Lyman Slack, president of the National Association of Automobile Dealers, to participate in today's hearing (invitations to other witnesses were substantially similar) ; Mr. Slaclc's reply, declining the invitation : a paper by Messrs. Burgess and Glahe of the -University of Colorado on the Ford cost data presented at the 1968 hearing; other miscellaneous correspondence and materials, received and to be received, on the subject of these hearings. The first two documents mentioned follow this statement. The remainder will be found in the aippendlxes, printed separately as Part lA of this record. 32-493 O— 69— pt. 1- Our fir^ panel is concerned with distribution in the automobile in- dustry, and its members are Raphael Cohen, Alexander Hammond, and Thomas C. Mann. Mr. Cohen is chairman of the executive committee of the Metropoli- tan Independent Dodge- Chrysler Dealers Association, of the New York area. Mr. Hammond, an attorney in private practice in New York, is a leading practitioner under the Automobile Dealers Day in Court Act. Mr. Mann, the former distinguished Under Secretary of State, is now the president of the Automobile Manufacturers Association. I shall insert in the record before their testimony, without objec- tion, biographies of each of them. Following Mr. Cohen's biography, I also want to insert an editorial about him that appeared recently in Automotive News. It is very complimentary. (The table, the excerpt from the 18th Annual Report of the Senate Small Business Committee, and the report to the Senate Small Busi- ness Committee by Senator Nelson, referred to in the chairman's state- ment, follow :) EXHIBIT 1 (SUBCOMMITTEE CHAIRMAN'S EXHIBIT NO. 1: TABLE PREPARED BY THE SUBCOMMITTEE STAFF.-THE "BIG FOUR" OF THE U.S. AUTOMOBILE INDUSTRY, RANK BY SALES IN FORTUNE MAGAZINE'S LIST OF 500 LARGEST U.S. INDUSTRIAL CORPORATIONS, 1954-68) Rank by sales General American Motors Ford Chrysler Motors (0 6 76 3 5 81 3 7 87 3 6 112 3 3 3 11 9 7 83 47 38 3 3 12 12 49 44 3 7 44 3 6 55 2 5 63 2 5 92 3 5 113 3 5 131 Year: 1954. 1955. 1956. 1957. 1958 1959 1960 1961 1962 1963 1964 1965 1966 1%7 1968 > Not listed. Ford's financla. data (and stock) were not yet public. Source: Table prepared by the subcommittee staff from the directories of the 500 largest industrial corporations pub- lished annually by Fortune. Exhibit 2 (Subcommittee chairman's exhibit No. 2: Excerpt from the Senate Small Busi- ness Committee's 18th annual report, S. Rept. 1155, 90th Congress, 2d session (1968, for year 1967) : chapter V, section A, "Hearings on planning, regulation, and comi)etition.") Chapter V. Antitrust Activities A. HE5ARINGS ON PLANNING, REGULATION, AND COMPETITION The New Industrial State, by John Kenneth Galbraith, a best-seller from the day of its publication in June 1967, has enjoyed, quite possibly, more attention from the general public than any other treatise on economics in the long and stormy history of "the dismal science." The main thrust of the book was known before its publication, througli lec- tures ^ and articles ^ of the same title which Professor Galbraith had published in late 1966 and early 1967. A principal conclusion of the book — that giant cor- porations and pervasive industrial concentration are natural and inevitable de- velopments of an industrial society, and therefore desirable — had excited the interest and concern of Senator Morse at the time of your committee's hearings in March on the status and future of small business.' The Senator inserted one of Galbraith's lectures in the Jiearing record * and questioned Federal Trade Com- mission Chairman. Paul Rand Dixon* and Assistant Attorney General (Anti- trust Division) Donald F. Turner" about them. On May 18, 1967, Senator Morse announced ' that his Subcommittee on Retail- ing, Distribution, and Marketing Practices, and the Subcommittee on Monopoly, chaired by Senator Nelson, would hold a joint public hearing for the purpose of confronting Professor Galbraith with some of his oflScial and scholarly critics — ■ and subjects of his own criticism. The witnesses who faced the two subcommittees, and one another, on June 29, 1967, accordingly, were Dr. Galbraith; Assistant Attorney General Turner; Dr. Willard F. Mueller, Chief Economist of the Federal Trade Commission ; and Dr. Walter Adams, professor of economics at the University of Michigan. The question before them, as posed by Senator Morse, was "Are planning and regu- lation replacing competition in the new industrial state?"* Dr. Galbraith's statement, in your committee's judgment, amounted to an em- phatic "Yes." The answers of the other three witnesses to the title question were varying shades of "No." Citing familiar and generally accepted statistics on the disproportionate per- centages of manufacturing assets," employment," defense contracts," research and development expenditures," and gross revenues " accounted for by the very large corporations, Dr. Galbraith argued : "* * * by common agreement the heartland of the industrial economy is now dominated by large firms. The great bulk of American business is transacted by very large corporations." " The giant corporations very substantially control their supplies and suppliers, their prices, their customers, and, beyond that, "not surprisingly, impose both their values and their needs on the society they are assumed to serve."^ ^ Six Reith lectures entitled "The New Industrial State" were delivered by John Ken- neth Galbraith over the facilities of the British Broadcasting Corp., In 1966 and published in The Listener, BBC's weekly magazine, issues of Nov. 17 and 24, Dec. 1, 8, 15, and 22, 1966. 2 A series of three articles on "The New Industrial State," by Galbraith, was published in The Atlantic, issues of April, May and June 1967. 3 Hearings before the Select Committee on Small Business, U.S. Senate, on the status and future of small business In the American economy, 90th Cong., first sess., in 2 parts (1967). See ch. VII, sec. A, Infra. * Id., at 438. 6 Id., at 438-447. 8 Id., at 749-750. 762-763, 766, 772-776. ■^ Congressional Record, p. S7109 (daily edition. May 18, 1967). 8 Hearing before subcommittees of the Select Committee on Small Business, U.S. Senate, on planning, regulation, and competition, 90th Cong., first sess. (1967) ; hereinafter In this section referred to as "hearing." * "In 1962, the five largest industrial coriwrations in the United States, with combined assets in excess of $36 billion, possessed over 12 percent of all assets used in manufactur- ing. The 50 largest corporations had over a third of all manufacturing assets. The 500 largest corporations had well over two-thirds. Corporations with assets in excess of $10 million, some 2,000 in all, accounted for about 80 percent of all the resources used in manufacturing in the United States," hearing, p. 5. ^'' "In the mid-1950's. 28 corporations providetl approximately 10 percent of all em- ployment in manufacturing, mining, and retail and wholesale trade. Twenty-three corpora- tions provided 15 percent of all the employment In manufacturing." ibid. " "In the first half of that decade — June 1950-June 1956 — a hundred firms received two-thirds by value of all defense contracts ; 10 firms received one-third," ibid. >- "In 1960 four corporations accounted for an estimated 22 percent of all industrial research and development expenditures. Three hundred and eighty-four corporations employing 5,000 or more workers accounted for 85 percent of these research and develop- ment expenditures ; 260,000 firms employing fewer than 1,000 accouoited for only 7 per- cent," ibid. ""[I]n 1965, three industrial corporations. General Motors, Standard Oil of New Jersey, and Ford Motor Co.. had more gross income than all of the farms in the coun- try. * * • The income of General Motors, of $20.7 billion, about equaled that of the 3 million smallest farms in the country — around 90 percent of all farms. The gross revenues of each of the three corporations just mentioned far exceeded those of any single State. The revenues of General Motors in 1963 were 50 times those of Nevada, 8 times those of New York, and slightly less than one-fifth those of the Federal Government," hearing, p. 6. " Hearing, p. 7. 15 Ibid. In his book Dr. Galbraith told the subcommittees, he had argued that this trend to the I'arge corporation and this resulting exercise of substantial ix)wer over the prices costs wages, capital sources, and consumers is part of the broad sweep of economic development. Technology, the extensive use of «ipital, affluent and hence malleable customers, the imperative of organization, the role of the union, the requirements imposed by public tasks, including arms develop- ment and space exploration, have all weakened the authority of the market. At the same time, these developments have both enabled and required hrms to substitute planning with its management of market for a simple response to the market." " ^. v, i.v, ^ ^», These developments, the witness asserted, pose the question whether concen- tration and attendant market control and planning can be escaped at all and. if so whether the antitrust laws "are an effective instrument for this escape. His answer to that question was that the antitrust laws are a "charade." Insofar as any impact on market power is concerned, "the antitrust laws legitimatize the real exercise of market power on the part of the large firms by a rather diligent harassment of those who have less of it." "* * * Where firms are few and large they can, without overt collusion, estab- lish and maintain a price that is generally satisfactory to all participants. * * * But if there are 20 or 30 or more significant firms in the industry, this kind of tacit pricemaking— this calculation as to what is mutually advantageous but without overt communication — becomes more difficult." ^' To meet the difficulty, meetings or exchanges of information occur ; but these are illegal, and the Department of Justice vigorously prosecutes : "What the big firm in the concentrated indu.stry can accomplish legally and effortlessly because of its size, the small firm in the unconcentrated industry does at the pain of civil and even criminal prosecution." " The antitrust laws, in Dr. Galbraith's view, are even more discriminatory in their application to mergers. "If a firm is already large, it has as a practical matter nothing to fear under antimerger provisions of the Clayton Act. It will not be demerged. It can con- tinue to grow from its own earnings ; if discreet, it can even, from time to time, pick up a small and impecunious competitor, for it can reasonably claim that this does little to alter the pattern of comi)etition in the indutsry. But if two medium- sized firms unite in order to deal more effectively witii this giant, the law will be on them like a tiger. Again if large, you are exempt. If you seek to become as large, or even if you seek to become somewhat larger, although still much smaller, you are in trouble." ^^ Dr. Galbraith conceded that giant companies may not be more efficient but, by virtue of their market power, they have advantages in planning their own future. And, he asserted, big business is inevitable and will not be affected by the antitrust laws. To call for an all-out attack on achieved market power would mean "action, including enabling legislation." against a number of the coun- try's largest industrial corporations, "tanltamount, given the role of the big firms * * * to declaring the heartland of the modern economy illegal." No such antitrust crusade is likely to be launched, the witness averred, adding, ••I am frank to say I would not favor it myself." The task, therefore, is to find other means of facing "the real problem, which is how to live with the vast organi- zations — and the values they impose — that we have and will continue to have." His approach to that task was in two parts, the first clearly stated, the second only implied. First. Dr. Galbraith would "withdraw our faith from the anti- tru.st laws * * * allow them quietly to atrophy." That done, the giants could no longer, as they now do, assert that they are "controlled" by "the markets." If the market were generally acknowledged to be dead as a regulator of corporate power, then it would be politically feasible to impose other forms of control on the giants. The form that such controls might take was not spelled out ; but the subcommittees were, of course, aware that Dr. Galbraith, during World W^ar II, was Deputy Director of the Office of Price Administration. Dr. Adams's statement characterized Dr. Galbraith's picture of the modern economy as asking questions that were to the point, and giving the wrong answers. The society depicted by Galbraith, in the view of Dr. Adams, "is a blueprint for technocracy, private socialism, and the corporate state." The 18 Id., at 6. " Id., at 7, 8. " Id., at 8. M Ibid. Michigan professor attacked, seriatim, the Harvard professor's assertions (as paraphrased by the former) that Brobdingnagian size is the prerequisite for, and the guarantor of — ( 1 ) Operational eflSciency ; (2) Invention, innovation, and technological progress ; and (3) Effective planning in the public interest.'" Empirical studies by John M. Blair and Joe Bain, said Dr. Adams, demon- strate conclusively that multiplant industrial giants have grown far larger than the optimal sizes required for eflBciency. Noting that Dr. Galbraith had conceded as much. Dr. Adams said : "If size is to be justified, then, this must be done on grounds other than efficiency." '' The relative roles of giant and smaller firms in the area of technological progress will not afford such grounds. "In a study of the 60 most important inventions of recent years, it was found that more than half came from independent inventors, less than half from corporate research, and even less from the research done by large concerns." Moreover — "roughly two-thirds of the research done in the United States is financed by the Federal Government, and in many cases the research contractor gets the patent rights on inventions paid for with public funds. The inventive genius which ostensibly goes with size would seem to involve socialization of risk and privatiza- tion of profit and power.'^ The tardiness of the American steel industry, "which ranks among the largest, most basic, and most concentrated of American industries," to adopt the basic oxygen process of steel production was cited by Dr. Adams as a further example of his contention that major technological change more often than not originates in small firms. "The cold wind of competition" — introduction of the process, in- vented by a miniscule Austrian firm, into the United States by a small American firm — "not the catatonia induced by industrial concentration," caused American "Big Steel" to modernize its plant some years later. Dr. Adams reserved his strongest attack for what he described as Dr. Gal- braith's contention that the giant corporation is the "chosen instrument" of planning, and planning, in turn, is made essential by modem technology. Asserting again that the premise of giantism as an "inevitable" concomitant of technology was unproved by Galbraith and, in fact, disproved by the works of others, Dr. Adams went on to challenge Dr. Galbraith's belief that most giant corporate planning is beneficent and in the public interest. "What are the safeguards — other than the intellectual in politics — against arbitrary abuse of power, capricious or faulty decisionmaking?"*^ Dr. Adams asked. He added to his prior example of the basic oxygen process three further case histories in support of his own central premise : "The competitive market is a far more efficacious instrument for serving society — and far more viable — than Galbraith would lead us to believe." ^ (1) The yardstick competition of TVA proved to the private electric power industry that lower electric rates were profitable and increased the demand for electric power. (2) The "nonsked" airlines' competition proved to the scheduled air carriers and "their overprotective public regulators" that low "coach" fares would generate new business and new profits, not reduce the revenue from an assumed "inelastic" market. (3) Oligopoly planning in the steel industry has resulted in "truly shabby performance," which will be improved, if at all, "through an accommodation to the exigencies of the world market, and not by insensitive monopolistic pricing, practiced under the protectionist shelter of the tariffs which the industry now seeks." "Without multiplying such examples, it is safe to say that monopoloid plan- ning is done in the interest of monopoly power. Seldom, if ever, is society the beneficiary." ^ Industrial giantism in America, Dr. Adams concluded, is fostered by many acts and omissions to act on the part of Government, of which inadequate anti- trust enforcement is only one. Because there is a "conservative bias inherent in 20 Hearing, p. 12. 21 Id., at 13. 2" Ibid. 23 Id., at 14. « Id., at 15. « Ibid. any organization devoid of competition," the aim of the policymaker should be ?o promote competition in and by every aspect of Government action Named for special attention were defense contracts, R. & D. support, patent policy, tax nolicv stockpiling arrangements, tariffs, subsidies, policy for the regulated in- dustries, and, of course, antitrust. "An integrated national policy of promoting competition * * * is not only feasible but desirable." Dr Mueller's statement began with his own summary and interpretation of the main ideas of Gailbraith's The New Industrial State, including those already mentioned and a few that Dr. Galbraith had omitted from his own summary. One such point, as phrased by Dr. Mueller : „^„ .^v, ^- ^ ^v.„<- ^i,^ "Where is the new industrial state taking us? Galbraith predicts that the mature corporation [Galbraith's term for a giant corporation substantially di- vorced from control by its stockholders and operated with almost total autonomy bv its management bureaucracy or "technostructure"] is increasingly becoming a part of the administrative complex of the state and that there will be a grad- ual convergence of capitalistic and communistic societies." ^ But the FTC economist said this result, if it ensues, will be by policy choice, not be technological imperative. ^ ^ ,, ..»., .v. Dr. Mueller, like Dr. Adams, selected for challenge three of Galbraith s theses which seemed to him central to the latter's argument. These were : (1) Technological imperatives dictate vast industrial concerns and high levels of market concentration and, hence, the death of the market. (2) Public policy aimed at maintaining a market economy has failed in the past and is doomed to fail in the future. (3) The necessity for state planning in certain areas further diminishes the need for reliance on the market as a regulating and planning agent. "^ The same studies cited by Dr. Adams, and more, were cited by Dr. Mueller in his assault on the first of these premises. He pointed out that the doctrine that economies of scale in research and innovation make high concentration and near monopoly an inevitable outcome of modern capitalism, first set forth by Joseph Sehumpeter in 1942 and expanded by Galbraith in 1952, had since been subjected to extensive empirical testing. The result is that the doctrine is "on the verge of collapse." He rebutted a fanciful example given by Galbraith in illustration of the supposed principle — the evolution and marketing of a new type of toaster — by pointing out thajt the real electric toaster was invented and first marketed by a small concern, to be belatedly imitated by the electrical giants. He mentioned again the example of the basic oxygen process and the dormant steel industry giants. Under the heading, "Is the Market Dead?" Dr. Mueller took Dr. Galbraith to task by asserting that, in fact, concentration is declining across a broad front in the producer goods sector of manufaoturing. And, like Adams, he challenged Galbraith's belief that those with great market power act admirably and in the public interest. The need accordingly is for more, not less, competition. To the question, "Is antitrust a charade?" Dr. Mueller answered that the Celler- Kefauver Act had demonstrably reduced and prevented much concentration. He expressly denied Dr. Galbraith's contention that the act has "been an attack on industrial midgets. Over 60 percent of the largest, those with over a billion dollars and nearly a third of the top 200 have been the subject of arntimerger complaint. * * * In my opinion, this enforcement effort represents a great victory for com- petition, as well as a clear demonstration that antitrust policy can be an effective instrument of public policy in the last half of the 20th century." Dr. Mueller conceded, nevertheless, that "the market may well be destroyed in the next generation as Galbraith predicts, but," he added, "not for his reasons. It will be a matter of public will or neglect, not technology."* Under the heading, "Planning and the State," Dr. Mueller conceded for the State many of the important planning functions adumbrated by Dr. Galbraith : "Specifically, it stabilizes aggregate demand, underwrites expensive technology, restrains wages and prices in limiting inflation, provides technical and educa- tional manpower, and buys upward of a fifth of our economic output." ^ Dr. Galbraith's error, according to Dr. Miller, lay in his assumption that these functions, as well as the planning functions legitimately carried on by business concerns, are inconsistent with the life and functioning of the market. » Hearing, pp. 17-18. '^ Id., at 18. 28 Id., at 25. » Ibid. 9 Rather, planning, regulation, and competition support and complement one another. There are social tasks best performed by fully and freely competitive industry, others by regulated industry, and still others by the state : "Unfortunately, many persons are inclined to damn the market — ^which to them means the businesses operating within it — for failing to do jobs better left to the State. And, unfortunately, the defensively hostile responses of some busi- ness leaders to every social welfare proiX)sal lend credence to the argument that the real issue at stake is the market system. Actually, however, the real issue usually is whether or not a particular job should be done at all, and who is going to pay for it. Once it is agreed that there is nothing inherently un-American or antimarket in admitting that some things are best left to the State, the State and the market can live in happy coexistence." ^ Dr. Turner's statement, which was made extemporaneously, opened by agreeing with the main points made by Adams and Mueller and disagreeing with Gal- braith's evaluation of the market structure of the American economy. He said, however, that he wished to confine his remarks largely to Dr. Galbraith's charges against and characterization of the antitrust law and its enforcement. The Assistant Attorney General admitted that antitrust has been more effective in attacking price fixing and other restrictive practices, and in preventing mer- gers, than in dealing with established market power. To begin, Dr. Turner said, the failure to deal with existing size and market power clearly makes sense, where size truly reflects and accompanies economies of scale. It may also make some, if less, sense, where market power was initially acquired by competitive superiority and maintained without exclusionary behavior. "It would be a little paradoxical, to say the least, to turn on the winner when he wins." Disincentive problems could thereupon arise. Beyond that. Dr. Turner continued, he agreed that it would be desirable to increase the effectiveness of antitrust in dealing directly with existing market power. Possibilities under existing legislation are "worth probing, and * * * [are] being probed." In addition, he said, he still favored enactment of new legis- lation, as recommended by himself and Prof. Carl Kaysen some years ago, "which would make it easier to deal with monopoly and oligopoly problems." "However," he went on, "I suppose it is highly likely that if I sent such a pro- posal forward to the administration, it would not be rushed over to the Hill the following morning." " But even if it be assumed that "our present relative inactivity in dealing with existing undue market power shall continue for the indefinite future," the Assist- ant Attorney General insisted, "I do not agree that it is bad public policy or bad law or bad anything to continue to attack price-fixing and other restrictive agreements and mergers likely to increase market power in those areas where we still have hope." This is not, as characterized by Dr. Galbraith, discrimination. "Past mistakes by no means compel repetition." Dr. Turner next pointed out that, in his opinion. Dr. Galbraith had overstated the extent of oligopoly and monopoly. Taking mining and manufacturing together with transportation and public utilities, he estimated that the oligopolistic sec- tors account for only about 20 to 25 percent of the national income. He conceded that this is not trivial but does not amount to the domination claimed by Gal- braith for the giants. He concluded that it is good public policy to defend com- petition in that majority of the economy where it still exists. The Antitrust Division's chief vigorously defended the policy of prosecuting price fixers. A price-fixing agreement contains all the disadvantages inherent in noncompetition, with none of the size economies of the oligopolistic giant com- panies. Turning to mergers. Dr. Turner noted that in some unconcentrated industries economic changes make certain minimum firm sizes necessary for achievement of eocnomies ; nevertheless, he questioned the desirability of permitting concen- tration to develop in such industries by merger. Internal growth can and should meet the need, he asserted. He further stated : "Where there is already a fair degree of concentration in an industry, even where there may be one or two or three dominant firms, the problem posed by merger involving firms other than the largest is indeed a somewhat more diflB- cult problem than it appears to be in the unconcentrated industry. But it is also, I suggest, much more complicated than Professor Galbraith suggests by using the term "discrimination." ^^ » Id., at 27. 31 Hearing, p. 28. «" Id., at 29. 10 He cited the successful Government attack on the proposed Bethlehem- Youngs- town merger, several years ago, as an example. Although the two together, if merged would still have been much smaller than the dominant firm in their in- dustry, ' United States Steel, there was no showing that their amalgamation would have improved competition in the industry in any way, and much show- ing that the reverse would have occurred. In conclusion, said Dr. Turner, a strong antitrust preventive policy would pro- mote longrun benefits for the economy, even if nothing more were done to at- tack undue market power. ^ ^ -,, .j.-. , r,- In the period allotted for discussion and rebuttal, Dr. Galbraith pressed his critics to agree with him that, whatever their evaluation of his other premises, as a practical matter there would be no antitrust "crusade" to break up the giants of industry, and that the giants, their power thus immunized against attack, enjoyed a very real "advantage." Dr. Adams, urged by Dr. Galbraith to consider General Motors as the prime example, remarked that, if Chevrolet were to be carved out of the General Motors empire, it would still be as large as Chrysler and almast as large as Ford and presumably could operate quite eflBciently. But do you think that is ever really going to happen?. Dr. Galbraith persisted. An answer came, not from the panelists, but from Senator Russell B. Long, co- chairman of the hearing, in these words : "My impression of what happens, in the legislative process up here, is that something which is wrong continues to get worse and worse until the public becomes aware of it, and it continues to get worse still until everybody becomes so outraged about the matter that something has to happen, and then Congress has to pass a law in competitive or other fields. Management goes so far that eventually people are outraged and they pass a Wagner Act. Then something else goes so far, labor gets out of hand, and we pass the Taft-Hartley law. ******* "But as far as moving against one of these major companies goes, I agree that there is no prospect of it until the public becomes upset, enraged and aroused about it — and then you cannot justify voting any other way. "As an example, we could not have done anything about these drug companies a year or so ago. You watch us now. * * *" ^ Conclusion: Your committee concludes that planning, regulation, and com- petition are all here to stay. They coexist in the American economy, have long done so, and quite properly will continue to do so. But the committee disagrees with Dr. Galbraith, as earnestly as any of his critics, that the market is dead or dying and that it is, should be, or will be supplanted by planning and regulation, whether by private oligopoly, the state, or a combination. Planning about, plan- ning for the market by competitors therein is proper and desirable. Every business, large and small, must plan if it is to succeed. But if the American system is to succeed, some business plans must fail. More than competition and the market are in danger — economic and political freedom are in danger — when any business is able to supplant planning by control, to be quite certain, for example, that its plans for a 30-percent return on invested capital will be real- ized year in and year out. It is quite clear that many American corporations are in, or approaching, that position. There does exist, in sober fact, a power of size, a certitude of profits engenedered by size, and a resulting arrogance of size, ac- knowledged by Galbraith and this critics alike, that gravely concern your com- mittee. It has no detailed approach to recommend right now ; but it will continue to ponder the matter. Generally, your committee agrees with Dr. Adams that the best way of dealing with the problem is by "an integrated national policy of promoting competition." That has always been and will continue to be your committee's policy. Exhibit 3 f Subcommittee chairman's exhibit No. 3: Report by Senator Gaylord Nelson, Chairman, Subcommittee on Monopoly, to the Senate Small Business Com- mittee : "Hearings before subcommittees of the Senate Small Business Com- mittee on 'Planning, Regulation, and Competition : Automobile Industry— 1968' — a brief description of the hearings, their background, and the questions presented that are of special concern to the Subcommittee on Monopoly" (May I960).) *• Id., at 38. See next following section of this report for explanation of the reference to drug companies. 11 (A Report to the Senate Small Business Committee by Gaylord Nelson, Chairman, Subcommittee on Monopoly) At a 1967 seminar hearing' on the question, "Are planning and regulation replacing competition in the new industrial state?", the automobile industry was most often mentioned by the witnesses " as one in which market i)Ower of domi- nant corporations had supplanted competition in the classical sense. To explore that contention in more detail, the Senate Small Business Com- mittee's Subcommittee on Retailing, Distribution, and Marketing Practices, chaired by Senator Wayne Morse, and Subcommittee on Monopoly, of which I am chairman, convened another joint hearing, in panel-session or seminar form, at which responsible executives of that industry could exchange views with an industry critic. Ralph Nader was invited to perform the critic's role and ac- cepted. In succession. General Motors Corporation, Ford Motor Company, the Automobile Manufacturers Association, Chrysler Corporation, American Motors Corporation and Checker Motors Corporation declined the subcommittee's invi- tations to participate. Senator Morse and I thereupon decided to hear Mr. Nader separately and permit the automobile manufacturers and their business associa- tion to respond separately later if they wished. Accordingly, Mr. Nader's testimony was received at public hearings held on July 10 and 23, 1968.'' His statement was long, extensively documented and in- tensely critical of the automobile industry's performance and present organiza- tion. He singled out for his strongest; attack the size and woldwide market power of the General Motors Corporation, the world's largest industrial corporation. "The history and attainments of GM's market power make it a classic candi- date for antitrust enforcement under Sherman [Act, sections] 1 and 2 and Clay- ton [Act, section] 7. In law and in economics there are solid grounds for pro- ceeding toward dissolution or divestiture of General Motors vmder the t^'o anti- trust laws," the witness declared, adding : "The only obstacle is political * * *." " At the conclusion of the initial session on July 10, Senator Morse and I wrote to each of the "big four" automobile makers, stating the questions suggested by Mr. Nader's testimony which, in our judgment, it was most important for the companies to answer. Each manufacturer was again invited to testify by personal appearance of a representative selected by it, if it wished.^ SECRECY OF PRODUCTION COSTS AND DIVISIONAL FINANCIAL DATA In our letters to the manufacturers. Senator Morse and I placed particular stress on the public's need and right to have more information about the costs of making an automobile and the profits realized by individual divisions of the major corporations. Mr. Nader's testimony had sharply criticized the practice of publishing only consolidated financial data, and no reports at all on costs, as a means by which the companies exercised flexibility in market power, covering up high profits in some operations that are used to subsidize "other company activities for the purpose of driving competitors out of business^® Senator Morse and I also requested the manufacturers' comments on Mr. Nader's allegation 1 Hearing before subcommittees of the Senate Small Business Committee on Planning, Regulation, and Competition, 90th Congress ( 1st Session (1967). See also Senate Small Business Committee, ISth annual report, S. Rpt. 1155, 90th Congress, 2d Session, p. 37 (1968). _ - Professor John Kenneth Galbraith of Harvard University, Professor Walter Adams of Michigan State University, Dr. Willard F. MueUer of the Federal Trade Commission, and then Assistant Attorney General Donald F. Turner of the Justice Department's Anti- trust Division. 3 Hearings before Subcommittees of the Senate Small Business Committee on Planning, Regulation, and Competition : Automobile Industry — 1968, 90th Congress, 2d session (1968) ; hereinafter refererd to as "hearings." * Hearings, pp. 213, 214. 6 The letters to each company, and their replies, are in the hearings : American Motors, p. 591 ; Chrysler, p. 594 ; Ford, p. 600 ; General Motors, p. 607. 8 Hearings, p. 200. See also pp. 200-207 (speech by Andrew Barr, chief accountant of the Securities and Exchange Commission, on the need for product-line reporting by con- glomerates) ; pp. 428-446 (colloquy between Senator Morse and Mr. Nader on divisional reporting, and related exhibits presented by Mr. Nader) ; pp. 897-901 (notice of proposed action by Securities and Exchange Commission, on product-line reporting by registrants) ; pp. 916-917 (comments of Professor of Economics Samuel M. Loescher and Associate Pro- fessor of Economics Lloyd D. Orr, of Indiana University, on need for "detailed records on operations ' of giant corporations as "probably one of the more useful alternatives to dissolution"). 12 that the direct and indirect labor cost of a medium-priced car does not exceed $300, while annual sityling changes cost the consumer "at least $700 of the price of his new car." ' , . ^ ^. All the manufacturers declined to give any specific information on production costs, although General Motors, Ford and Chrysler each termed the $300 labor- cost estimate low and the $700 styling-change-cost estimate high. General Motors and Ford, which were asked to supply divisional financial data as well as selected unit-cost data, refused for the reason that they would be, they averred, com- petitively damaged by such disclosures. Mr. Nader had argued that the manufacturers knew each other's costs, "if not to the fourth decimal point." He stated : "The myth that secrecy is necessary to preserve the bitter competition between companies . . . has to be a big joke in Detroit where there are few auto secrets. . . . Secrecy is really directed against the public, pursuant to the tried precept that concealing the facts prevents the criticisms." * He pointed out that, in 1958, the "big three" had refused the request of a Senate subcommittee to disclose their materials costs, on competitive grounds, while American Motors, the smallest of the major manufacturers, had made the public disclosure requested. "And AMC had its best years to come," the witness remarked. In support of his estimate of $300 as the labor cost of a medium-priced car, Mr. Nader cited : (1) a Wall Street Journal study reported in the issue of Decem- ber 10, 1957;® (2) estimates of the Senate Subcommittee on Antitrust and Monopoly ; ^" and (3) a document identified by Mr. Nader as an internal auditing record of Ford : a 26-page computer print-out of the standard unit costs ("inven- tory valuation records") of 19 models of Ford ears, and accessories, in July 1966 at an unidentified assembly plant." In support of the $700 estimated total "cost to the consumer" (not the manufacturers' own direct costs) of annual styling changes, Mr. Nader offered a study published in the October 1962 issue of the Journal of Political Science, by Fisher, Griliches and Kaysen.'' The comments of the "big three" on these points follow : Chrysler Corporation. — "Our direct and indirect labor costs of a medium- priced automobile far exceed $300. To the extent that the inaccurate reference to labor casits in the testimony is inltended to imply exorbitant profits on the part of the automobile industry, we would like to point out that in 1967 Chrysler had a net profit of 3.2% on sales and 10.89% on investment, less in both cases than the average of the 500 largest industrial corporations in the United States. "Our annual styling changes cost us " a minor fraction of $7(X) per car and are far less than direct and indirect labor costs. "As to the question of the confidentiality of costs in the automobile industry, while we can estimate what it would cost Chrysler to build a competitor's car, we do not know what our competitors' costs are nor, we hope, do they know what ours are, and for this reason we must decline to submit the specific cost data you outlined." ******* "Our total revenues minus our total costs would seem to be the only relevant factors and these are already a matter of public record." ^^ Ford Motor Company. — ^"Questions 1 and 2 request divisional and product line financial data from Ford Motor Company. As indicatetl in my letter of July 22, these data are highly confidential ; therefore, we must decline to answer. I can tell you. however, that statements made during the hearings to the effect that the direct and indirect labor cost of a medium-priced car does not exceed $300, and that "annual .styling changes" cost the con.sumer at least $700 i>er new car, are without foundation. With respect to Ford products, at lea.st. the $300 figure is very seriously understated and the $700 figure is grossily overstated. ■''Hearings, p. 267 (labor costs) and p. 350 (costs of styling changes). » Hearings, p. 267. 9 Hearings, p. 26S (reference) and p. 497 (text of the article). 1" Subcommittee on Antitrust and Monopoly. Senate Committee on the Judiciary, report on "Administered Prices: Automobiles." S5tli Congress. 2d session, p. 127 (committee print, 1958). The subcommittee staff's estimate of direct and indirect labor costs to General Motors to build a car in 1957 was $375 to .$400; the source of the $300 figure from that period is the Wall Street Journal study by Dan Cordtz, footnote 9 above. '1 Hearings, p. 268 ff. "Id. at p. 350 (reference) and p. 1075 (text of article). "Mr. Nader and the article upon which he relied (footnote 12. above) referred to the total cost to the consumer of annual styling, changes, not costs to the manufacturer directly. " Hearings, pp. 595-596. » Id. at p. 599. 13 "It was suggested during the hearings that the automobile companies know each other's costs. The fact is that we do not know our competitors' costs, al- though we can estimate the effect on our own cost structure of adopting designs or manufacturing processes followed by competitors. As to the effect on confiden- tiality of the occasional movement of executives among companies, such indi- viduals are prohibited by law, as well as by business ethics, from disclosing confidential data of any nature to their new employers." "The principal purpose of [Ford's] inventory valuation records" is to deter- mine changes in inventory levels at specific plants during specific periods. They reflect only those elements of cost that are charged to assembly plants in the Ford accounting system. Many significant cost elements are never entered on the books of assembly plants, including special tool amortization, selling and marketing expenses, engineering and research costs, warranty and policy costs, and general administrative expenses. Subtracting inventory values of a single plant from the final selling prices of our end products to dealers yields numbers which do not remotely resemble the profits earned by the company on its auto- motive business. "By the usual objective standards. Ford's profit margins are not abnormal or excessive. Ford's 1966 pre-tax profit margin of 9^2 per cent on sales was lower than in any of the seven previous years, and it was lower than the average mar- gin reported for the 30 companies in the Dow Jones Industrial Average and about the same as the average for all manufacturing companies." ^* General Motors Corporation. — GM's responses were too lengthy to be directly quoted here, except in the most fragmentary excerpts. The company argued that its divisional financial accounts, in addition to being confidential for competitive reasons, are not comparable with corporate financial statements. One reason is that : "* * * many and significant items of assets, liabilities, income, cost and net worth are not carried on divisional books and hence are not reflected in the divisional statements." " Another is that : "* * * there are certain expenses beyond the control of the divisions which nevertheless are charged against divisional operations and are included in their records and financial statements. Examples are expenses in connection with the operations of the Proving Ground, Technical Center, Research Staff and Mar- keting Staff.=" » » * 4: 9 « 4: "The lack of comparability between the divisional financial statements and corporate statements is further complicated by the fact that divisional sales in- clude so-called allied 'sales' which actually are not sales at all but are really interdivisional transfers." '^ In language remarkably similar to that used by Ford and Chrysler, GM averred : "We do not know the details of our competitors' data nor, we are convinced, do they know ours." "- On the labor-cost and styling-change-cost estimates, GM responded : "It is not necessary to reveal confidential internal cost data to demonstrate clearly, through the analysis of published financial statements, that the figures quoted . . . are grossly in error. "The 1967 Annual Report of General Motors reveals that 31% cents out of each sales dollar went to employes for payrolls, employe benefit plans, etc. (p. 4). Since the average wholesale price of cars sold by General Motors is slightly over $3,000 (including optional extras), this means that the labor cost ("direct and indirect") would be approximately $1,000 per car. w Id. at p. 602. '^ See text at footnote 11, above, and cited materials in hearings. 1'' Hearings, p. 604. " Hearings, p. 729. =0 Ibid. 21 Id. at p. 730. 23 Id. at p. 731. 14 "The bulk of style change costs is included in the cost of special tools. In 1967, General Motors' Annual Report showed that the total tool amortization expense wis $840 million (p. 9). This would amount to $134 per vehicle not the $700 mentioned^by Senators Morse and Nelson, quoting Ralph Nader] for the over ?^Son vehicles sold by General Motors in 1967. Even this figure of $134 over- ^ti the cost of syling since it includes a large amount for tool amortization ?SaUng to functional changes. It also includes tool amortization relating to non- automotive products." ^ OTHER QUESTIONS IN CONTENTION In addition to the divisional-reporting and unit-cost issues, the hearings raised— and left unresolved— these further important questions: (1) Price competition.— Is price competition in the automobile industry real and effective or greatly tempered by the concentrated structure of the industrj- and the dominance of General Motors. The testimony of Dr. Nader and the written responses of the companies— especially a lengthy statement submitted bv General Motors^— were squarely at odds on the point. In a post-heanng comment Associate Professor of Economics Mark B. Schupack of Bro\ATi Uni- versity suggested that a comprehensive study of the automobile industry "aimed at developing the necessary data ... to propose policy action" conceivably could result in a 5 percent average price reduction in cars, worth $1 billion annually to American consumers.*^ (2) Barriers to entry.— Would the automobile industry sen^e the American people better if it consisted of more and smaller companies? Is the present small number of manufacturers the result of natural and fair competition and industrial evolution-^r of excessive and anticompetitive power? Mr. Nadei- argued strongly that the size and power of the industry's giant manxifacturing corporations both dissen-e the consumer and prevent the entry of new com- petitors.^ General Motors responded : "Entry into the [automobile manufacturing] business is open to all who are willing to assume the risks ; there are no artificial barrier-s." " Professor Schu- pack stressed the product identification (brand loyalty) built up and maintained by the major manufacturers through vast advertising expenditures as the most formidable barrier to new entrants."* (3) The dealer system. — How accessible are the franchised dealers of the major automobile companies to direct competitors of the franchisors? If any automobile manufacturer, no matter how small and powerless, is now free to market his product, on its merits alone, to and through the franchised dealers of the "big four," it is obvious that one barrier to entry often cited in the litera- ture has fallen. It was the contention of the "big three" that no restrictions were placed on their dealers about what products they could market, including directly competitive products.^^ It was Mr. Nader's argument that dealers are 23 Hearings, pp. 735-736. The General Motors Annual Report for 1967 is reproduced in full in the hearings, page for page, beginning at p. 750. 2^ General Motors Corporation's statement to the subcommittees. "The Automobile In- dustry : A Case Study of Competition" will be found at pp. 617-72S of the hearings, with the original pagination also preserved. Chapter III is entitled "Competition in Prices" and Chapter IV "Competition in Marketing." Mr. Nader's principal commentary on auto industry noncompetition in pricing begins at p. 207 of the hearings ; see also testimony beginning at p. 495. 25 Professor Schupack's "Statement Regarding Competition in the Automobile Industry begins at p. 917 of the hearings. His conclusion on the possible $1 billion annual benefit to consumers of a "comprehensive complete study of the auto Industry structure, conduct and performance," costing only $2- to $5 million, is on p. 926. 20 Hearings, pp. 239-240. Mr. Nader cited and inserted an excerpt from Joe Bain, In- dustrial Organization (1959) on "Examples of conditions of entry in specified industries." 27 Hearings, pp. 711-714. 28 Id. at pp. 922-924. =9 General Motors : "The franchised dealer is an independent businessman. He can and often does accept more than one franchise. He buys the cars from the manufacturer and is free to sell to anyone, anywhere, at any price." Hearings, p. 675. "Proof that General Motors does not require its dealers to handle its vehicles exclu- sively Is evidenced by the fact that of its 14,035 dealers at least 1,662 handle new vehicles produced by domestic and foreign competitors at the same locations." Id. at p. 739. Ford: "Some of our dealers [7,035 total in the U.S.] also sell (in the same general facilities used to sell Ford pro Hearings, pp. 213-214, 239-240, 253-254, 427-428 (political influence is only bar to antitrust action against General Motors for divestiture or dissolution) ; 332-333 (decision to drop criminal action after air-pollution investigation by grand jury) ; 385— 387 ("half-hearted investigation" by Internal Revenue Service of "undercover corporate contributions to the political candidates") : 391-422 (political dangers of economic con- centration and breakdown of antitrust) ; 333, 450^63 (alleged "privileged access" of auto makers to confidential information of the Antitrust Division and the Federal Trade Commission) ; 910 (comment of Professor Douglas F. Dowd) ; 926 (comment in final sentence of Professor Mark B. Schupack) ; 933-934 (question by Ralph Nader on activi- ties of a GM executive in politics) . 16 autx) makers insisted that, their size notwithstanding, they remained subservient to the disciplines of a competitive market in which the consxmaer, not the corporation, was king.*' And they denied political activity, if not political influence." CONCLUSIONS The questions presented by the 1968 hearings, as briefly outlined above, are among the most urgent and difficult that the American people face. Obviously, im- partial and intelligent men will differ on the answers, and the Senate Small Busi- ness Committee should not jump to hasty conclusions of its own. on either the factual or policy aspects of this immensely complex subject. But I would suggest that two conclusions, at least, might now be drawn : (1) Hearings must continue. — The record already made indicates to me that Congress and the country need a clearer understanding of the automobile in- dustry—and possibly a different public policy for that industry. Accordingly, I have already announced my intention to hold further hearings on this subject. The present plan is to take testimony from panels of witnesses representing many different business Interests and academic disciplines and also representing the widest range of conflicting and contrasting vi swpoints. This approach, initially at least, should be the most productive. (2) There is too much needless corporate secrecy. — The claims made by the world's largest international corporations to a "right" to keep almost all of their financial and operating data a close secret of their top managements would appear to be increasingly insupportable. The recitation of modest or low, total-corporate profit as an excuse for continued concealment of divisional, line-of-business or product-line financial data completely begs the question. The question is whether high profits — even exorbitant profits — in some lines of business are being used to subsidize low or non-profit operations in other liens of business, to the great damage of independent small-business competition in those lines, and to the damage of stockholder interest in the best possible total corporate profits. If corporations want to reinvest large earnings from their most profitable lines in high-risk or intensely competitive ventures in another line, it may well be their right to do so; but do not the public and the stockholders have a correlative right to be fully informed of the decisions that are being made and the cost /profit consequences of those decisions, in order to exercise their own judgments on whether public (and stockholder) interests are being well served by the decision makers ? The claim that the "approximate" labor cost of building a General Motors car can be inferred by applying to the average wholesale price of the car the ratio of GM's total payroll costs to its total sales is an egregious example of corporate question-begging and obfuscation. While GM is most important as the maker of over half of the Nation's passenger autos, it is also the leading producer of trucks, buses and locomotives — and automobile cigarette lighters." It makes at least 167 separate products other than cars.** It is the tenth largest defense prime con- tractor.*" It is, in short, a conglomerate^ — oue of the first and definitely the largest. Given this span of products and activities, it seems astonishing that GM would suggest that the labor cost of building its cars can be "approximately" inferred by the method it suggested. The company could as well and as rationally have claimed that the "approximate" annual salary of GM's highest officers or lowliest laborers could be inferred by dividing the total corporate payroll by worldwide total employment. The Senate Small Business Committee's advisory council, in its report to the committee, recommended : "The Securities and Exchange Commission should require all corporations to report on a divisional and subsidiary basis rather than on a consolidated basis "Heariners. pp. 595-597 (Chrysler); 602-606 (FORD); 610-611. 613-614, 619-741 (General Motors. Cf. comments of Professor J. K. Galbraith of Harvard University, p. 910. *- Id. at 595, 596 (question to and answer by Chrysler on "influence" sales) ; 601, 603 (question to and answer by Ford on "X plan" sales) ; 609, 741 (question to and answer by General Motors on "influence" sales) ; 744, 747 (Ralph Nader's 12th and 30th "Stock- holder questions for General Motors," on political contributions, and the company's reply). "115 Congressional Record, p. S3089 (dally ed., March 24, 1969). Cf. hearings, p. 589. " Hearings, pp. 103-105. « Jhid. **■ Department of Defense, "100 Companies and Their Subsidiary Corporations Listed According to Net Value of Military Prime Contract Awards, Fiscal Year 1968." 17 and supply more detailed information with respect to the results of their divisional operations." " It \vould appear that the committee might well adopt that recommendation as its own and inform the SEC of an earnest hope that it will not much longer delay in effectuating the new disclosure regulations that it first published for comments on September 4, 1968, after more than two years of preliminary study. While far too limited in scope to meet the long-felt needs, the new rule would be a start.^^ Inasmuch as none of the other questions presented by- the hearings can be fully and fairly discussed without more information, there must be, in the future hearings of the Monopoly Subcommittee, a persistent focus on obtaining more detailed financial data from the giant integrated and conglomerate corporations for full public scrutiny. Washington, May 1969. OPENING STATEMENT OF SENATOR MARLOW W. COOK In response to Senator Nelson's opening statement, I can only say that I share his concern over the apparent decline of small business in the United States. The Senator stated that accordino; to Fortune magazine, the assets of the 500th largest corporation in 1954 were $36.9 million and $77.6 million in 1968. During those same je^re sales were $49.7 million and $143.7 million respectively. He also pointed out that the assets of the largest corjDoration (General Motors) were $5.1 billion in 1954 and $14 billion in 1968. Sales for those 2 years were just under $10 billion in 1954, and almost $23 billion this past year. Senator Nelson also sug- gests that G.M.'s sales in 1985 may he as high as $160 billion. I thank the Chairman for alerting the Subcommittee to these figures. However, in order to bring them into the proper perspective, they should be viewed in relation to the total economic picture. For example, in 1954, this country's Gross National Product was $364.8 billion, while in 1968, it was $860.7 billion. While I don't have any figures for 1985, the National Planning Association has estimated that real eco- nomic growth at an average annual rate of 4.4 percent will boost the current dollar G.N.P. to approximately $1,920 billion by 1980. Ob- viously, the increase would be considerably more by 1985. The percentage sales increase for the 500th largest corporation from 1954 to 1968 was approximately 188 percent. During this same time G.M. increased its sales by only 130 percent. Using this same fourteen year span, the Gross National Product increased by well over 136 percent. *' Report of the Small Business Adyisory Council to the Select Committee on Small Business, U.S. Senate. 90th Congress, 2cl Session, p. 23 (committee print. Senate Small Biisiness Committee. 1968). ■""Hearings, p. 897 (notice by Securities and Exchange Commis.sion). A revised proposal was issued by the SEC on February IS, 1969. for comments. The period for filing comments closed March 10. 1969. The comments received are available for public inspection at the offices of the SEC. The SEC's revised proposal would require line-of-business, not divisional or product-line disclosure. [See Appendix IX in Part lA of this record.] 18 Therefore, in using Senator Nelson's index to measure the growth of G.M. in relation to the 500th largest corporation (and also the G.N.P.) , it is apparent that no real conclusion may be drawn as to General Motors' increased dominance in our economy. Senator Nelson. The statement of each panel member will be printed in full in the record. If you find it possible to do some smnmarization extemporaneously, gentlemen, we probably could get to the question period a little more quickly, but I will leave that entirely up to you. In any event, the record will contain your full statement as you have presented it. _ The order of speaking has been determined by drawmg lots. Our first witness is Mr. Alexander Hammond. Mr. Hammond. (A biographical note on Mr. Hammond follows:) Biographical Note Alexander Hammond, 54 Riverside Drive, New Torli, N.Y. 10024, is a graduate of Columbia College (1937) and Columbia Law School (1939). During the 'forties he spent approximately two years in the used car business and was an income tax specialist with Wall Street law firms for more than five years. During the 'fifties, he was associated with a new car dealership and then became a new car dealer (Ford franchise) in New York City. During the last eight years, he has been in legal practice, engaged in principal part in representing dealers in suits against automobile manufacturers. His practice is limited to antitrust and franchise-termination matters in the automotive and oflace machine indus- tries and to representing trade associations in those fields. He has been, during the past year, a frequent lecturer at programs on automobile dealer and other franchised dealer problems, under the sponsorship of the Practicing Law Insti- tute and various business associations. STATEMENT OF ALEXANDER HAMMOND, COUNSELOR AT LAW, NEW YORK,*N.Y. Mr. Hammond. Thank you. I wish to thank the distinguished mem- bers of this committee for the opportunity of di.scussing the increiis- ing participation of automobile manufacturers in retail distribution and its implications for the continued existence of automobile dealers. In earlier hearings before committees of Congress, economists have clearly demonstrated the probability that, if present trends are not checked, the manufacture of all major products will in the near future be concentrated in a limited number of industrial corporations. Cap- italism can exist only where there is meaningful price and other com- petition in a marketplace not controlled by private powers. Our form of political democracy is inseparable from our economic democracy, which depends upon the continued existence of countless relatively small and independent businessmen. It would be a very, very sad day, indeed, if all economic activities were to be conducted by a few hun- dred giant corporate enterprises. Furthermore, such concentration of power in private hands inevitably would lead to full government regu- lation and control. The facts and statistics showing the growing concentration in manu- facturing are widely known, and I might add goes back as far as, I think, 1932 to Gardner Means and Professor Berle's well-known book, and economists and congressional committees liave naturally directed their attention to this trend. But there is little or, indeed, no statistical information available on the subject of the increasing entry of giant 19 corporations into retail distribution and the resulting reduction of private enterprise in this sector of our economy. Tliis aspect of the growing concentration of more economic power in giant corporations has been largely ignored until today. By reason of its size, importance, and concentration, the automobile industry epitomizes the development of industiy in the United States. Where there were once over 1,000 automobile manufacturers, there are now four passenger car manufacturers, three of whom have 97 per- cent of the domestic car market. Eveiy year there has also been a con- tinuing reduction in the number of dealerships handling U.S. makes of passenger cars. The 1969 Automotive News Almanac reveals at page 74 that as of January 1, 1969, there were 27,486 dealerships, whereas there had been 49,173 on Januaiy 1, 1949, a decrease of 44 percent in 20 years. But these figures do not indicate the full reduction of independent dealers, for many existing dealerships are factory subsidiaries or arc financed and controlled by the manufacturers. The manufacturers, for many reasons, have adopted a policy of secrecy concerning both the nature and extent of their involvement in retail distribution. They have not divulged this information, and no statistics are available to show the alarming increase in their open and disguised retail activities. By reason of my background and special concern with the survival of small business, I have had the opportunity to observe closely this trend. I have spent much of the last 30 years either in the retail new car busi- ness or in the practice of law^ engaged essentially in representing dealers in litigation with automobile manufacturers. In the last 8 years I have been consulted by hundreds of dealers, many of whom were able to furnish me with information concerning their manufacturers' retail activities. Most of my cases contained issues of law and fact that re- quired the manufacturer to disclose in discoveiy procedures specific information about their retail practices. Much of the specific data and information I have gathered is unfortunately privileged and con- fidential as a result of the lawyer-client relationship. On the basis of my direct observations, I sadly must agree with those thoughtful automobile dealers who predict that, if present trends con- tinue, all independent dealers in large cities and their suburbs will eventually be replaced by factory-financed and controlled dealerships. Complaints and resolutions on this subject by dealers and their trade associations throughout most States are commonplace in automotive trade publications. In many large cities and their suburbs, factory-financed and con- trolled dealersliips are becoming the rule rather than the exception. The trend is accelerating everyw^here at an alarming rate in a period of relative prosperity and record automobile sales. The manufacturers cannot claim they have been forced to enter the retail business because their retail sales are falling. It is clear to me that there is no evidence that the entry of manu- facturers into retail distribution is in any way based upon the expecta- tion of making profits in retailing as such. Most of the manufacturers' wholly owned retail branches in the big cities operate at staggering losses. In addition, manufacturers have made and continue to make repeated loans to controlled dealerships without reasonable expecta- tions of repayment since these dealerships are continuously losing 32-493 O— 69— pt. 1 3 20 money. If the establishment and continuation of the various forms of factory dealerships depended upon profitable operations, there would be no problem as very few of them could meet this test. The operating losses sustained by the factory-controlled dealerships in Pittsburgh and surrounding areas, as shown by the evidence in Mt. Lebanon Motors, Inc. v. ChrysW Corj).. 283 F. Supp. 453 (D.C.W.D. of Pa. 1968), is typical of factory retail operations throughout the United States. The incentive, I repeat, the incentive, as well as the ability to engage in loss retail operations, is the j^roduct of unusually large manufactur- ing profits. In effect, manufacturers' prices are administered by Gen- eral Motors, and followed by others, and there is no price competition at the wholesale level. The manufacturers' profit per car is so large that they can afford to lose money at the retail level if even a small increase in sales volume occurs. This is true because the extra addi- tional units sold yield a much larger profit than the average profit of the preceding units. With all of the overhead met by a given volume, the gross jjrofit on extra units becomes almost net profit after the cost of labor and materials. There have been estimates that the cost of labor and materials to manufacture a car runs anywhere from $500 to $1,000. But whatever it is, the profit on the extra units is tremendous. Senator Nelson. I do not get the definition of an extra unit. Mr. Hammond. My definition. Senator, simply is this, that if with- out engaging in loss, subsidized retail operations, the manufacturer were to make, for example, a million units, the average profit might be at a certain figure, but on those extra units, with all the overhead met, with the tooling costs, the administration charges and everything else fixed, the particular units created by subsidized retail selling, are extra units for the purpose of this discussion as well as, I think, for other purposes. By extra units I mean something that is created by special efforts over and above the normal advertising. Let me put it another way. When Chrysler, a number of years ago, offered and gave very sub- stantial fleet and leasing discounts, many, many, many hundreds of dollars below the dealer cost, they were thereby creating or, if you please, buying an additional share of the market that was not otherwise available to them. These were extra units that they were able to pick up, to purchase, by this special technique; and for that purj^ose I am calling them extra units over and above what they otherwise might have if they were selling all their cars to dealers at their normal prices. Senator Nelson. So, the extra unit in the fleet car situation was the fact that they got part of the market they could not otherwise get? Mr. Hammond. Yes. Senator Nelson. And that their profits in your judgment, were so substantial that even though they sold the extra units at a very low price, they still made a profit on them. Is that what you are saying? Mr. Hammond. Yes. And I am going on to point out in the next few paragraphs that you have to make a distinction between their average profit on units as compared with the profits that those particular additional units derived once you consider all their overhead costs as having been absorbed by all the other volume. I think I make it a little more clear in the next paragraph. 21 Senator Cook, Mr. Chairman, for purposes of definition, does the accounting field or, for instajice, the Internal Revenue Service have any definition of what you call extra units as applied to their gross profits ? Mr. Hammond. Oh, no I think there is just a traditional economist's point of view on the special role that additional volume may have over and above a normal volume that is otherwise obtainable in the normal way. Continuing, thus a manufacturer can profitably operate or finance retail operations at large losses and can engage in anticompetitive pric- ing practices, if at the same time retail sales volume is increased. Again, because of the unusually large manufacturing profits on the extra, on the additional units, the combined retail and manufacturing opera- tions result in a larger overall profit. The manufacturers have entered the retail business in majiy ways, especially during the past 6 years. They sometimes operate by way of factory branches and wholly owned subsidiaries. Much more fre- quent is the wholly or substantially financed dealership with a nominal dealer or, as they sometimes call it, "operator" who has very little or no capital at risk and who may be replaced at will by the dealership's board of directors, composed of essentially employees of the manu- facturer. Other dealerships are factory-controlled in that they are the recipients of favored treatment — a subject I am not going to go into for many reasons — or receive large loans that they are unahle to repay. In addition, manufacturers are invading traditional areas of the retail business in many ways. Directly and indirectly, they have by- passed their dealers and have taken over a substantial portion of the fleet and leasing business by the use of low and indeed, predatory pric- ing policies. They have established auction centers for the sale of used cars; have established new car preparation centers; and have announcecl the establishment of diagnostic or repair centers. Companies are erecting large numbers of elaborate and costly facili- ties without reasonable expectations that these real estate investments will return a fair profit. In the last few years Chrysler has built over 600 large dealership facilities for lease to controlled aaid nominally uncontrolled dealers, and new facilities are constantly being erected at a very rapid rate. Dealers whose existence naturally depends upon the renewal of the leases for their facilities and also upon the amount of rent they must pay are obviously subject to continuing domination and control. Moreover, and I think this may be more important in the fu- ture, when dealers become unable to pay their large rents because of reduced opportunities for profit or because of reductions in the current large volume of new car sales, aaid this is something that is foreseeable, the manufacturer will be obliged to take over the operation of the dealership or engage in various forms of discriminatory practices to allow the dealer to continue in business. Factory dealerships very often operate to increase retail sales and the company's share of the market in the dealerships' territory, and at the same time to stimulate or increase the volume of sales by other deal- ers of the manufacturer in the area. The stimulation of the market is accomplished by pricing practices which generally do not take into account the dealers' cost of doing business or sometimes by outright predatory pricing practices. By lowering the average retail price of 22 its cars as against those of competitive makes, the manufacturer is able to increase its share of the local market. For all of the above reasons, retail prices are depressed m many markets, many dealers cannot operate their business at a fair profit, other dealers operate at a loss, and many dealers, and this is a con- tinuing process, are forced to leave the business. The opportunities for profit of existing and potential future dealers are diminished or often destroyed, and this is my theme really. This process continuously feeds upon itself. As dealers leave the business because of insolvency or lack of profit, the manufacturer is hard pressed to find new dealers with, or perhaps even without, sufficient capital by reason of the reduced or nonexistent profit opportunities. The manufacturer replaces the independent dealer with one form or another of factory-controlled dealerships that do not operate at a fair profit. Once this process has taken hold, it generates its own increased mo- mentum, which may not easily be controlled by the manufacturer. A manufacturer will seek, and indeed does seek, to explain or defend the establishment of a new factory dealership in some location as being necessary for it to retain its normal percent of penetration in that market. This explanation appears credible and is credible until the economic forces which created the necessity for such action are examined: it is the manufacturer's own retail practices and some- times those of its over-zealous competitors, and that to a lesser extent, which have destroyed the opportunities for profit and driven in- dependently financed dealerehips out of business. Again, once economic forces are put in motion, they do not depend on the intention or good will of men, and they are inexorable and I am afraid often irreversible. In brief, if pre.sent trends continue, and I do have to say if the pres- ent trend continues, the total elimination of independent dealers in the large cities and in metropolitan areas will come about because of the operation of two inter-related and self-reinforcing forces: the operation at a loss of factory financed and controlled dealerships and the resulting destruction of the opportunities for profit for independ- ent dealers. As of this date. General Motors has not yet, because of its dominant position in the market, found it necessary to enter the retail business except in New York City and some other major markets. In fact, the other manufacturers have used factory dealerships as a means of attempting to maintain or increase their share of local markets at the expense of General Motors which is reluctant, in my view, because of antitrust reasons to presently adopt similar retail practices. However, American Motors Corp. has been the intended or the un- intended victim of these retail practices. American Motors does not begin to have the additional capital funds necessary to finance numer- ous large-scale retail operations, nor does it have sufficient manufac- turing profits to incur substantial retail losses in many markets. If we were to compare American's percent of market penetration in those markets where its manufacturing competitors are involved in retailing or extensively involved in retailing, with other markets where no such activity exists, it will be found that American is suffering serious losses in its share of the market as well as in unit sales. I might add that I have done this kind of comparison in a cursory kind of way and it bears that conclusion out. 23 I am unable to make any meaningful estimate of the number of sales lost by American, but I am sure it is substantial. In all events, speaking from my view of the industry, I strongly believe that American Motors will not be able to maintain its present volume in the face of this competition. What I am saying is that its competitors are using profits made in one market, manufacturing, to subsidize losses in another market, retailing. As manufacturers' par- ticipation in retailing increases, and it has continued to increase weekly and monthly and yearly, American's share of the market and its volume must continue to decline. I believe that American Motors cannot for more than a few years sustain further reductions in its sales as a result of competition of the kind I have been describing at the retail level. The survival of American Motors, the last remaining competitor of the "big three", is important ; and perhaps just as important, its sur- vival has symbolical importance in efforts to slow down industrial concentration. A full investigation disclosing all of the facts is an immediate necessity before it is too late for American Motors. About 6 years ago Chrysler started to sell fleet and lease cars at hundreds of dollars under dealer cost by way of special discounts, guar- anteed used car prices, and numerous other devices. Now, unlike other manufacturers. General Motors could ignore for a time the resulting diversion of its traditional shnre of this business. But General Motors had to react ; and after waiting a sufficient number of years to allow it to claim a legal defense of a bona fide meeting of competition, it met, it finally met, the much lower fleet prices of its competitors last fall, at the time of the introduction of the 1969 models. Similarly, Gen- eral Motors can be expected in the near future to be forced to react to the competition of the other manufacturers at the retail level, after again waiting to allow it to claim this legal defense. General Motors has already done so in some large cities, such as New York. Senators, when General Motors joins the other manufacturers in retail distribu- tion on a large scale, the dealers' opportunities for profits will be further dramatically reduced or destroyed, and there will be a whole- sale elimination of private capital, private enterprise, and independent dealers. In many industries direct selling by manufacturers is a fact of life. For example, in a field that I am familiar with, all major U.S. office machine manufacturers sell directly to consumers, and most of the sales volume of some manufacturers is channeled through factory branches or divisions. Many of them, including IBM, the largest, do not have any dealers. In the truck industry. International Harvester sells an estimated 40 to 45 percent of its trucks through approximately 265 retail branches and other divisions of the company, all of which are in direct competi- tion with its dealers. This company exercises many controls over its dealers' ability to compete and make a profit. For example, it effec- tively fixes the prices at which its dealers may sell parts to their cus- tomers by a special discount structure. Special discounts are available to all parts customers without regard to any functional basis ; and by reason of the competition by the branches, dealers must extend these lower prices to all or practically all of their customers. The branches in other ways are given important competitive advantages denied to 24 their dealers. By way of illustration, through special arrangements with tire manufacturers, its branches are able to exchange new truck tires at comparatively small or indeed nominal costs, while its dealers must pay significantly higher charges to make the exchange. It is of the utmost importance to ascertain the existing nature and extent of the manufacturer's invasion into automobile retailing. Auto- mobile retailing is a large business affecting the fortunes and lives of hundreds of thousands, and I think that is an understatement, of people employed in the business. The increased takeover of the retail- ing business by automobile manufacturers will also disastrously af- fect and eventually destroy great numbers of manufacturers and sup- pliers and dealers in accessories, parts and supplies who presently are able to compete with automobile manufacturers in supplying some, and I repeat, some of these products to independent dealers. These manufacturers and suppliers will find ultimately in the future that their present markets will be further curtailed and ultimately fore- closed. I think we could spend hours on the importance of this threat to private business and enterprise in this country, but I do not think it is in my province to do so here. In conclusion, I would like to say that numerous violations of exist- ing laws should be revealed by full disclosure of all of the facts. Pri- vate legal actions by dealers can only begin to uncover a meaningless fraction of a manufacturer's course of conduct. It is absolutely neces- sary that Congress and the Federal Trade Commission undertake a full investigation into the retail practices of the manufacturers. Should all the facts and figures become known, I believe Congress will soon find the necessity of protecting small business from destruction. Among other things, it may be appropriate to make specifically illegal those retail operations conducted at a loss by large manufacturers in com- petition with their dealers or indeed, with each other. If the Federal Trade Commission were to conduct a sweeping economic investiga- tion, it would find that the use of manufacturing profits to engage in unprofitable retail operations and other current practices consti- tute unfair methods of competition under section 5 of the Federal Trade Commission Act. The problem is an immediate one. Action must be taken before it is too late. Thank you. Senator Nelson. Thank you very much, Mr. Hammond, for your very thoughtful statement. The committee will allow the other wit- nesses to present their statements so that we can get them in the record before 12 :30. However, if Senators do have some questions Senator Dole. Mr. Chairman, I wonder, since the next witness, Mr. Mann, has a 41-page statement, will the other witnesses be available tomorrow for questioning, because it may take until 12:30 to finish 41 pages and then the other two witnesses will not be available for questioning. Senator Nelson. Mr. Mann is on the panel tomorrow. Senator Dole. I mean the other two. Senator Nelson. The other two are not. Mr. Hammond. I am sorry, I am not, sir. It is absolutely impossible for me to be available tomorrow. At any other time I would be very happy, any time at all, but this week is impossible for me. 25 Senator Dole. I think maybe, Mr. Chairman, because of the length of the statement and the fact that Mr. Mann will be here tomorrow, it might be helpful to ask Mr. Hammond some questions now. He may not be available tomorrow and he made a statement which I think deserves some questioning. Senator Nelson. If you would like to ask some questions of Mr. Hammond at this stage, I think that w^ould be all right. Senator Dole. First of all, I understand, Mr. Hammond, that you are now involved in some litigation involving some of the very ques- tions you set forth in your statement, is that correct? Mr. Hammond. I am involved in and liave been involved in litiga- tion on these very questions for the last 8 years. Putting it another way, a good deal of my law practice involves just those issues. Senator Dole. Is there anything that you are looking to this com- mittee to find for you that you have not been able to fiiid in a court of law? Mr. Hammond. No, Senator. My only purpose in making this state- ment, I think, is that things are continuing at such a rapid pace that if the facts are not known and disclosed and available to Congress, it may be too late before anything can be taken to either hold back these mexorable forces or just do anything about it. Senator Dole. Well, there is some doubt in my mind frankly, about the propriety of having hearings concerning matters presently in liti- gation. I understand you represent many clients and have many mil- lions of dollars at stake and probably a rather healthy fee, but there is a question in my mind about the propriety of having these hear- ings at this time, whatever the facts may be, whatever the problems may be, while litigation is pending. I thnik there is also some prece- dent here, the Senate earlier considered this in document No. 99 entitled, "The Congressional Power of Investigation." But at any rate, on page 10 of your statement you indicate, and I quote : It is of the utmost importance to ascertain the existing nature and extent of the manufacturer's invasion into automobile retailing. Now, is that esentially the same thing you are trying to determine in the litigation? Mr. Hammond. I have no present litigation that involves that par- ticular issue. Anything that might be done this year will not in any way aid or influence any of the evidence in the cases that are at issue. Senator Dole. I wonder if you might elaborate, then, what the real thrust of that statement is on page 10 which says it is of the utmost importance to ascertain the existing nature and extent of the manufacturers invnsion in automobile retailing. Mr. Hammond. Well, simply what I am saying, Senator, is that the continuing increased participation by manufacturers in retailing is at such a rapid rate and the reduction of profit opportunities and the elimination of dealers is continuing so that there will be posssibly, and I cannot predict when, a certain flash point in many major metro- politan markets where all dealers will necessarily be unable to exist. They will be insolvent or will leave the business; and we will be con- frontpd with a situation wliere there will be no private enterprise in retailing in most of the big populous areas of the country. So this is, I think, for the future. 26 I am not saying that if a law is not passed in this session of Congress, all this will necessarily happen within the foreseeable 3 or 4 years. I do think in many markets it may be impossible to restore private capital because things have just gone too far, but I am less worried about, shall I say, what happens in 20 or 30 or 40 markets than I am as to what will certainly happen if present trends continue in all the populated areas of the country. So, it is a long-term view looking for- ward, and I do not know whether this flash point will occur 2 years or 5 years or 7 years. I do think that when we have a recession of a sharp curtailment in automobile buying, you will have a blood bath in the dealership body. At that point the manufacturers' necessity of trying to maintain the volume that they had or of getting even somewhere close to it will be such that they will increase their heavy loss retail operations and the thing will just snowball like anything. So, it has nothing to do with any of the cases that I have in a sense that were issues in previous cases. Senator Dole. I understand now there are a number of cases pend- ing including where you are the attorney of record in the case of Broadway Rambler, Inc., versus American Motors Sales Corp. Mr. Hammond. That case is no longer pending. Senator Dole. That has been disposed of ? Mr. Hammond. Yes. Senator Dole. I will not ask you how it came out. You are smiling. How about Beach Rambler, Inc., versus American Motors? Mr. Hammond. That case involves the legality of a contract. The entire case involves two causes of actions that relate to specific language in a contract. Senator Dole. And Lindenhurst Rambler versus American Motors Corp. and American Motors Sales Corp., is this still pending? Mr. Hammond. Yes, indeed. Senator Dole. And does that touch on anything that we are touching on here today ? Mr. Hammond. In a very remote sense by reason of distance and otherwise, and also I might add because American Motors activities in this area are very minimal, one can say that it is an issue of the least importance, but it is there. But it is a minor side issue. Senator Dole. And then you have, I guess one case, at least against Chrysler Corp., Long Island Motors, Inc., versus James F. Walter and Ashdown Motor Sales. Is that case pending or does it have any refer- ence to any of your statements here today ? Of the issue in that case ? Mr. Hammond. Well, in the sense that I am asking Congress to look into the present and the future, that case would have nothing to do with that because all the activities that are involved there go back 7 or 8 years. So, if you investigate what may be happenina; this fall, it certainly does not bear on what happened in 1959 or 1960. Senator Dole. Do you have any other suits pending against manu- facturers? Mr. Hammond. Not in the automobile industry ; no, sir. Senator Dole. As I understand it, your i:)ractice primarily repre- sents dealers. Have you ever represented a manufacturer ? Mr. Hammond, They have never sought my legal i-epresentation. Senator. Senator Cook. Will the Senator yield ? Senator Dole. Yes. 27 Senator Cook. Mr. Hammond, you said in relation to the Senator's question on the phrase, "it is the utmost importance to ascertain the existing nature and extent of the manufacturer's invasion into auto- mobile retailing," you are talking about all phases of retailing. You are not only talking about the automobile itself, but the parts dis- tribution, the whole system, are you not ? Mr. Hammond. I could be and I should be although this paper was directed primarily to this aspect of it. I think I would be remiss in saying that those other areas should not be looked into. I was con- centrating purely in this statement on this danger which I consider paramount. Senator Cook. The reason I am giving this broad view is because you speak repeatedly in your statement about parts, about the fact that industry-owned dealerships have a benefit on parts, benefit on tires, that the other individual does not, but yet you said that in relation to this statement, it had nothing to do with the present litigation that you are involved in. Now, let us look at for instance, the Broadvmy Ratnhler case. This case was dismissed with prejudice in April of 1969 and was a suit for $2,100,000 which also included in it the preferential treatment to competitive dealers in forced purchasing of parts and accessories. In the Beach Rambler case there was not only the matter of the franchise but it was also claimed an antitrust violation including forced pur- chasing of parts and accessories. The Lindenliurst case included those same items, but yet a moment ago you said in dealing with American Motors this was rather a small segment or infinitesimal part of Ameri- can Motors activities but these three lawsuits amounted to $5,585,000. Now, that is not to be considered a small and infinitesimal part of their business, is it ? Mr. Hammond. The Beach Ranibler case, Senator, involved only and very clearly the particular language in the agreement itself. Senator Cook. As it applied to forced parts and accessory purchases? Mr. Hammond. As the agreement itself indeed in my view required that ; yes. Senator Cook. Are all of these cases treble-damage cases ? Mr. Hammond. The antitrust causes of action are. The good faith causes of action would not be. Senator Cook. Thank you. Senator. Senator Dole. I want to pursue that just a bit further. I assume that you feel the people who appear before the committee should come here sort of with the mind of a juror, open and objective and not having prejudged the issues. Is that correct? You come here somewhat prejudiced. Senator Nelson. Let me comment so that it is clear to the Sen- atorp. Mr. Hammond did not ask to appear before the committee. Mr. Watts, staff counsel, was seeking the people with the best understanding that he could find, and experience, in dealing with precisely the problems that Mr. Hammond has commented about. So he w^as invited to come I might say that if the Congress were going to wait and never have hearings on any issue on wliich there was some problem of litigation, remotely connected or directly with the hearings, there would not be any hearings on any issue of importance. I have been conducting hearings for 2 years oil the drug industry. 28 There have been lawsuits filed probably every single day involving drug companies and issues that this committee has been hearing. In fact, lawsuits have been filed as a consequence oi niiu^i..... ..ii J.e- veloped by this committee. So, I just want the Senators to understand Mr. Hammond was invited to come and I think he gave a very fine, intelligent statement. Senator Dole. I do not have any quarrel with his statement and I assume he was invited by the chairman to come. We were not consulted on that side. That makes no difference really, but I think the important point is that if we are going to arrive at some objective analysis of the problem, we ought to be talking to persons who sort of feel objective about it and I do not have any fixed opinions. I notice the editorial comment in the chairman's statement about giant corporations. I do not know how to describe a giant corporation. I would like the record to note at this point that I do not own any stock in any corporation or have any interest in any corporation. I do drive an automobile and that may be part of a giant corporation, but at any rate I think it is important for the record to show that you do have a special interest in these hearings, at least if not the hearings, you have got lawsuits totaling about $10 million pending and I would guess that you might be classed as a big city lawyer. I am just a small country lawyer myself, from Russell, Kans., and I assume I could look upon you with some disdain because you make those big fees in these big cases. I no longer have any clients. I decided to try something else. Mr. Hammond. May I answer your questions ? Just picking up the last one, representing the small man, the small dealer, I assure you is not profitable and any lawyer who undertakes that route has to do it on the basis of, if you please, ideological conviction, and that takes me to Senator Dole. Plus a contingency fee. Mr. Hammond. Yes. We must never overlook the fact that people must eat in this world. Coming back to your first comment and ques- tion, Senator, I would have to in all honesty say that I have precon- ceived opinions. I would have to in all honesty say I am partisan, and if you want to use word Senator Dole. You may be correct. I am not saying- Mr. Hammond (continuing). "Prejudiced," you can use that word, too, but I will tell you what my prejudice or partisanship is, and that is for the continuation, not only in the automobile industry and other industries but the continued existence of hundreds of thousands and perhaps millions of small businessmen who are threatened with extinc- tion and who are rapidly being eliminated; and it is my passionate conviction, and if you want to call that a prejudice, you may, that our system of economic and political democracy are one and the same and that to have cur kind of meaningful political democracy, we must pre- sence the independence of millions of people to act as businessmen. We must preserve private enterprise. And I do not think, and I am going to reveal my opinions, I do not think we will have private enterprise or capitalism if some day — we are drifting in that direction — we are going to have two or three or four hundred big corporations con- trolling retailing, manufacturing, and servicing. And if we are drifting in that direction, and there is a lot of evidence that we are, I think it is about time that Congress should not only look at the con- 29 centration in the industrial areas but also in retailing and, if you please, in servicing as well. Senator Dole. I think generally I am not disagreeing with what you are saying but I go back to my original thought — I think our committee should be very objective and I am certain we will be. The small businessman is indeed in trouble everywhere in America, whether it be Kansas or New York City, so I think our ideas of small business may differ depending on what area you may come from, but I would hope that the thrust of these hearings, and I am certain they are as the chairman indicated in his statement, not only the answers to the seven questions he has posed but also to determine just what the facts are, and I recognize, too, that we can j^orobably never have a hearing if we did not have someone testifying who knew a little bit about it, but I want the record to show that you do have a prejudice, that you do have a special interest, in fact, you would not be in court if you did not think you have a case, and some of the very issues you are discussing there before the judge are touched on at least broadly before our committee today. Now, you mentioned in your statement about General Motors in- creasing its factory outlets. Just how many factory outlets have they added in the last 20 years, do you know? Mr. Hammond. My knowledge is hearsay and from reading news- papers and other newsletters. I do not really know, and I think it would be best if the Senate were to try to find out, but they are not numerous. In terms of Chrysler, for example, I have weekly con- tacts almost with that increasing trend, so I have solid familiarity with the facts there. And really. Senator Dole, all I was asking for in this hearing is I think it is about time that this committee and the Senate learned the facts before it may be too late. Senator Dole. What do you suggest — this is not a legislative com- mittee but what do you suggest that we do as a Congress? How do we stop it? You indicate the flash points may be coming next year or 10 years from now. How should we respond in the Congress, the Senate and House ? Mr. Hammond. My first sugarestion. Senator, would be to get the facts from the manufacturers. They are hiding the nature, the kind, and the disguised participation in retail activities. Before you can understand the appropriate form of action, I think the facts have to be ascertained out in the open. Independently of that, I think if you were to make that investigation, you would slow down the process considerably for a number of years. That would be a great positive benefit in the short term view. Ultimately, and perhaps not too far in the future, it seems to me appropriate that there should be a law passed prohibiting a manu- facturer from using manufacturing profits to engage in retail opera- tions. This is using power arrived at in one way or another in one market to not compete in another market but rather destroy the competitors in the other market and this is a continuing process and that is really what I am talking about. Incidentally, the competitor, the manufacturing competitor that is most vulnerable is American Motors and in reply to your earlier questions, I would say my present litigation really has nothing to do with this major problem at all. Senator Dole. I think 30 Mr. Hammond. Except most tangentially. Senator Dole. How do you justify any of these companies having a retail outlet, say, in New York City where they absorb a tremendous loss in the retail facility? ^^Hiat is your rationale for that? Wliy do they do that when they cannot make a profit, just to drive out com- petition ? Mr. Hammond. No. Once this tiling starts, you see, th^ cannot turn back and once the other fellow is losing a large sum of money, they have to meet him. And American Motors did not want this situation, I would say, but just found themselves trapped into it. And in certain markets, to the extent they have capital, they are trying in a small way to meet this kind of competition, but they cannot because they surely do not have the money to invest in facilities, they do not have the money to lend to the dealers, nor do they have the actual money to lose. So, American Motors will be the victim of this very thing, and if nothing else comes out of this hearing, I would say you had a better look at what this process is doing to American Motors. If you sit here and do nothing, and 5 years later American Motors is no longer manufactur- ing cars, I would say that this hearing had an opportunity to maybe look at the facts and possibly do something about the situation. I am not saying that it could accomplish that result, but the time to look at some of these things is here now, and it just does not do much good to look at the situation after the horse is out of the barn. Senator Dole. I think you indicate that American Motors is in this vice, you did not say vice, that is my word, but I also note in the July 3d issue of the Wall Street Journal, it indicates American Motors just signed up 28 new dealers which is the highest monthly total of new dealers in 2 years. Would this indicate demise or maybe a little spark of some kind ? Mr. Hammond. I think their total dealership numbers over the years is on the decreasing curve. Any movement — you move two steps back- ward and one step forward and one step sidewise and still be losing ground all the time. Senator Dole. They are also planning to come out with a new car and some other new products. I hope it does not mean the demise. I hope they stay in the field and stay competitive and I understand also that I am certain we are dealing primarily today with manufacturers of automobile, but I also feel there may be the same problem, alleged problem, existing in many other fields of American industry, and we find the same true in rural America with reference to farming. We find more and more small farmers going by the wayside. We find cor- porate farming on the march in some areas. So I would not want, and I am certain you do not believe that it is just isolated, that it deals only with the manufacture of automobiles. It is true in many areas in industry, Mr. Hammond. Yes, Senator. I think if you want to generalize from what I am saying, in those concentrated industries that have the power to practically or actually administer prices, the unit profit is large. The additional unit profit is large. And as a result of this power that they have in manufacturing, they have the ability, they have the power to take over the retail activities. And the tentacles of power spread and spread in such a way as to destroy and potentially destroy over the foreseeable 10, 20, 30 years, perhaps millions of small busi- 31 nesses, so that ultimately some day, if all present trends continue, our children or our grandchildren will have the choice of working for big government or big business or big education, and that is not the kind of private enterprise system that I believe is worth living for and dying for. Senator Dole. I agree with that general premise. I have told my friends for many years that I do not think small business really has any strong thrust in the Congress, and from that standpoint I have no quarrel with your statement. I do think in fairness that it is liard to describe you as an unbiased witness, and I have no further questions. Senator Nelson. Let me say the committee invited Mr. Hammond because we knew he had a biased position. We invited Mr. Mann be- cause we knew that he represented the automobile manufacturers. We invited a representative of General Motors, Chrysler, Ford, American Motors, to come before this committee because we knew they had bias. I have sat around here and listened to Senators say to professors, "Well, you are just talking theory. You do not have any practical ex- perience. Let us get somebody with practical experience." Then the Senator says, "Yes, you have got a bias." We are having every bias that we can find before this committee. Senator Cook. Mr, Chairman Senator Nelson. Yes. Senator Cook. I would like to say, Mr. Hammond, that I have no objection to your statement from that standpoint. I would only hope, with all due respect, that this committee does reach a far-reaching conclusion, that does not show any bias in its own conclusions. Mr. Chairman, with all due respect, in the statement that you did not read but put into the record, there are many things in here that seem to point a finger at business, yet using figures from 1954 to 1968, not taking into consideration the gross national product in relation to their profits, not taking into consideration the tremendous inflationary situation that we find ourselves in in this country, and I am afraid if we do not put things in their true perspective, we might find ourselves getting off to a rather bad start. I would like to ask permission to put a statement into the record in regard to your opening statement show- ing the increase of the gross national product, showing the increase in the inflation of the dollar with regard to these profits from 1954 to 1968 because I think it is ( xtremely important and I think it might well put things in a true per? ipective.^ I might also say for the record, Mr. Hammond, that as far as General Motors is concerned, and I do not own any General Motors stock, that they have six dealerships that they own themselves. There are four in New York City, one in Pontiac, Mich., and one in Chicago. The thing that I wanted to ask you, if this historically has been that company's policy, to leave it up to its dealer, then how can you say that it refrains from retail sales only because it suddenly feels anti- trust consequences? Mr. Hammond. I think my statement also included something else and that is because of its dominant position in the manufacturing and retail market place, it can ignore that for the time being. Senator Cook. Let me ask you another question, Mr. Hammond, as lawyer to lawyer. When you talk about the proposal that Congress 1 See p. 17, supra. 32 seriously consider legislative actioil that would see to it that manu- facturing profits could not be used to maintain retail or wholesale out- lets, are you suggesting that this be aimed directly at the automobile industry and the automobile industry only. Do you feel legislation of this kind could be sustained as a matter of legal consequence? Mr. Hammond. Yes. Senator Cook. Do you feel Mr. Hammond. I have no problem there. Senator Cook. Do you think it could be sustained as to the automo- bile industry and ignored by IBM or ignored by Sperry Rand or ignored by Remington or all of the rest of the companies who do not have retail outlets individually owned ? Mr. Hammond. IVhat I was suggesting is not that manufacturers should be precluded from using money or capital to enter into retail activities. I am not opposing dual distribution as such. I am only saying that when manufacturers do enter into retail activities, and by that I mean all manufacturers, they should not be permitted to subsi- dize continuing losses in retail operations by manufacturing profits. That may be the existing Taw and indeed, I think an antitrust lawyer would say you have that already on the books in a sense, but it is being ignored and it must be ignored in the nature of litigation. So all I am saying is that our independent dealers, our small businessmen, should not be eliminated by loss operations that are offset by manufacturing profits. Companies should not destroy competitors in one industry as a result of the profits made in another industry, and all the more so in this kind of situation. That is all I am saying. Senator Cook. Only in conclusion, Mr. Haimnond, I might suggest to you that having represented dealers just as you have, I have come to the conclusion that maybe what the automobile industry is doing is the same thing that the Government has been doing for years, and that is it gets into everything, gets into every facet of what it has any con- nection with and maybe this is the same thing the automobile industry has been doing and maybe we are the ones that have been setting the bad example, not the giant corporations throughout the country. Mr. Hammond. Senator Cook, I am sure we both do not like either. Senator Cook. Thank you. Senator Nelson. May I say as to the statement I put into the record, that statement represents my own viewpoint which I have expressed in hundreds of speeches, I suppose, and I have no objection to anybody on the committee putting in any response they please.^ I would just like to point out that each member of this committee — the full committee, that is, not just the subcommittee — received a letter a month ago announcing these hearings. I have not to this day recei^'ed a suggestion from anybody of the minority or the majority as to any other witnesses to have before this committee in order to make it a balanced hearing. It has always been my objective to have balanced hearings and in the 2 years I have l)een conducting hearings of this subcommittee, I have had witnesses representing every single view- point. Many of them were biased obviously and represented a specific viewpoint and that is why we had them here. I will say for the record that I Avill be glad to have suggestions for any other witnesses that membei'S of this committee would like to hear before the committee, but 1 statement of Senator Cook appears at p. 17, supra. 33 as I said, each member received notice of these hearings a month ago. and it is a little late to raise the question about whether or not these hearings this Aveek are balanced. Now, it is 11 :25. I do not know just exactly how we ought to handle this. Mr. Cohen will not be here tomorrow^, Mr. Mann, and you will be. Maybe we had better proceed with Mr. Cohen. Would that be satis- factory, and then you certainly will get yours in either today or to- morrow. Mr. Mann. Wliatever you want to do, Mr. Chairman, is all right with me. Senator Nelson. I think we had better proceed that way. Then if we do not get to yours, Mr. Mann, we will make yours the first state- ment tomorrow. Mr. Mann. Very well. Senator Nelson. Our next witness will be Mr. Raphael Cohen, chair- man of the executive committee, Metropolitan Independent Dodge- Chrysler Dealers Association, who is also invited because we thought he had experience and understanding and could make a contribution. I assume he has a bias, too. Mr. Cohen. (A biographical note on Mr. C^hen follows :) Biographical Note Raphael Cohen, Merit Motors, Inc., 132 S. Broadway, Yonkers, New York 10701, was born in 1924 and has been a second generation newear dealer In Yonkers since 1947. He has been the elected representative of the New York Region Dodge Dealer Council for the past five years "and is presently chairman of the council. He is also a member of the National Dodge Dealer Advisory Coun- cil. Mr. Cohen appears at this hearing as chairman of the executive committee of the Metropolitan Independent Dodge Chrysler Dealer Association, a national organization with members in 41 States and one foreign country. The associa- tion's address is Box 421, Ridgewood, New Jersey 07451. (The following editorial appeared in Automotive News, June 23, 1969, on the subject of Mr. Cohen's acceptance of the subcommittee's invitation to appear at this hearing. — Editor. ) Ray Cohen To Make It . . . PSesenting Dealer Case at Nelson Hearing The opportunity to testify before a Senate subcommittee is not something that would thrill the average dealer, but we wonder if Lyman Slack may not have missed an opportunity when he declined an invitation given to the National Automobile Dealers Assn. to testify at the July 9-11 Senate hearings on auto comi)etition. Slack explained : "The keen competition at the retail level does not give us any special insight into the role of competition among automobile manufacturers." The first day of hearings before Senator Gaylord Nelson's Monopoly subcom- mittee, will deal with auto distribution. NADA and Slack, or a representative selected by him should have been pre- pared to testify at great lengths on this topic. For some time, NADA speakers at state dealer conventions and individual retailers have complained that distribution encompasses one of the larger areas of inequity in the factory-dealer relationship. After Slack's decision, the subcommittee turned to Raphael Cohen, leader of New York City-area group of dealer dissidents and an advocate of turning to government or the courts for dealer redress. iCohen is dedicated, persuasive and articulate. He is a low-key salesman of high order and a veteran of Washington anoearinoes. H-^ h^idc- seats on both national and local Dodge dealer councils. Cohen knows the ropes in the dealership, in Detroit and in Washington. 34 STATEMENT OF RAPHAEL COHEN, CHAIRMAN, EXECUTIVE COM- MITTEE, METROPOLITAN INDEPENDENT DODGE-CHRYSLER DEALERS ASSOCLA.TION, INC., RIDGEWOOD, NJ. Mr. Cohen. I think we live in a nation of bias and we all fall on one side of the aisle or the other, and I do not believe in any way this will reflect on what I am saying or certainly has not reflected in my opinion, on anything any of the Senators have been saying as of this moment. The Metropolitan Indenpendent Dodge- Chrysler Dealers Associa- tion wish to thank your committee for the privilege of appearing today. We desire to contribute one of the opinions on the competition as it pertains to the manufacturer and retail distribution of automobiles. One of the grave errors that is made when discussing whether there is, or is not, competition in the auto industry is brought about by the manner in which the question is posed. For I believe the question should be stated in the following fashion : Is there meaningful com- petition in the auto industry that takes place to benefit the consumer who is the largest segment of the society ? The reason that I make this distinction is not to split hairs, but to really arrive at the crux of the problem. One need only open any newspaper or magazine, turn on any radio or television station, and he can find one of four manufacturers fiercely competing for his business. Examine the same newspaper and the dealer is offering all kinds of goodies to the purchaser for the op- portunity of selling him a car. So, to flatly state that competition does not take place, brings me to defend a position that can be easily refuted. Now let me add that word meaningful to competition and we arrive at the point of where this forum can begin. This Nation purchases some 9 million new vehicles each and every year, not totally out of desire. The automobile is, and will be for many years to come, the major mode of transportation, so it is most important that the com- petition taking place has true meaning. Entry for new domestic manufacturers is closed for all intents and purposes. This is a most unhealthy situation, but there is one method now available that can accomplish the same ends as new entry. But, a mere mention of this method brings down an avalanche of criti- cism on those who suggest it. That method would be to take the cur- rent manufacturei-s, and divide them into smaller entities. I believe this would accomplish many of the healthy things that we are looking for. However, I do not see this happening. In an asymmetrical oli- gopoly the leader, in this case General Motors, sets the price standards for the industry and the others merely comply. To illustrate — this past year Chrysler announced price increases on new 1969 models. They claimed that these increases were most modest and actually accounted for only 60 percent of their added cost. They stated that they were absorbing the other 40 percent. A roar came from our executive branch of Government that the increase was unjusti- fiably liigh and inflationary. General Motors then met with the chair- man of the President's Council of Economic Advisors and General Motors set the price increase. Chrysler res]>onded in the only manner available to them ; they lowered their prices. 35 To those who doubt that prices are administered by the leader of the oligopoly, what further proof do you desire ? Senator Cook. Mr. Cohen, would you yield just a moment? Are you not really saying that it is conceivable after General Motors met with the President's Council of Economic Advisors it was the Federal Gov- ernment who saw to the increase or failure of the increase in the auto- mobile price and not General Motors ? Mr. Cohen. No. I am basically saying it is a freedom of choice. The Government has put pressure on other industries from time to time not to raise their prices, sometimes successfully and sometimes unsuc- cessfully. With the large concentration of power, Senator, it behooves General Motors to respond. Senator Cook. What I am saying to you is in the case of not only the automobile industry but also the steel industry and the present pressure on the banking industry, that if the majors decrease, then everybody else is going to do it, but the real incidence of the decrease is not the majors doing it but the Government doing it. Mr. Cohen. In this particular instance I would say that the Gov- ernment had no small hand in it. Senator Cook. All right. Mr. Cohen. I certainly have to concede that point to you. But there w^as still the freedom as the steel industry after the Kennedy admin- istration stopped them from rolling back prices and the Johnson ad- ministration tried it, I think a similar position, they were not success- ful and the steel industry did go up. Senator Cook. Partially. Mr. Cohen, Yes, partially. So I believe the necessity for GM to respond is that in this industry the power is so concentrated in their area, and I will go on later in my statement and show that this con- centration Senator Cook. But you will admit that the Federal Government is probably one of the biggest purchasers that General Motors has. Mr. Cohen. Well, I think it was a past chairman of General Motors that made the statement that what was good for General Motors is good for the country and what was good for the country was good for General Motors. Senator Cook. Too late to learn that that statement was not quite what he wanted to say. Mr. Cohen. Whether he wanted to say it or not. Senator, he was most accurate. To continue, and I might say that any portion of this that you care to interrupt, I would certanily appreciate your interrupting me so that I could explain anything that I am not clear about in the statement. What happens, so many times with those that are making statements, is that we understand our subject so well that we do not explain it to the next fellow. To those who doubt that prices are administered by the leader of the oligopoly, wliat further proof do you desire? In fact, with only four domestic manufacturers in the field it is necessary for the leader to keep prices sufficiently high in order for the others to survive. Now the question arises of why I have opened with a statement on manufacturer competition at wholesale when the subject today is dis- tribution systems and their effect on competition. It is solely to point 32-i93 O— 69— pt. 1 4 36 out that the only place that meaningful competition exists is on the retail level. The three major manufacturers remain competitively together. Senator Dole. I think you are right. Some of us do not understand the problem maybe, but now as I understand it, if one manufacturer lowers his price to meet the price of another manufacturer, that is not competition. Is that what you are saying? Mr. Cohen. No. That is not what I am saying. Actually, what I pointed out here I think in this paragraph, is that the leader. Gen- eral Motors, sets all the price patterns and the others just follow along and I think Senator Dole. If you lower the price on your car and the others just follow along, that is competition. Mr. Cohen. Are you talking on the retail level or wholesale level ? Senator Dole. I am trying to find out on both. Mr. Cohen. On the wholesale level the market is set by competition — on the retail level in a particular area, and this is where meaningful competition takes place. However, you have to remember that on the wholesale level the dealer can only purchase his product from the particular manufacturer he is franchised to. He has no economic leverage to say if your price is not reasonable enough I am going to go over to Ford or American Motors and buy it for less because the prices are not less. If you check them across the board you will find that they are competitively together, and that in this case, the price is set by General Motors. I have no doubt about it. And I think any investiga- tion on your part will pretty well sustain my point. Senator Dole. I am just trying to determine the essential difference in how you might define competition. What is competition as far as the wholesaler is concerned, and what is competition as far as the re- tailer is concerned ? Mr. Cohen. I think meaningful competition as far as the consumer is concerned, and that is who feeds me, is price competition, getting the most he can for his economic dollar, and that this competition be kept open. But when he has a fixed wholesale price that he is bucking, he really has no competition unless it be on the retail dealer level who will take a lesser markup or higher markup. This has other effects in other areas but this committee is not getting into parts and service and I think Senator Hart is doing a fairly decent job in handling that. I think these hearings of these committees are most meaningful even though we accept subjective views. In all these hearings at least it gets open on the boards and on the table for everybody to reason out and understand what the problems are. I do not say that we have any overnight solutions. Certainly there is a debate that starts here at 12 :30, in the Senate, that is certainly more meaningful in my esti- mation, than what I am saying here this morning and I am sorry to take up the time of the committee to make a statement when there are things on the Hill that are very important. Senator Dole. I think this is very important but I tliink meaningful competition is about like meaningful tax reform. If you lower my taxes and raise yours, that is meaningful. Mr. Cohen. I would rather Senator Dole. Maybe there is not any hard and fast definition for meannigful competition. You view it one way and I assume the whole- 37 salers view it another way and as you say, we are talking about subjec- tive judgments and maybe this is the way it ought to be. Mr. Cohen. Well, Mr. Mann's statement which I have gone through shows what the manufacturer considers meaningful competition and they certainly have a comj^letely different side of it than I have, and I know that when he delivers his statement Senator Dole. In essence, then, when Chrysler lowers its price to get in line with GM, that is not meaningful competition. That is just following along. Mr. Cohen. Well, the only time this has been done is at times when there has been some kind of a — ^as Senator Cook said — some kind of Government pressures on the leader to hold the prices down. There has not been this kind of price competition — General Motors — it has not in the middle of the model year, for example, if Chrysler is doing real poorly, they do not lower the price of the automobile. They still keep the same exact price and do not go into that kind of competition to get the market: Now, where I as a retailer, if I am not selling my amount of cars in competition with the Ford and General Motors dealer down the street, I will just have to lower my prices to try to entice some of his customers away. This is what I mean by meaningful competition. If Chrysler was having a bad year, or Ford was having a bad year, for example, and they came out with a price reduction to take part of GM's market away this would be meaningful competition. But if they tried to do it with an increased budget, shorter miniskirted girls on television, this to me is not meaningful competition in the area of selling cars. Senator Dole. Interesting, but not meaningful. Mr. Cohen. Shall I continue? Senator Dole. Yes. Mr. Cohen. During recent hearings of the Subcommittee on Anti- trust and Monopoly of the Committee on the Judiciary, it was clearly developed that the manufacturers control and regulate warranty service price. At the completion of the initial segment of these hearings, General Motors, our leader, responded to the criticism with a new formula. Shortly afterward, Chrysler adopted the exact same formula. After 60 days or so the Ford Motor Co. surprised no one by introducing the identical formula. Do you see the pattern of competitive to- getherness ? Senator Cook. In the banking industry it takes about 5 minutes. Mr. Cohen. Well, let us say that they feel more secure. The automobile retail distribution system has been through franchised dealers of each particular manufacturer. This franchise is a nonexclusive agreement which grants each franchisee the right to purchase cars from his manfacutrer but does not grant him an ex- clusive territoiy in which to sell them. There have always been sufficient numbers of franchisees of each particular make so as to allow the consumer the opportunity to purchase competitively. Senator Cook. Mr. Cohen, at this point, I do not mean to con- tinue to interrupt Mr. Cohen. That is all right, sir. Senator Cook (continuing). But we are talking about the fact that we have four major manufacturers and are fighting to save the fourth 38 one and this may not happen and yet we turn right around in this business of saying that they almost have a monopoly, but then you say one of the things you complain about is that you cannot get a contract for a particular territory. Now, are you not in essence saying the same thing? Mr. Cohen. No. That was not the complaint, Senator. That was just an explanation of what the franchise system is. I am not looking for any protected territories. Senator Cook. You do not want a protected territory ? Mr. Cohen. Absolutely not, sir. I think at this point you misinter- preted what I was trying to say. I certainly do not think it would be competitive and to the competitive advantage of the consumer if he had to buy from me because I was in a specific town. Senator Cook. You would have some complaint if you had another dealer right straight across the street, though, would not? Mr. Cohen. I have one 2i/2 miles away and we have dinner or lunch quite frequently and although we compete fiercely, we still play together a little. I think it is like what goes on here in the Senate. Senator Cook. Lawyers do the same thing. Mr. Cohen. However, over the past 20 years, there has been an erosion of the number of franchise dealers. In 1949 there were 49,173 f ranchised new car dealers. In 1969 we have 27,486. This portends seri- ous consequences upon competition. New blood is not being infused in the retail end of the business and the manufacturer claims it is the high startup costs for new dealer- ships. Where in this country have we found a shortage of capital for new ventures w'hen the opportunity of success has been afforded ? The true answer is that the dealer franchise agreement is an invitation to serfdom. General Motors originally offered a 1-year selling agree- ment. After Senate hearings in the fifties, in which the franchise agreement was criticized, they raised the terms to 5 years. Chrysler Corp. offers term letters from 1 to 5 years or permanent franchise agreements which can be canceled for cause. The Ford Motor Co. has a similar agreement. Who in their right senses enters into such an agreement ? Would you invest over a half million dollars for any one of these agreements ? There are other parts of these agreements which I would like to cover. They cannot be sold without company approval. The new can- didate is not only judged on his qualifications and his ability to finance the business, but on what he is paying for its purchase. That is correct. You can independently negotiate a satisfactory cash arrangement to sell your business and the factory can tell you that you have been paid too much and refuse transfer of the franchise. If the franchisee dies, his wife or family can run the business for 1 year. Then she can either sell out, which, under such circumstances rarely brings a fair price, or she can take an approved partner. What other retail endeavor carries such restrictions? I wonder how many company executives accept their stock options under the same condi- tions ? Now a new threat, the takeover of the retail market through unfair dual distribution systems, rears its ugly head. Chrysler Corp., through its dealer enterprise division, and Ford through dealer development, is putting up the capital to start new operators on the path to 39 independent success, but it assures neither success nor independence. In the Chrysler system two of the three men on the board of directors are Chrysler employees. All voting: stock is retained by Chrysler until they are completely bought out. That is to say, if the operator has purchased 90 percent of the corporate stock and Chrysler retains 10 percent, they still own all voting stock. Allow me to illustrate what has happened in one market, Allegheny County, Pa. Exhibit I [Serial Exhibit No. 4] shows that in 1960 100 percent of all Dodge dealerships in x\llegheny County were privately capital- ized. By 1967, only 44.6 percent of the dealers were private capital and 55.4 percent were Chrysler financed. Chrysler had taken over better than half the dealerships. How was this accomplished? Exhibit II [Serial Exhibit No. 5] illustrates this.^ From 1961 through 1966, Staley Dodge, owned by Chrysler, lost $235,868.47. Cloverleaf Dodge, from 1962 through 1966, lost $132,- 380.21. Hillside Dodge lost $113,320.31 from 1962 through 1966. Years 1963 through 1966 were among some of Chrysler's best years. But, by priming the stimulators with cash they were able to put other private dealers out of busines. This form of operating is known as stimulator-dealerships. Tliey falsely stimulate a market. Senator Dole. "Wliat happened to Staley Dodge? Mr. Cohen. They are putting up a new facility for him. Senator Dole. He is still in business, though. Mr, Cohen. He is a Chrysler directly owned factory branch. It is not Mr. Staley's money. Senator Dole. "WHiose money was lost ? Mr. Cohen, Chrysler's. Senator Dole. Mr. Staley did not lose any money ? Mr. Cohen. No, sir. In fact, in one of these years he was paid a $58,000 bonus for making $4,000. Quite frankly, I felt after making all these statements Senator Dole. That is referred to as serfdom ? [Laughter.] Mr. Cohen. I think that is not what I am referring to as serfdom. Mr. Staley was one of the privileged classes. Senator Dole. Privileged serf, but there are 247,000 serfs, appar- ently. You mention on page 5 that, the true answer is that the dealers franchise agreement is an invitation to serfdom. If they are making that kind of money I know a lot of people who would be willing to accept that proposition. Mr, Cohen. There are many professions in this world, if you would call them professions, that have not been looked upon highly but have been highly j^rofitable. Senator Dole. I mean, the point is on the one hand you say it is Mr. Cohen. Well, because Senator Dole (continuing) . Almost slavery and on the other hand, apparently Mr, Staley and the manager of Cloverleaf Dodge profit from this same franchise system, right ? Mr, Cohen. They do not profit from the same franchise system. They profited from a completely different one because when the manufacturer totally owns — these were totally owned subsidiaries ^Note. — Mr. Cohen's exhibits appear together, beginning at p. 48, infra. 40 of the manufacturer, so they were, although the agreement was a franchise agreement, they were an operator and not an investor. So their agreement was completely diiferent than the normal franchise agreement and I think this is Senator Dole. They did not own any stock at all. Mr. Cohen. That is right. I think this is where you are losing sight of Senator Dole. They owned the 10 percent. Mr. Cohen. That 'is right. The 10 percent example was to show the total control they hold of the dealership even when they are the most minor stockholder. I wonder if I could buy 10 percent of the Chrysler stock with some of your cash assistance and if I would be able to go up to Detroit and take over the board of directors. I doubt that very greatly and I do not see where in a real free enterprise system, where a contract is so drawn up, so that where one holds 90 percent of the stock and the one who owns 10 percent has total control. Senator Dole. How did Mr. Staley make a $58,000 bonus ? Mr. Cohen. For a $4,000 profit. I think that is one of the dis- closures you can ask of the manufacturers better than I. I did not give it to him. Mr. Hammond. If I may interject, I think the money he was receiving was that of a manager and not that of a dealer. It is another capacity, another function. Senator Cook. I think the important thing Mr. Cohen has struck on here really, and the independence that Mr. Hammond discussed, is this real business of the franchise itself. Mr. Cohen. That is right, sir. Senator Cook. And I am very familiar, representing one, as a matter of fact, who has got it down to about 10 or 12 percent and still does not have control of his dealership, I think the important thing that you are discussing here is this independent financial ability to own a franchise which is in fact yours. Mr. Cohen. That is correct, sir. Senator Cook. And I am interested in this and hope that we can, Mr. Chairman, expound on this phase of it because I think the inde- pendence which Mr. Hammond is talking about in relation to the dealer itself, rather than maybe a law as such, which goes to the distribution of profits, could more strongly be established in relation to the direct ownership of the franchise itself without all of the inhibiting matters that occurred through it, than the package you are discussing. I would kind of pose that as an open question to both of you but it seems to me you have really hit on the key and that is the fact that here is a man who owns a franchise, here is a man who goes out and borrows all the money and maybe even has to borrow it from General Motors or from Chrysler but at least he pays it back and he at least has a profitable function under that franchise but it really is not his. That is what you are saying really. Mr. Cohen. That is correct. Senator. I am glad I have been clear enough to get that across because that was my point. I am very i^leased with it. Of course, I hope you do not represent a dealer in litigation because maybe this conversation would be out of place. Senator Cook. I do not. [Laughter.] 41 Mr. Cohen. I am sorry, Senator. Sometimes we have to have a little fun. Senator Cook. As a matter of fact, really and truly, I think if I did it would be all the better for me in that regard. Senator Dole. I already cleared him. Mr. Cohen. I hope you have cleared me, Senator. Exhibit III [Serial Exhibit No. 6] is an ad that appeared in Oak- land, Calif. This ad was placed by a factory-managed retail outlet. They offered tremendous price cuts and advertised high volume and they had just entered into business. In 1956, because of the disparity in size between franchisor and fran- chisee, the Senate passed a law called the Grood Faith Act. It was to attempt to equalize the powers of both parties during litigation. Un- fortunately, it has, in most instances, proven to be ineffective. Only the decisions of Judge Will, Matsen Motors v. Chrysler G ovporation^ and Judge Coolahan, Sicartz Motors v. GhrijsJer Oorporation, did the judges interpret the act in the fashion it was written. They both de- cided that the minimum sales responsibility clause was being applied by Chrysler in a discriminatory fashion. That the minimum sales responsibility was, in fact, coercive, arbitrary, and unfair. I would like to make a correction in my statement here, recognizing that the Judge Coolahan litigation was still pending and that any dis- closure here might in some way prejudice the jury when the Sioartz case is heard, I have withdrawn exhibit IV out of my papers.^ So I think, Senator Dole, I took your point before you made it. Swartz Motors was a dealership formed in the early thirties. It was three generations old. However, Chrysler decided they wanted their own dealership in close proximity to Mr. Swartz. So he was cancelled, and Chrysler applied for zoning variances on their property. Judge Coolahan negated this action and Swartz Motors is operating today under a preliminary injunction against failure to renew his term letter. This system worked so well for Chrysler that Ford has decided to follow suit. Plaza Ford in Newark, N.J., is reported to be losing $20,000 per month. Presidential Ford in Philadelphia boasts the same record. How long will the independent remain in such an environ- ment ? Another form of control of distribution is through Americo Realty, the realty division of Ford, and Chrysler Realty, the realty arm of Chiysler. Americo owns $20 million in real estate in New Jersey alone. Chrysler claimed recently in an article in Automotive News that they were purchasing $2 million worth of real estate per week. Where does this leave our leader. General Motors? Biding its time until they can enter the market under the guise of competition. The last bastion of price competition for the consumer lies in the independent f rancise system. I foresee in the future trading stamps and 1 Editorial Note. — Mr. Cohen's statement, as originally prepared, included, as exhibit No. 4. the text of an opinion by Judge Coolahan, U.S. District Court, District of New .Tersey. jrrantincr plaintiff s motion for a preliminary injunction in Swartz v. Chrysler Motors Corp., civil action No. 1230—68 in that court. The opinion as submitted by Mr. Cohen was a mimeographed text marked, at the head and foot, "Not for publication." Accordingly, on advice of the subcommittee counsel, Mr. Cohen withdrew the exhibit. Subsequently, the opinion was published in "1969 Trade Cases," Commerce Clearing House, Inc. Mr. Cohen thereupon resubmitted the exhibit, and it is included with the rest of his exhibits, following his statement. 42 games as the only method of competition when the "Big Three" have complete and final control of all retail sales. Another area in which giant corporatism injures the average con- sumer and competition in the automotive field is in fleet and leasing subsidies. Avis may be No. 2 in car rentals, but the deal they receive when purchasing their vehicles is second to none. They receive the fol- lowing benefits not available to the consumer, or for that matter, dealers : (1) Large advertising subsidies. (2) Preferential delivery schedules at announcement time. ( 3 ) Price concessions on equipment. (4) Guaranteed trade-in value on their used cars. A Ford dealer in New Jersey displayed an order placed by a na- tional fleet. After figuring in the special guaranteed value paid to the dealer by Ford, and the $50-over-dealer invoice, the fleet paid $500 less than an individual consumer would have had to pay. This is not to say that the dealer makes $500 more on the private purchaser, but with factory subsidies, the fleet, in reality, is purchasing the car for less than the dealer. This complaint has been voiced to the manufacturer, but dealer protests fall on deaf ears. With the fleet buying for less than the dealer, the consumer has been subsidizing fleet purchases. Another area of unfairness is displayed by my exhibits V through VII [Serial Exhibit Nos. 7 through 9] . These represent orders placed with my manufacturer on May 26, 1969. If you will examine my order, as opposed to what Chrysler de- cided to build, you will find the following equipment added : ( 1 ) Glove box light. (2) Ash receiver light. (3) Ignition switch time delay. (4) Headlamp warning switch. (5) Bumper guard, front and rear. The dealer cost on these items adds $41.35 to my invoice on items that I did not order. Furthermore, since this is our most reasonably priced car, and is generally purchased by the price-conscious con- sumer, my chance of recovering these costs are minimal. I would further like to point out that at no time was I consulted on these additions. I think I should add something here if I might. There have been dealers that have been consulted on additions to their cars. However, what you must recognize is that when it comes to this time of the year we order our closeout merchandise and if we do not accept these cars with the additional equipment, we get nothing to sell at all. So we have even when offered the option, we have very little option, and I would just to be fair to the manufacturer, and I think you will appreciate that, Mr. Mann, but just to be fair to the manufacturer, I might say that in some instances I do know that they have called the dealers and said do you want these cars and in fact, after shipping 15 of these units to me, they offered to purchase these 15 units back, but I will need these 15 units to try to cover my overhead, so I accepted them. Senator Cook. Mr. Cohen, getting back to this fleet price business, being familiar with it from a local executive point of view, we would buy, say, 300 or 400 cars a year. That is not like Avis, but I would note when we would put out such bids that we would have to give a longer 43 period of time to receive the bids in because the dealers apparently many of them, and ])articularly the manufacturer's own dealers, would have to work with the home office to get a price. The only result of this would be that as a result of almost buying it from the manufacturer, really not buying them from the dealer, that our service on these automobiles was just absolutely horrible. Mr. Cohen. Well, that is another problem that is posed by fleet selling, saturating the market. This is an area that Senator Hart's committee was covering. You see, many times, in many instances, the selling dealership is a great distance from the point of use of the vehicle. Then the service burden falls upon the dealer in the locale of where the oar is being used. Now, since we have been complaining of losses on warranty, it has crowded our service departments. In many instances it has not afforded us the opportunities to serve those who have given us a margin of profit, who have allowed us to exist, who are really our bread and iDutter customers. However, I will say this for the dealers, they have taken this like champions and have been on the w^hole providing the service. But I will admit that they are starting to get rather filled up on this kind of stuff and they are finding more an more reasons not to accept this type of service. Senator Cook. I must confess that we had to eliminate certain man- ufacturers from bidding, particularly upon police units, because of this business of warranty, and we just could not get the facilities that really were necessary to keep these units in operation. Senator Dole. With reference to the additional equipment men- tioned on page 10 and page 11, in other words, the points you were making is that in some cases this wasn't deliberate. It was either taking the car with that equipment or not taking the car at all. You weren't consulted. Mr. Cohen. I wasn't consulted on 15 of these units which I pointed out but I did want to inject that some dealers had been consulted and I am not trying to say here that they had picked on me or in any way chosen not to tell me. It was probably an error inside their office. But even if I had the choice, even if I had been notified that this equipment was going to be added, would I have been in a position to refuse these vehicles ? Senator Cook. Not if you needed them. Mr. Cohen. Not if I needed them, that is correct. And the second part of this is that these vehicles could have w^ell been built without this equipment. I mean, you don't have to build a car with an ash re- ceiver light, but what happens, at the end of the model year, the manu- facturer wants to get rid of all the equipment he has in the plant so he just puts it in the car. If it hasn't been purchased before, well, that is just tough. Senator Cook. There is another item, too. The $41 it costs you doesn't cost him anywhere near the $41 and this is another reason I like to put it in that car. Mr. Cohen. I am certain it doen't cost him anywhere near the $41 or he wouldn't have been selling it to me at that price. I think the major points I am trying to make here, and make in this entire state- ment, this entire presentation, is that the franchise system is really the only hope left for the consumer and I say this from a very sub- 44 jective point of view. I am a franchised car dealer. I am very prej- udiced on things that concern this Nation because I am a citizen of this Nation. So I make no excuses in any case to anybody for my sub- jectivity in this area. The only thing I would like to say is that I be- lieve that hearings of this type do serve a function. If nothing happens past the conversation in this room. Because they do have effect on those that have heard them. Would we have gotten the increase on war- ranty if Senator Hart's committee had not pursued that, and no legis- lation has been passed and no regulation has been put into effect and we did get the change because it was necessary. It was tokenism at the best but at least it was some tokenism and it shows there was a sen- sitivity to these hearings. Senator Cook. It was done before the legislation. That is the real point. Mr. Cohen. Well, I think we have enough laws on the books right now, quite frankly. We don't really need any more. I do think, how- ever, in certain areas we can use more strict enforcement of them and more inspection of them. I did not place an exhibit of a 1939 Federal Trade Commission report to this Congress in which it almost sounds like they wrote this paper I have produced here today. That was in 1939. Now, this is 1969, 30 years later, and the same situations prevail but now they are transferred to the other two manufacturers. General Motors has its initial rate. They are there. And Mr. Hammond has brought up a good point, the point of American Motors. Why did this legislative body see it necessary to grant a $19 million tax rebate to American Motors if they didn't recognize that it was very vital that American Motors remain in business? So that we did have a less shrinking of the manufacturers. I think that this Con^-ess has been sensitive to the needs. I wish they were more sensitive m more areas, but I can't say that our legislative branch of government has not worked. I think it has worked and I think my appearing here today shows it can work if you want to participate. I will continue. I can readily assure you that this is only one instance of adding ad- ditional equipment. A dealer recently complained to me that he had received a new car which was ordered for a specific customer and they had added a $100 option. He further stated that he could not pass this on to the consumer and was forced to absorb it. He could have refused to deliver the car, but who do you believe the customer would have termed the unethical party ? Again, allow me to raise a point covered in your inquiry. It is that of corporate secrecy. I am not quite sure of what infonnation you be- lieve should be public knowledge. I do know one requirement which 1 must divulge to Chrysler Corp., which is part of my contractual obliga- tion. Exhibit VIII [Serial Exhibit No. 10] is a blank copy of a fi- nancial statement that is required by Chrysler each and every montli. Ford and General Motors have the same requirement. This state- ment breaks down my entire operation and supplies the manufacturer, in the most minute details of (1) liow much gross profit I make on sales of new and used cars; and (2) what my service department earns. In fact, it shows every area of my operation. Now keep in mind that tlie same corporation has retail outlets, so by contract, I am forced to supply my competition with my operating 45 statement. I believe that this is the most ridiculous situation I have ever heard. If the trend that is now taking place continues and we have the statistics of the past 20 years as an example, we may see the end of independent retail sellino; in the foreseeable future. Thank you for your attention. I will be glad to answer any questions on my testimony. Senator Nelson. Thank you, Mr. Cohen, for a very thoughtful state- ment. I think we had better move on to Mr. Mann's statement and at least get through part of it. Then I would — if there are some questions that any members of the committee would like to ask for the record, I would assume, Mr. Hammond and Mr. Cohen, and Mr. Mann, that you would be willing to respond to written questions for the record if any member of the committee had some ? Mr. Cohen. Gladly. At some future date or any way the committee desires. (The complete prepared statement and exhibits submitted by Mr. Cohen follow:) Statement of Raphael Cohen, Chairman, Executive Committee, Metro- politan Independent Dodge Chrysler Dealers Association The Metropolitan Independent Dodge Chrysler Dealers Association wish to thank your committee for the privilege of appearing today. We desire to con- tribute one of the opinions on the competition as it pertains to the manufacturer and retail distribution of automobiles. One of the grave errors that is made when discussing whether there is, or is not, competition in the auto industry is brought about by the manner in which the question is posed. For I believe the question should be stated in the following fashioai. Is there meaningful competition in the auto industry that takes place to benefit the consumer who is the largest segment of the society? The reason that I make this distinction is not to split hairs, but to really arrive a;t the crux of the problem. One need only open any newspaper or magazine, turn on any radio or television station, and he can find one of four manufacturers fiercely competing for his business. Examine the same newspaper and the dealer is offering all kinds of goodies to the purchaser for the opportunity of selling him a car. So, to flatly state that competition does not take place, Ijrings me to defend a position that can be easily refuted. Now let us add that world meaningful to competition and we arrive at the point of where this forum can begin. This nation purchases some 9,000,000 new vehicles each and every year, not totally out of desire. The automobile is, and will be for many years to come, the major mode of transportation, so it is most impor- tant that the competition taking place has true meaning. Entry for new domestic manufacturers is closed for all intents and purposes. This is a most unhealthy situation, but there is one method now available that can accomplish the same ends as new entry. But, a mere mention of this method brings down an avalanche of criticism on those who suggest it. That method would be to take the current manufacturers and divide them into smaller entities. I believe this would accomplish many of the healthy things that we are looking for. However, I do not see this happening. In an asymmetrical oligopoly the leader, in this case General Motors, sets the price standards for the industry and the others merely comply. To illustrate — This past year Chrysler announced price increases on new 1969 models. They claimetl that these increases were most modest and actually ac- counted for only 60% of their added cost. They stated that they were absorbing the other 40%. A roar came from our executive branch of government that the increase was unjustifiably high and inflationary. General Motors then met with the Chairman of the President's Council of Economic Advisors and General Motors set the price increase. Chrysler responded in the only manner available to them : they lowered their prices. To those who doubt that prices are administered by the leader of the oligopoly, what further proof do you desire? In fact, with only four domestic manufacturers 46 in the field it is necessary for tlie leader to keep prices sufficiently high in order for the others to survive. Now the question arises of why I have opened with a statement on manufacturer competition at wholesale when the subject today is distribution systems and their effect on competition. It is solely to point out that the only place that meaningful competition exists is on the retail level. The three major manufacturers remain competitively together. During recent hearings of the "Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary", it was clearly developed that the manufacturers control and regulate warranty service price. At the completion of the initial seg- ment of these hearings, General Motors, our leader, responded to the criticism with a new formula. Shortly afterward, Chrysler adopted the exact same formula. After sixty days or so the Ford Motor Company surprised no one by introducing the identical formula. Do you see the pattern of competitive togetherness? The automobile retail distribution system has been through franchised dealers of each particular manufacturer. This franchise is a non-exclusive agreement which grants each franchisee the right to purchase cars from his manufacturer but does not grant him an exclusive territory in which to sell them. There have always been sufficient numbers of franchisees of each particular make so as to allow the consumer the opportunity to purchase competitively. However, over the past 20 years there has been an erosion of the number of franchise dealers. In 1949 there were 49,173 franchised new car dealers. In 1969 we, have 27,486. This portends serious consequences upon competition. New blood is not being enfused in the retail end of the business and the manu- facturer claims it is the high start-up costs for new dealerships. Where in this country have we found a shortage of capital for new ventures when the oppor- tunity of success has been afforded? The true answer is that the dealer fran- chise agreement is an invitation to serfdom. General Motors originally offered a one. year selling agreement. After Senate hearings in the 50s, in which the franchise agreement was criticized, they raised the tenns to five years. Chrysler Corporation offers term letters from one to five years or permanent franchise agreements which can be cancelled for cause. The Ford Motor Company has a similar agreement. Who in their right senses enters into such an agreement? Would you invest over a half million dollars for any one of these agreements. There are other parts of these agreements which I would like to cover. They cannot be sold without company approval. The new candidate is not only judged on his qualifications and his ability to finance the business, but on what he is paying for its purchase. That is correct. You can indei^endently negotiate a satis- factory cash arrangement to sell your business and the factory can tell you that you have been paid too much and refuse transfer of the franchise. If the franchisee dies, his wife or family can run the busines for one year. Then she can either sell out, which, under such circumstances rarely brings a fair price, or she can take an approved partner. What other retail endeavor carries such restrictions? I wonder how many company executives accept their stock options under the same conditions? Now a new threat, the takeover of the retail market through unfair dual distribution systems rears its ugly head. Chrysler Coriwration, through its Dealer Enterprise Division and Ford, through Dealer Development, is putting up the capital to start new operators on the path to indei^endent success, but it assures neither success nor independence. In the Chrysler system two of the three men on the Board of Directors are Chrysler employees. All voting stock is retained by Chrysler until they are completely bought out. That is to say if the operator has purchased 90% of the corporate stock and Chrysler retains 10%, they still own all voting stock. Allow me to illustrate what has happened in one market, Allegheny County, Pennsylvania. Exhibit I shows that in 1960 100%) of all Dodge Dealerships in Allegheny County were privately capitalized. By 1967, only 44.6% of the dealers were private capital and 55.4% were Chrysler financed. Chrysler had taken over better than half the dealerships. How w^as this accomplished? Exhibit II illustrates this. From 1961 through 1966, Staley Dodge owned by Chrysler, lost $235,868.47. Cloverleaf Dodge, from 1962 through 1966, lo.st $132,380.21. Hills-ide Dodge lost $113,320.31 from 1962 through 1966. Years 1963 through 1966 were among some of Chrysler's best years. But, by priming the stimulators with cash they were able to put other private dealers out of business. Tliis form of operating is known as stimulator- dealerships. They falsely stimulate a market. 47 Exhibit III i.s an ad that appeared in Oakland, California. This ad was placed by a factory managed retail outlet. They offered tremendous price cuts and advertised high volume and they had just entered into business. In 1956, because of the disparity in size between franchisor and franchisee, the Senate passed a law called the Good Faith Act. It was to attempt to equalize the power.'^ of both parties during litigation. Unfortunately, it has, in most in- stances, proven to be ineffective. Only the decisions of Judge Will, Matsen Motors V. Chrysler Corporation, and Judge Coolahan, Schicartz Motors v. Chrysler Cor- poration, did the judges interpret the Act in the fashion it was written. They both decided that the minimum sales responsibility clause was being applied by Chrysler in a discriminatory fashion. That the minimum sales responsibility was, in fact, coercive, arbitrary, and unfair. I have attached to my statement a copy of Judge Coolahan's decision, marked Exhibit IV. [Note.— This exhibit was withdrawn by Mr. Cohen.] Schwartz Motors was a dealership formed in the early 30s. It was three generations old. However, Chrysler decided they wanted their own dealership in close proximity to Mr. Schwartz. So he was cancelled, and Chrysler applied for zoning variances on their property. Judge Coolahan negated this action and Schwartz Motors is operating today under a preliminary injunction against renewal of his term letter. This system worked so well for Chrysler that Ford has decided to follow suit. Plaza Ford in Newark, New Jersey reported to be losing $20,000 i^er month. Presidential Ford in Philadelphia boasts the same record. How long will the independent remain m such an environment? Another form of control of distribution is through Americo Realty, the realty division of Ford, and Chrysler Realty, the realty arm of Chrysler. Americo owns $20,000,000 in real estate in New Jersey alone. Chry.sler claimed recently in an article in "Automotive News." that they were purchasing $2,000,000 worth of real estate per week. Whei-e does this leave our leader, General Motors? Biding its time until they can enter the market under the guise of competition. The last bastion of price competition for the consumer lies in the independent franchise system. I foresee in the future trading stamps and games as the only method of competition when the big three have complete and final control of all retail sales. Another area in which giant corporatism injures the average consumer and competition in the automotive field is in fleet and leasing subsidies. Avis may be number two in car rentals, but the deal they i-eceive when purchasing their vehicles is second to none. They receive the following benefits not available to the consumer, or for that matter, dealers : (1) Large advertising subsidies. (2) Preferential delivery schedules at announcement time. (3) Price concessions on equipment. (4) Guaranteed trade-in value on their used cars. A Ford dealer in New Jersey displayed an order placed by a national fleet. After figuring in the special guaranteed value paid to the dealer by Ford, and the $."»0 over dealer invoice, the fleet paid $500 less than an individual consumer would have had to pay. This is not to say that the dealer makes $500 more on the private purchaser, but with factory subsidies, the fleet, in reality, is pur- chasing the car for less than the dealer. This complaint has been voiced to the manufacturer, but dealer protests fall on deaf ears. With the fleet buying for less than the dealer, the consumer has been subsidizing fleet purchases. Another area of unfairness is displayed by my Exhibit V through VII. These represent orders placed with my manufacturer on May 26, 1960. If you will exam- ine my order, as opposed to what Chrysler decided to build, you \vill find the following equipment added : (1) Glove box light ; (2) Ash receiver light; (3) Ignition switch time delay ; (4) Headlamp warning switch ; (5) Bumper guard, front and rear. The dealer cost on these items adds $41.35 to my invoice on items that I did not order. Furthermore, since this is our most reasonably priced car, and is generally purchased by the price-conscious consumer, my chance of recovering these costs are minimal. I would further like to point out that at no time was I consulted on these additions. I can readily assure you that this is only one instance of adding additional equipment A dealer recently complained to me that he had received 48 a new car which was ordered for a specific customer and they had added a $100 option. He further stated that he could not pass this on to the consumer and was forced to absorb it. He could have refused to deliver the car, but who do you believe the customer would have termed the unethical party? Again, allow me to raise a point covered in your inquiry. It is that of cor- porate secrecy. I am not quite sure of what information you believe should be public knowledge? I do know one requirement which I must divulge to Chrysler Corporation, which is part of my contractual obligation. Exhibit VIII is a blank copy of a financial statement that is required by Chrysler each and every month. Ford and General motors have the same requirement. This statement breaks down my entire operation and supplies the manufacturer, in the most minute dtetails of (1) how much gross profit I make on sales of new and used cars; and (2) what my service department earns. In fact, it shows every area of my operation. Now keep in mind that the same corporation has retail outlets, so by con- tract, I am forced to supply my competition with my operating statement. I believe that this is the most ridiculous situation I have ever heard. If the trend that is now taking place continues and we have the statistics of the pasit 20 years as an example, we may see the end of independent retail selling in the fore- seeable future. Thank you for your kind attention and I will answer any questions my state- ments may bring to mind or any other that you may have in your mind. Exhibit 4 (Raphael Cohen's exhibit No. 1: Table: Allegheny County (Pittsburgh, Pa.) sales of new Dodge passenger automobiles : private-capital and Chrysler- financed dealers' percentages of total Dodge sales, 1960-1967) PERCENTAGES OF DODGE SALES, 1960-67 Calendar years— Model years— 1960 1961 1962 1963 1964 1965 1966 1967 Allegheny County private capital dealers 100 99.1 60.0 59.0 54.0 47.7 47.1 44.6 Allegheny County Chrysler-financed dealers .-. .9 40.0 41.0 46.0 52.3 51.9 55.4 Total 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 PERCENTAGES OF DODGE REGISTRATIONS Allegheny County private capital dealers 93.5 90.1 59.0 58.3 51.0 42.9 Allegheny Country Chrysler-financed dealers 8 39.4 40.4 43.4 47.1 Non-Allegheny County dealers (net) 6.5 9.1 1.6 1.3 5.6 10.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 49 Exhibit 5 (Raphael Cohen's exhibit No. 2: Table: Losses of three Chrysler-financed dealerships, Allegheny County (Pittsburgh), Pa., 1961-66) LOSSES Staley : 1961 ($10, 389. (X)) 1962 (54, 042. 34) 1963 (57, 401. 54) 196i (55, 465. 78) 1965 (21, 618. 32) 1966 (36, 948. 49) Total loss (235, 868.47) Cloverleaf : 1962 (7 months) (77, 959. 20) 1963 (87, 74.5. 91) 1964 48, 816. 41 1965 33, 110. 70 1966 (48, 602. 21) Total loss (132, 380. 21) Hillside : 1962 (43, 514. 98) 1963 (49, 843. 99) 1964 6, 530. 93 1965 (27, 005. 41) 1966 513. 14 Total loss (113, 320. 31) 50 Exhibit 6 (Raphael Cohen's exhibit No. 3: Xewspai^er advertisement placed l^y a Chrysler- financed Dodge dealer, Oakland, Calif.) O:^ DCI!C!III¥E CARS ^^ fuairiy modeSs, mckes end coiors to Ca^sose ■'tosti Don't delay— v/hen these 'jGouiies arc 3o!d, thsre'ii be no more — Bay Now loiay Scve a big 51000. o Ful! Finsnoing o Danl; Tsrnis o Gro^it llnicn; o Casii-sPiyway you v/anUo Wj ■ Complete service • Body and Paint Dcpt. 'Tunc-ups • Factory Parts I Be treated like a ciJStonisr-iiOt 11!;? a niuiitWy qaota . . . - ' , Bus 'Jo o:i"r [isiijIIij-'/GiiyR^Q r?-," _. .^ _•,.-,-.. -—r -seIos — rje rare ©yereC'OC-":-" .GuoronJocd ' U V / C J tJLiLilii'j U hLuLs ti L-.i-J.J>Jwt)» ^ by Koncs: :':;<:;ont • Two (2) Used cor locations to serve you better • '.^vv;„ 4054 E. 14th St. 261-1258 • 51st and E. 14tii St. 201-27-' '^^ J^^' ^>i^ IfK T f //^M 51 Exhibit 6-A (Raphael Cohen's exhibit No. 4 (withdrawn and subsequently resubmitted) : Opinion of Judge Co()lahan grnntins prelJmlnary injunction on plaintiffs' motion in Swartz v. ChrysJcr Motors Corp., U.S.D.C., X.J., Civ No 1230-68- from 1969 Trade Cases If 72,8o4 ) ; Court Decisions Swartz V. Chrysler Motors Corp. [H 72,854] Herbert C. Swartz, Norman I. Swartz, Eleanor Lattig and Swartz Motors V. Chrysler Motors Corp. In the United States District Court for the District of New Jersey. Civil Action No 1230-68. Filed March 11, 1969. Automobile Dealer Franchise Act Preliminary Injunction — Retention as Dealer. — A preliminary injunction to continue an auto dealer's status as a franchised dealer was granted, since it was reasonably probable that the dealer would succeed in the jury trial in showing that the manufacturer had mserted a minimum sales requirement clause in the franchise agreement which permitted termmation, that the clause was not uniformly enforced, that actual sales performance would not justify termination, and that the manufacturer wanted the termination because of the planned construction of a company-owned dealership in the area. See Refusal to Deal, Vol. 1, ^2540. For the plaintiffs: Cohn & Burger, by Martin Burger. For the defendant: Pitney, Hardin & Kipp, by Frank C. O'Brien. Opinion CooLAHAN. District Judge: This is an action in which the plaintiffs seek to re- quire Chrysler Corporation to continue Swartz Motors as a Dodge dealer. The jurisdiction of this court is invoked under the Automobile Dealer's Day in Court Act, 15 U. S. C. § 1221 et seq. The case is presently before the court on plaintiffs' mo- tion for a preliminary injunction continuing Swartz Motors' status as a Dodge dealer; a temporary restraining order to that effect was signed on November 23, 1968, and has been continued pending this decision. [Preliminary Injunction] In order for a preliminary injunction to be issued here, the plaintiffs must prove that there is a "reasonable probability of eventual success" in the current law suit and that there is a "likelihood of irreparable injury" if the injunction is not issued. Ikirt V. Lee National Corp., 358 F. 2d 726 (3d Cir. 1966). There seems little doubt that an automobile dealer will be irreparably harmed if the manufacturer which supplies its stock of cars terminates dealings with it. The loss of identification as a Dodge dealer and the resulting monetary loss will not be easily susceptible of proof at trial. Moreover, a measurement of the momentum lost by a failure to continue Dodge advertising on a regular basis could only be based on specu- lation. While the complaint asks for mone- tary damages in the alternative, as is pointed out by the defendant, it is clear that the main relief sought in this action is the injunction requiring Chrysler to continue Swartz as a Dodge dealer. The only ques- tion remaining, therefore, is whether it is "reasonably probable" that the plaintiffs will eventually succeed in this action.' Swartz Motors was begun in 1933 as a partnership consisting of the father, grand- father and uncle of the present President of the corporation, Herbert C. Swartz. From 1933 until 1955 Swartz acted as a dealer for Chrysler in both the Plymouth and Dodge lines of cars. In 1954, Mr. Herbert Swartz' father died, and, as a condition of continuing the dealership, Chrysler required that Swartz Motors incorporate and add a new shop. This was done. Then, in 1955, the Plymouth franchise was taken away, leaving Swartz with only its Dodge fran- chise. Finally, in 1965, Chrysler theatened to terminate the Swartz franchise if sales failed to improve, and sent in an inspector to survey the facilities of the dealer and to recommend changes. According to the un- controverted testimony of Mr. Swartz, Swartz Motors, in order to prevent Chrysler from terminating the franchise at that time, was forced to consent to a cancellation of its permanent Direct Dealer Agreement, and to the substitution of a Term Agree- ment running from August 13, 1965 until June 1, 1966. On January 18, 1966. Chrysler had Swartz execute a "sales locality amend- ment," enlarging the territory involved in fixing the sales formula for Swartz from the immediate Dover area to the entire Newark metropolitan region, extending as far south as New Brunswick and as far east as Jersey City. The term agreement was renewed, after Mr. Swartz flew to Detroit to work out the terms, in May of 1966, and was to run from > As a result, the facts recited hereafter and tentative conclusions reached from evidence thus the legaJ conclusions set forth represent only far adduced in the case. 32-493 O — 69— pt. 1- 52 June 1, 1966 to June 1, 1967. This first ^ extension was itself extended, by agreement on June 1, 1967, until December 1, 1968. A clause in the original Term Agreement, wliich continued to be a part of the con- tractual arrangements of the parties through the extensions, provided that a new Direct Dealer Agreement would be granted by- Chrysler if Swartz fulfilled the responsibili- ties set out therein. These responsibilities included: (1) increasing working capital; (2) providing monthly financial statements to Chrysler; (3) selling a sufficient number of cars and trucks "to equal or exceed" the Minimum Sales Responsibility (MSR) as defined in the Direct Dealer Agreement; and (4) "Dealer is otherwise qualified for a regular Dodge Direct Dealer Agreement." The report of Scott Smith, a Chrysler in- spector, dated October 8, 1965, calls for, among other things, an improved used car display, a remodeling of the showroom, an enlarged sales force, increased advertise- ment, and the removal of two persons then working at the dealership, Mr. and Mrs. Bruno Storck, Mr. Swartz' uncle and aunt. According to the testimony at the hearing on the preliminary injunction, all of these recommendations have been followed at great cost to the plaintiflFs, but Swartz Motors has still not been able to equal or exceed its MSR. Chrysler maintains, there- fore, that it has the right to refuse to allow Swartz to remain as a dealer and to refuse to sign the permanent Direct Dealer Agreement. Swartz, on the other hand, contends that the use of MSR is "un- equitable, discriminatory and coercive," and. that failure to meet MSR is being used as a subterfuge to cancel the dealership to allow Chrysler to establish a company-owned dealership. Swartz further alleges that, to further this plan, Chrysler expanded the area within which Swartz' MSR is coni- puted, thus increasing Swartz' MSR, and reclassified Swartz' location in Dover from a "designated" to a "non-designated" area. [Minimum Sales Formula] The Direct Dealer Agreement provides that a dealer's MSR is computed as follows: From time to time, but at least once a year. Dodge will compute the ratio of the number of new Dodge passenger cars or Dodge trucks, as the case may be, registered for the most recent 12-month period for wiiich registration figures are available in the Dodge Sales Region in which Direct Dealer is located to the number of all ncvv passenger cars or trucks, as the case may be,, so registered in that Region. The ratio thus obtained will be applied to th.e number of all nrw passenger cars or trucks, as the case may be, registered during the same 12-moiith period in Direct Dealer's Sales Locality. The resulting number (and th- pcrccMta^e share of market that such nutnl^cr rcjire- sents for the Sales Locality) will be Di- rect Dealer's Minimum Sales Responsi- bility for this same twelve (12) month period, subject to such adjustment as is described below. . . If. Direct Dealer's Sales Locality is in a metropolitan or other market :;rea where there are located one or more au- thorized dealers in the passenger car or truck as to which the Minimum Sales Responsibility computation is made . , . Direct Dealer's fair share will be deter- mined on the basis of recent trends in sales performance, availability of motor vehicles, local conditions, revisions in Direct Dealer's Sales Locality descrip- tion, location of facilities, and the other factors, if any, directly aflfecting sales opportunity. At the hearing, however, Jack Casement, the manager of the department of Chrysler responsible for the computation of MSR for Plymouth and Dodge and for the calcula- tion of each dealer's Fair Share, testified that the MSR and Fair Share were arrived at somewhat differently. The truck MSR, he. explained, was not computed separately; instead, the figure was taken to be the same as the passenger car MSR. He testified further that the Fair Share was established by determining the relative impor- tance of each dealer's local market, which is measured by the number of new cars registered in what Chrysler designates as the dealer's prime trading zone and after considering the combined selling strength of all dealers, including those of other automobiles which are located in the same general "dealer cluster." Mr. Casement did not deal specifically with the facts in the Swartz' MSR assignment, but testified only as to the general method by which MSR's were assigned. While the Direct Dealer Agreement also provides that Where appropriate. Dodge will adjust Direct Dealer's Minimum Sales Respon- sibility to take into account the avail- ability of motor vehicles, local conditions, revisions in Direct Dealers' Sales Locality description, the recent trends in Direct Dealer's sales performance, and the other factors, if any, directly affecting sales opportunity Raymond Cox, Regional Manager for the New York Region, testified at the hearing 53 that lie had never been involved in any case in wliich the above paragraph was utihzed during the sixteen years he has been employed in the regional office. His interpretation of the paragraph's use of the phrase "local conditions" was restricted to "a drastic situation which might adversely affect the dealer's ability to perform, such as a fire, which would have burned out his facilities." In considering whether MSR is "unequitable, discriminatory and coer- cive," therefore, this paragraph may be ignored. [Local Conditions] Turning, then, to a consideration of the propriety of the MSR formula, its basic failure immediately becomes clear: The formula does not take into account the socio-economic level of the particular area surrounding the dealership or use as a factor the greater or lesser degree of ac- ceptability which Dodge automobiles have in the vicinity of the dealership. Obviously local conditions are of paramount impor- tance in any consideration of a dealer's performance, and the responsiveness of the MSR formula to these conditions has not, at least at this stage of the proceedings, been indicated. Furthermore, the method by which Chrysler made the decision to incorporate Swartz into the Newark Region, while not incorporating its dealer in Sparta, whicli is in a neighboring area of the same general character as that of Dover, was not elucidated at the hearing, nor was the subjective method of Fair Sharing used in deciding Swartz' MSR. In addition, it is clear that, given the method by which MSR is calculated, approximately one-half of all Chrysler dealers would be subject to termination at any time by virtue of the MSR clause,' since Chrysler defines "ade- quate performance" as the "attainment of minimum sales responsibility . . . [a]ccom- plishment would be a hundred per cent." It is evident, because nowhere near that number have been terminated, that Chrysler accepts less than 100 per cent achievement of MSR as adequate sales performance. This court agrees with Federal District Judge Will, who after a trial on the merits in Madscn v. Chrysler [1966 Trade Cases 1171,950], 261 F. Supp. 488 (N. D. 111. 1966), vac. as moot, 375 F. 2d 773 (7th Cir.), stated: As we shall note subsequently in some- what greater detail, Chrysler can properly waive "strict performance" of the MSR requirement and substitute a standard of conduct which accepts a lesser degree of performance as satisfactory. Having done so, however, it cannot claim the right to vary the standard of satisfactory performance between dealers so as to gain the right to terminate dealers for causes other than those enumerated in the con- tract, i.e., applying a more rigorous stand- ard of satisfactory performance to one dealer because it has reasons for desiring termination, when those reasons, in and of themselves, would not constitute cause for termination under contract. Such ac- tion is tantamount to rewriting the con- tract to give Chrysler the right to terminate at will which the contract — as written — precludes. We conclude that MSR calculated simply as provided in the Chrysler dealership agreements without adjustment for the various factors herein discussed and which results at all times in a substantial number of dealers being in technical default is an arbitrary, coercive and unfair provision since it would enable Chrysler to termi- nate roughly one-third to one-half of all its dealerships at any time. We conclude also that Chrysler has waived failure to achieve MSR as a default in plaintifFs dealership agreements by treating it as a performance goal rather than as a con- dition of those agreements. In this court's view, it is obvious that to allow Chrysler to terminate, based solely on the use of these MSR and Fair Share figures which are computed by a division of Chrysler, would be unfair. This is in accord with the legislative purpose behind the Automobile Dealer's Day in Court Act, which indicates that the words "fair and equitable" are to be in- terpreted within the context of coercion by the manufacturers, which arises from the inequality of bargaining power between the oligopolistic automobile manufacturer and the local dealer who possesses little eco- nomic power. Milos v. Ford Motor Co. [1%3 Trade Cases 1170,794], 317 F. 2d 712 (3d Cir. 1963). If the franchise of a dealer is terminated for wrongful reasons, the manu- facturer is liable under the statute. Berry Brothers Buick, Inc. v. General Motors Corp. [1966 Trade Cases 1171,875], 257 F. Supp. = Full data on this point was not adduced at the hearing on the preliminary injunction. Plaintiffs' exhibit 10. covering the entire 1965 model year, however, shows that nine out of the thirteen dealers listed on that sheet prepared by Chrysler had failed to achieve MSR. See also Madsen v. Chrysler, infra. Th\s point, and the many others which were not elucidated at the hearing, will hopefully be clarified through the use of the expanded discovery techniques per- mitted by the Federal Rules of Civil Procedure, and will be further pursued at trial. 54 542 (E. D. Pa. 1966), aff'd fl967 Trade Casks If 72,111], 377 F. 2d 552 (3d Cir. 1967). As the Fiftli Circuit Court of Ap- peals has pointed out, in Woodard v. General Motors Corp. 11%2 Tkadic Casks 1170,191], 298 F. 2d 121, 127-28 (Slh Cir. 1962): The policy behind tiic enactment of the Automobile Dealer Francliise Act was to cstabUsh a balance of power as between manufacturers and dealers in the automobile industry by curtailinpf tlie eco- nomic advantages of the larger manufac- turers and increasing those of the dealers. * * * [0]ne of the principal evils which the Act was designed to remove was the exertion of pressures by the dominant automobile manufacturers upon dealers to accept automobiles, parts, accessories and supplies which they neither needed nor wanted and which they felt their market would not absorb. The insertion of the clause allowing Chrysler to terminate any dealer who falls below MSR, a figure which a very substantial number of dealers fails to meet, appears to have been inserted only as a result of the tremendous bargaining pressure possessed by Chrysler over its dealers, a pressure which the Act was intended to counter- balance. None of the cases cited by the defendant is authority to the contrary. In Garvin v. American Motors Corp. [1963 Trade Cases 1[ 70,800], 318 F. 2d 518 (3d Cir. 1963), cited by defendant, the court says at p. 520: ■ As we have previously noted, Garvin promised to hire at least one full-time salesman in 1958. Certainly, there is nothing arbitrary or unreasonable about this requirement. Indeed, the very pur- pose of the franchise was to assure the sale of automobiles. Hence, the manu- facturer's insistence on the performance of this contractual commitment could not possibly be considered coercion or in- timidation. Miles V. Ford Motor Co. [1963 Trade Cases If 70,794], 317 F. 2d 712 (3d Cir. 1963); Woodard v: General Motors Corp. [1962 Trade Cases If 70,191], 298 F. 2d 121, 128 (5th Cir. 1962). It appears from the court's statement that where there is an arbitrary or unreasonable requirement imposed upon the dealer by an automobile manufacturer as a result of its great bargaining power, the court may intervene under the Automobile Dealer's Day in Court Act. In this instance, as noted above, all requirements insisted upon by Chrysler were complied with. The show- room was redecorated, a new used car lot was purchased, a new lighting system was installed, the amount of working capital was increased, more workers were anployed, the amount of money spent on advertising was increased to a level higher than that recommended by Chrysler, and, finally, Mr. and Mrs. Storck, founding members of the company, were bought out at a cost of more than $50,000. As in Madsen, supra at 506: to permit Chrysler to terminate in re- liance on plaintiffs' failure to achieve MSR would be particularly unfair here where, at Chrysler's urging, plaintiffs in- vested substantial funds in new sales and service facilities for the purpose of in- creasing sales and service volume. To allow Chrysler to terminate Swartz' dealer- ship in reliance on the coercive MSR clause, merely because the solutions Chrysler itself proposed are not totally effective in the Dover area, would be unfair. [Sales Record] The question before this court, therefore, is whether the sales record of Swartz Motors would warrant Chrysler's refusal to sign a permanent Direct Dealer Agreement' The bare sales figures alone, showing an in- crease of from 65 cars sold in 1962 to 120 cars sold in 1967* are not sufficient for the court to conclude that Swartz' sales per- formance, absent other considerations, may be considered unsatisfactory by Chrysler. The new MSR formula devised by Chrysler and computed over the entire Newark area does not seem by the court, for the reasons heretofore g^iven, to be of much assistance. Nor, for that matter, is the old MSR for- mula computed only in the surrounding area, because of the inequities which neces- sarily inhere in any computation of MSR.' The court therefore is left to its own devices in deciding whether or not Swartz' perfomi- ' While the court could simply strike the MSR clause, leaving Chrysler with no method for ter- minating a dealership because of poor sales performance, the court thinks it wiser to narrow the MSR clause to cover only cases where a dealer has an Inadequate sales performance. Therefore, the adequacy of Swartz' sales per- formance remains an issue in the present C£ise. * Final figures for 1968 were not available at the time of the hearing, although Mr. Swartz indicated that, as of December 1, 1968, 130 cars had been sold. = The court is especially troubled by the dif- ferent results attained through the use of the varying territories used in calculating MSR. For example, under the territory used In com- puting the MSR for 1962, plaintiffs' attainment for 1966 was over 63%, while using the wider territory allocated in January, 1966, the attain- ment was only 44.4%. The court cannot under- 55 ance was so unsatisfactory as to warrant Chrysler in terminating the franchise. [Increase in Sales] According to Mr. Swartz' testimony at the Iiearing on the preliminary injunction, which was uncontroverted by defendant's witnesses, Swartz* Motors did not experience any criti- cism of its sales performance by Chrysler until 1963. The year 1962, the earliest year for which the court was supplied sales fig- ures, may therefore be used as a base year in any calculations, a year in which Swartz' sales performance was considered satisfactory by Chrysler. Swartz' growth in sales must be measured against the growth experienced nationally by Dodge, which increased its share of the market from 3.43% in 1962 to 5.8% in 1967.' The following table indicates that Swartz' growth, extrapolating from the sales figure for 1962, has more than equaled Chrysler's nationwide percentage growth in all but 1964, the year prior to the survey prepared by Scott Smith: Dodge % Year Nationwide 1962.... 3.43 1963 5.02 1964 5.74 1965 5.60 1966 6.03 1967 5.87 Cars to be Sold, Cars actually % by which Swartz Using 1962 as Sold by Exceeded National the Base Year Swartz Market Growth 65 95 109 106 114 111 65 104 9% 105 -4% 116 9% 143 25% 120 8% Thus, using the figures supplied by Chrysler, it appears that Swartz' performance is not so unsatisfactory as to permit Chrysler to refuse to sign the permanent Direct Dealer Agreement. Based on the data presented at the hearing on the preliminary injunction,' therefore, it appears to this court that there is a "reasonable probability" of plaintiiTs eventual success in proving that Swartz' re- cent performance has been as satisfactory as, or more so than, it was in 1962, and that, therefore, Chrysler's termination, if based solely upon Swartz' sales performance, was unreasonable. There has been some testimony here as to a possible motive for Chrysler's action in re- fusing to sign the permanent Direct Dealer Agreement, the proposed new factory-dealer- ship for Mountain Lakes, New Jersey, which is located about five miles from Dover. None of the contractual arrangements between plaintiffs and the defendant permit termina- tion in the event that Chrysler constructs such a facility. On objection, Mr. Swartz was not permitted to testify as to the date indicated on Chrysler's plans for the dealer- ship, which Chrysler's attorney presented to the Mountain Lake's Board of Adjustment, in order to gain a zoning variance, but it is clear that, by "early 1968," according to the testimony of Dodge's Regional Man- ager, Mr. Cox, the dealership was already in the planning stages. Nevertheless, on February 13, 1968, Chrysler wrote to Swartz that: The possibility of your buying out your partners whom you felt was contributing to this poor sales performance was brought up. We urge you not to delay any action that will reverse the present unacceptable sales performance record made by you. Excluding the self-serving statement that the buy-out of Mr. and Mrs. Storck was desired by Swartz, rather than by Chrysler, a statement contradicted by the 1965 report of Chrysler's inspector, which called for their removal, it is clear that Chrysler was, at that date, still pressing Swartz to proceed with the buy-out, while knowing of the planned Mountain Lakes company-owned dealership. To permit Chrysler now to ter- minate under the guise of Swartz' failure to attain MSR would be unconscionable. Chry- sler's motivation for refusing to reinstate the permanent Direct Dealer Agreement is fur- ther illuminated by the decision to make Dover an "open point," the effect of which is to make it impossible for Swartz to find a buyer for its dealership facilities to take over the Dodge franchise in Dover. Plain- stand how Chrysler can maintain that use of these territories, which brings about such dif- ferent results, is equitable and based on objec- tive factors. • The effective sales area of Swartz Motors was not delineated at the hearing to the satis- faction of the court, nor was the increase In the number of all cars sold to Inhabitants of that area brought out. These variables are therefore ignored in the following calculation. ' Of course, Chrysler may bring forth addi- tional evidence at trial to convince the Jury that Swartz Motors' performance was unsatisfactory, and that it exercised reasonable business Judg- ment In terminating Its franchise because of that poor sales performance. 56 tiffs' contention that the termination was the result of other than its failure to meet MSR is further borne out by the statement of Mike McGee. Chrysler's distnct man- ager, who, Mr. Swartz testified, said that Swartz Motors' dealership would not be re- newed even if it sold 600 cars, which would be far above its MSR. Mr. McGee was not called as a witness by Chrysler Corporation at the hearing. The sole testimony on this point from Chrysler was by Mr. Cox, who stated that he did not recall hearing Mr. McGee make that particular statement. As the court noted in Mt. Lebanon Motors, Inc V Chrvslcr Corp. [1968 Trade Cases 1172,523], 283 F. Supp. 453, 456 (W. D. Pa. 1968) : Plaintiff's cancellation was purportedly for inadequate sales performance. . . . Testimony indicated that in fact other factors were considered by the company. Mere breach of contract by the dealer does not necessarily relieve the manu- facturer of liability under the statute, whose very purpose was to afford protection aga'inst undue bargaining power on the part of the automobile makers, further- more, failure to meet MSR does not per se prove inadequate or unsatisfactory sales performance, in view of the criteria for determining MSR and a dealers fair share thereof. Testimony indicates that some- times more and sometimes less than 507o of dealers fall below the prescribed figure. See Madsen v. Chrysler Corp. [1966 Trade Cases H 71,950], 261 F. Supp. 488. 492, 506 (N. D. 111. 1967). It is a jury question whether Chrysler's action was motivated by honest business judgment or bv personal animosity against plaintiff's president Samuel A. Liberto be- cause of his prominent part in promoting opposition by privately-financed dealers to the operation of "factory-stores or tor other insufficient reasons. Likewise, here it is a jury question whether Chrysler refused to sign the permanent Direct Dealer Agreement because m its honest business judgment Swartz Motors sales performance was unsatislactory or because it planned to open a company- owned dealership in Mountain Lakes. The extensions of the Term Agreement provided that, upon fulfillment of all the conditions contained in the ongmal Term Agreement and those contained in the ex- tensions, Swartz would be granted a permanoit Dodge Dealer Agreement. It appears to the court that plaintiffs have fulfilled all the conditions contained in all the agreements, with the exception of the MSR sales per- formance condition. In order for the court to grant the plaintiff's relief, it is only neces- sary to find that it is reasonably probable that plaintiffs will succeed in the jury trial to follow in showing that Chrysler violated the Automobile Dealer's Day in Court Act by inserting the clause permitting termina- tion for failure to meet MSR as a result of its superior bargaining power and coercion and intimidation of the type which the Act i was meant to prevent, and then using that clause to terminate Swartz, a termination desired by Chrysler because of the planned construction of a company-owned dealership in Mountain Lakes. It appears to the court that- in light of the testimony at the hearing, it is "reasonably probable" that plaintiffs will succeed in convincing a jury of these facts The indicated relief at trial would appear to be an order requiring Chrysler to reinstate Swartz Motors' permanent Direct ' Dealer Agreement. A preliminary injunc- tion requiring Chrysler to continue Swartz as a Dodge dealer pending trial is therefore warranted. Let an appropriate order be submitted. 57 Exhibit 7 (Raphael Cohen's exhibit No. 5: Order for a Dodge placed by Merit Motors, Inc., and shipping notice for Dodge delivered with unordered equipment.) OOOOE DIVISION ^^ CHRYSLER 1969 MODEL DART RED OUTLINED AREAS IMST BE FILLED IN 206274 DISTRICT DEALER Music Maslei Radio, Powei Steeling, Vaiiable Speed Wipeis and Electiic Washeis. Deluie Wheel Covets. Leit Remote i;ontiol Mii All Foam Fiont Seat (Sid- w'Buckel Seats) |i'iIi;i;iii:m _ Lett Side Remote Conliol Rigtit Side Manual Tit^ M^ Protective Rubbei Flooi Mais. Bumpei Guards Fiont & Reai. Undeicoating & Hood Insuialoi Pad ni H- Bell - Avail IJC3,GTt GTS Glove Boi Light. Tiunk Ligtit, Map* Courtesy Liglil[Std. Conveils.). AshTiayLight.lgnitionLighl w Time Delay, Headlamp-On Remindei, Glove Box LockfSld. GT& GTS) - Door Upper Frame - LL41 1 LH41 - Sill -Sid GTS - Optional All Oltiers IJJ.HH.I=IA<32Mie8 l7-«ai ADVANCE DEALER SHIPPING NOTICE OOOOE DIVISION ^ CHRYSLER MOTORS CORPORATION H/5MTRAMCK ASSY VEHICLE lOENT.NO. SHIP TO OLR. NO. LL23-B9B-433247 REG. SOLO TO OLR NO. 32 53628 ROUTE: B57 PAID FOR BY: c.c.c. NYC-LITTLE FEPR Y-M6G-C0NV0Y WHITE PLAINS S.O. NO. 626-BL-206276 MERIT MOTORS INC 597 WARBURTON AVE HASTINGS N Y MERIT MOTORS, INC. 132 SOUTH BROADWAY YONKERS, N. Y. 00000 DESCRIPTION LL23 F5 ^. ■< L2X DODGE DART SWINGER -6- 20R. HARDTOP 034 TORQUEFLITE TRANSMISSION D5I AXLE RATIO 2.71/2.76 E24 225 CID ENGINE Lll GLOVE BOX LIGHT L15 ASH RECEIVER LIGHT L25 TRUNK LIGHT L65 IGNITION SWITCH TIME DELAY L72 HEADLAMP ON WARNING SIGNAL M85 BUMPER GUARDS - FRONT £ REAR Rll MUSIC MASTER AM RADIO S77 POWER STEERING W61 7.'^0X13 2P/APR BSW TIRE sue TOTAL 265 DESTINATION CHARGE MFGR. SUGG. RETAIL PRICE TOTAL 2730 43 4 7 41 7 2,400.00 17 5.45 46.35 2.20 2.20 4,40 7.25 25.30 61.55 85.15 2,809.8? 6 5.0C 2,874.85 FACTORY WHOLESALE PRICE TOTAL 2,357.7] 06-18-69 TOTALS 2832 1 Dealer Copy 63 Exhibit 10 (Raphael Cohen's exhibit 8: Chrysler Corporation form: "Dealer Financial Statement" (monthly).) DEALER FINANCIAL STATEMENT . :iS£j *T,iuKinN ^»Fr.inN *F.»„„P ♦rnn :e sheet BALANC ASSETS AMOUNT c LIABILITIES AND NET WORTH AMOUNT CURRENT LIABILITIES c.s- n HAND i"f ACCOUNTS PA.AecC 20, C>SH » ,KHK .0! NOTES RATABLE 201 CONIXCTS >N IR.NJII IDE D,V.DENDS 205 TOTAL CASH AND EQUIVALENT .lines l-li . ► > CUSTOMER SERV.CE DEPOSITS 206 nCCEIVABLES CREDIT BALANCES-SERVICE PARTS . VEHICLE ACCTS St««.C£« P.I.IS »CC00r.t5 I no fj) a TOTAL ACCOUNTS i NOTES PAYABLE C^i'f* ) (i.) s ACCRUED CKPENSeS CUiTO»E« NOTES lU ID PATROLL AN. EDU.VALENT 2,0 IIA INTEREST 2,2 ,2 INSURANCE 2,1 .....NT.SE...CE ,1 TA.ES PAYROLL 2. A N0L>8.C> ,. TA.ES OTHER THAN PAVROLL • .NCONE 215 SPEC.LVENICLE.NCO.I 15 INCOME TAIES 2.6 16 OTHER ACCRUED E.PENSES 2.7 WHOLESALE P.NIS CONPENSAIION ,7 TOTAL ACCRUED EXPENSES (LINES 10- 16) (D) " WHOLESALE FINANCE LIABILITY, OTHE« 1160 „ «E« CARS AND IRUOS 220 LESS .LLOW.KCt F0« OOUBIFUL .CtOUN.S ( !*2. DENONSTBATORS 226 NET RECEIVABLES ,L,NES.,»»U 20, USED CABS AND TRUCKS 227 fp. OUE >.0M FIN.NCE . l»iU..NCE CO 5 CU..EN, 119 22 OTHER INVENTORIES 210 V TOTAL RECEIVABLES ,L.NES ...22, ( 1 21 TOTAL WHOLESALE FINANCE LI ABILITY {^i""' IB TOTAL CURRENT LIABILITIES , LINES 8 .7*2) -1 "" — 25 II ■■°'i-" .l"'lt. '« 1 "•■"' 110 26 WORKING CAPITAL ..L >A» ,„,^ DART -* 121 27 ■ ELV ;o,i! ■ „ijj ,11 2. FU«. ;o:M POLARA 1..* 121 2S CMH.SLEU ,!l A, ?J!c"s I..A 12. M '"""'' '""'°°" •''"'"'"""' mPEPUL 1... Ai .»(« I2S TOTAL NEW V H.CLES ,l,ne, .. - .,, ;'bi " OTHER LIABILITIES- ) Bl " DRIVER EDUCATION CARS 255 — ..s :;:; .K,;-»„ ,^.„ B >■ LEASE VEHICLES 256 ~" ;■;;: * ,n;., )*•- B « COMPAN. CARS .SERVICE VEHICLES 25A |i. TOTAL OTHER LIABILITIES ilines U-IS. 130 iB =' LONG TERM DEBT »".°,"."', °i'„ ACCESSORIES ni Bl " NOTES RATABLE ^*(1AnV 260 U2 ( tBi " ■ORTS.OES PA.ABEE 261 fD) TIRES .NO TUBES ill .0 OTHER NOTES. CONTRACTS 265 111 ., TOTALLO»0TE««0EeT(V,"S§ -- --- _-__ i-L ID) lis <2 TOTAL LIABILITIES , LINES 2. 16 > All | 1 <1 II TOTAL PSA » MISC INVT T , LINES 3..«, i ► " NET WORTH 1 NON.„TO.0„.E INVENTORIES 116 igj" CAPITAL STOCR PREFERRED 270 4 1" COMMON 271 I «»R „ TOTAL LIABILITIES AND NET WORTH (ATI.) | | '$ | . — — HATE POST » ARK ED «N TH. ^ IMPORTANT: Electronic processing requires legible informofion on lines with key punch symbols. REMINDER - Statemenr conihti of — Page 1, Balance Sheet — Page 2, Sterement of Income and Eipente — Page 3, Departmental Grau Profit Anolyiit end Page 4, Management Operating Information — REMOVE CARBONS AND STAPLE INTO SETS . Mail Original (White) ond First Carbon Copy (Green) to Regional Office prior to 10th of month. 64 '_ ., ; PERIOD ^ .roDF PAGE 2 "'^""■" STATEMENT OF INCOME AND EXPENSE r " NAMEOFACCOUNT j CCT NO MONTH YEAR . TO - DATE ■ - V E H 1 c L E s E L L 1 N G E X p E N s E s - 301 <► - J SALES SUPERVISrON COMMISSIONS A INCENTIVES 302 lO - 5 NEW VEHICLE PRE-DELIVEBY VAR. 303 ffl " 6 POLICY SERVICE — NEW VEHICLES 304 (i) - 7 NEW VEHICLE VARIABLE SELLING EXPENSES aINES J . 61 TOTAL (I (i) " , 1 1 " 9 ADVERTISING 307 (0 - SALESMEN'S SALARIES 308 ffl - 1 SALES SUPERVISION SALARIES 309 CO - ; SALES PERSONNEL TRAINING- NEW 310 (!) " 3 DEMONSTRATION EXPENSE VAR. 312 ^ " < INTEREST ON INVENTORY FINANCING 31! ® s NEW VEHICLE SEMI-VARIABLE SELLING EXPENSES ILINES 9 - Ml TOTAL \^ ^ J 1 1 J SALESMEN'S COMMISSIONS S INCENTIVES USED VAR. 321 (?) 8 SALES SUPERVISION COMMISSIONS » INCENTIVES 322 9 POLICY AND WARRANTY SERVICE— USED VEHICLES 324 ® USED VEHICLE VARIABLE SELLING EXPENSES ILIBES 1? . 191 TOTAL ^ ., T , 1 1 ADVERTISING USED SEMI VAR 327 ® 3 SALESMEN'S SALARIES 328 C') 4 SALES SUPERVISION SALARIES 329 ® S SALES PERSONNEL TRAINING - USED 330 ® 6 DEMONSTRATION EXPENSE AND INVENTORY MAINTENANCE— USED 332.33 t 7 INTEREST ON INVENTORY FINANCING 335 9 8 USED VEHICLE SEMI-VARIABLE SELLING EXPENSES ILINES 22 - 27i TOTAL (^ (3) 9 TOTAL NEW VEHICLE SELLING EXPENSES (LINES 7 a T51 NEl* TOTAL USED VEHICLE SELLING EXPENSES .lines 20 « 281 USED 1 TOTAL VEHICLE SELLING EXPENSES i LINES 29 «JOi TOTAL 2 VEHICLE NET ILINE 1 MINUS 311 ' 3 A SERVICE AND PARTS DEPARTMENT GROSS PROFIT 1PAGE3LINE 76) 5 SERVICE AND PARTS DEPARTMENT DIRECT EXPENSES D 1 R ^ E ^ c ^ N s 6 SALARIES WAGES AND INCENTIVES— SERVICE 34 2 ® J, SALARIES, WAGES AND INCENTIVES PARTS 343 ® 8 VACATION AND TIME-OFF PAY 345 (s) 39 SERVICE AND PARTS PERSONNEL TRAINING 347 y 40 SHOP SUPPLIES AND SMALL TOOLS 348 ® 1 UNIFORMS AND LAUNDRY EXPENSE 349 (?) 42 ADVERTISING 350 w 43 SERVICE AND PARTS VEHICLE EXPENSE 353 w 44 POLICY ADJUSTMENTS 354 ® 45 FREIGHT EXPRESS AND SHIPPING L S 355 <> 357-89 w 47 TOTAL SERVICE AND PARTS DIRECT EXPENSES 1 LINES 38-461 < > «1 48 SERVICE AND PARTS NET (LINE 34 MINUS .471 "*'"*' 49 SO INDIRECT EXPENSES SI SALARIES AND WAGES— ADM 1 N ISTRATIVE AND GENERAL 362 w 52 EMPLOYEE BENEFITS 363 CO 53 PAYROLL TAXES 365 (f) 5. ADVERTISING GENERAL AND INSTITUTIONAL 367 C«) SS STATIONERY OFFICE SUPPLI ES AND POSTAGE 368 w SS LEGAL AUDITING AND COLLECTION EXPENSE 370 C<) 57 OTHER OUTSIDE SERVICES 371 (*) 58 COMPANY CAR EXPENSE 372 (t) 59 DUES SUBSCRIPTIONS AND CONTRIBUTIONS 373 60 TELEPHONE AND TELEGRAPH 375 81 TRAVEL AND ENTERTAINMENT 377 S2 BAD DEBTS 378 63 MISCELLANEOUS 380 64 65 RENT AND EQUIVALENT 66 MAINTENANCE AND REPAIRS — HEAL ESTATE 382 67 INSURANCE— (OTHER THAN REAL ESTATEl 389 68 TAXES AND LICENSES— . OTHER THAN PAYROLL AND REAL ESTATE 1 390 69 DEPREC . MAINT S REPAIR AND RENTAL— FURN ITU RE SIGNS S EQUIPMENT 391. 2-3 ,0 HEAT. LIGHT POWER AND WATER 395 71 TOTAL INDIRECT EXPENSES ILINES 51 - 701 r ^' i 72 SALARIES— OWNERS AND OFFICERS 36, [ ;r « 73 TOTAL OVERHEAD EXPENSES (LINE 71 AND 721 1 14 TOTAL EXPENSES (LINES 31 . 47 AND 73 , 16) « OPERATING PROFIT (LINES 32 8, A« MINUS 731 77 OTHER INCOME AND DEDUCTIONS NET (PAGE 4 LINE 11 - NETi 1 — NET EARNINGS OR (LOSS) (LINE 70 PLUS OR MINUS 771 k ,0.«0(,.S^,. = ..2-..( ,»....NO.O <,(O.CO .,,.,». o„,o.„.(. ' • ^ as ...^Cl --""° The perfotoled slrips hove been added lo locllilote typing- They should be removed prior lo moiling. REMINDER- Srotcmcnt conlilla of — Page 1, Bolonee Sheet — Poge 2, Stotcmenr ot Income ond Expense — Poge 3, Depciftmen»al Grots Profit ' Anolyiii end Poge 4, MonogemenI Operoting Informotion — REMOVE CARBONS AND STAPLE INTO SETS Moil Originol (V^hirel end Fi™t Cortion Copj IGreenI to Rcgionol Ollico prior to lOHi of month. 65 PERIO FIT ANALYSIS CODE — PACE 3 DEPARTMENTAL GROSS PRO •r MONTH ACCOUNT YEAR. TO. DATE SALES 1 CC 51 or S4LES 1 CROSS PROFIT | UNITS NAME |nO UNITS 1 SAL S 1 COST OF SALES GROS S PROFIT NEW VEHICLE DEPARTMENT I y) (6) Si!kl,*."rnn. ""AIL 401 1 9) ^.E..E.E»E .ET.IE 103 , ^J^ 6).U„ .E,.. 405 5 rj^ fS,C„«,5EE» .ET.IE 107 6 Q) §) IMPEHIAL RETAIL 109 J (J) 10) OART RETAIL 111 S (5) aiT,i^.}i »^... 413 5 lis 10 ^ ^) OTH N CARS RTl 11 if) 1 fd) TOTAL CARS RETAIL ii $} fOl OODCE tR.5 RTL 417 11 ,» ,0) 0,„„ 7„5 .71 419 << IF) ] 1 TOTAL TRUCKS RETAIL C.R5 ELEET 421 16 « * """5 ELEET 122 II (F^ 1 1 TOTAL FLEET 16) U (^ 123 19 h 121 ( ) ;o )^ (P' HE'O »E" L0SSE5 4!SE : ; : : (X) (PI FIN « INS ir.CO»E 427F ; : ( ) (^ 1 TOTAL NEW VEH DEPT. c ) ;i USED VEHICLE DEPARTMENT ;4 1 1 (P).5„C.„5 »7. 4 30 1 15 (l) ^ |«C0. .C..5.7. 4300 tt, ^ (PI USED CARS WHSLE 133 1 It 135C ; .■8 IF,I ill TOTAL USED CARS Z9 1 ,»„5EOT.„C«5 -Tl!.3S JO (,) (L) 1 »ECON „,.K5 RTE 1360 11 fl) (P) USED TRKS-WHSLE 139 1 Ji ■ ( 1100 : ; !3 4 i) TOTAL USED TRUCKS 14 (Gj L '' NON-AUTO » OTHER 414 1 ) « )((' ■P)—VE« LOSSES 44SE : : JS 1 (Ij rpi FlN . INS INCOME 117F ; : K ) It TOTAL USED VEH. DEPT < ► IB TOTAL VEHICLE DEPT 1- I .CAR ivGliIB 1 ^^ SERVICE DEPARTMENT CAB llT RUCK l4 .CAB TRUCK 1 I V.RO 4J 'Si i' CUST IBR-RO -CARS 450 ■, WARRANTY LABOR 152 4S ^ ^ LABOR-INTERNAL 451 47 o ** CUST LBR-NON-AUtO 155 4S © M SUBLET WORK 156 49 © *J CAS OIL-LUBRICANTS 15S . 50 fG) W CUST LABOR-SUP 160 51 1^1 ^ WRIT LABOR-BJP 162 5? A M SUBLET WOBK-BSP 464 5! lit .ft B.P SHOP «ATLS 465 •>' [ ; )n UNAPPLIED TIME 4670 ; 1 5S «i M TOTAL SERVICE DEPT. ( ) !! PARTS AND ACCESSORIES DEPARTMENT " «' PARTS-R 5- CARS 470 1 ijl ^; PART5-R0 S-TRKS 60 'jj ^ PARTS-WRTY CLAIMS ® ^ PARTS-RETAIL 6; ® ^ PARTS-WHOLESALE 6! Wl PARTS-INTERNAL 64 w M ACCESS -RET > R 65 ® W ACCESS -WHOLESALE 6 6 ^ '^ ACCESS INTERNAL 67 (I) h PARTS-DS PRO S 69 (!) Ml PARTS-BSP WBTT 69 f ^ ACCESS B « P-RO 5 1 70 : yj) OTY PUR OISC PSA 4a5E ; : 71 [ KJ) WHSLE PARTS COUP 186F : : 11 i )^ P.A INVTY ADJ 1870 ! : 73 ^I) <0) TIRES AND TUBES 190 1 74 ^P NON.AUIO 1 "ISC ]495 I 75 '^ 0' TOTAL PSA DEPT I 76 1 TOTAL SERVft PTS.DEPT " '!• 1 1 TOTAL ALL DEPTS. { I ro. ^""-' "— =-'- ■ ■ • " * REMINDER: Stolement Anolyiii Moil Orig used unit soles in both the moi 6 on Line 41 ond 42, ge ^, Balance Sheet — Poge 2, ogement Operoting Information irst Corbon Copy (Green) to Re : Office prior to lOth of month. 66 OTHER INCOME OTHER INCOME AND OTHER DEDUCTIONS OTHER DEDUCTIONS TOTAL OTHER INCOME TOTAL OTHER DEDUCTIONS MANAGEMENT OPERATfNG INFORMATION 1 FLEET UNIT SALES | 1 SPEC AL VE HICLE INCOME ANALYSIS 1 1 PERSONNEL SUMMARY C»R UNE I MONTH T-T-0 "iV MONTH YEABTO-DATE NEW 1 USED 1 SESV | PAI>TS >DM TOTAL VAL.SAR VAL.BAR EXEC OWNER BELVEDERE BELVEDERE «03D ».N.OE.EN, 1 1 FURT FURT 4DSD S.EES.E. 4> & CHRYSLER CHRV5LER 407 D 9) DART IMPERIAL 40SD OTHER CORONET TOTAL CHRYPLV MECH.SERV i i DART 4110 MECKB>P CORONETC 4130 "ECH.INTL ^ 4150 1 1 1 4110 TOTAL h a a A< fy 1 CARS-<2. TOTAL DODGE 1 ANALYSIS OF OPERATIONS | CURRENT MONTH CURRENT YEAR TO.DATE PREVIOUS YEAR-TO-DATE | UNIT DOLLARS RNUR SALES DOLLARS PNUR SALES DOLLARS PNUR NEW VEHICLE DEPT. GROSS PROFIT IP 3. L !21 USED VEHICLE DEPT GROSS PROFIT IP 3. L 371 VEHICLE SELLING EXPENSES IP 2, L 3ii VEHICLE NET ip 4. L 33 a 34 MINUS 351 SVC-PTS a OVHD EXPENSE IP !. L 47 » 73) SERVICE a PARTS GROSS PROFIT (P 3. L 761 UNABSORBED OVERHEAD IP 4. L 37 MINUS 38) OPERATING PROFIT ip 4. L 3S MINUS 39 i OTHER INCOME 9 DEDUCT . NET IP 2. L 771 NET EARNINGS OR LOSS |P4. L.40 PLUS OR MINUS 41 1 1 RECEIVABLE ANALYSIS | REc'ETvAeLE DAYS PAST DUE •doSbtpuT" CURRENT 130 3 1-60 61-SO 9 1 a OVER SERV SPTS ACCTS. (P-I.L-BI VEHICLE ACCOUNTS IP-I,L-91 CUSTOMER NOTES IP-I.L-101 OTHER RECVBLES rp-I.L-lll WAR NTV SERVICE IP-i.L-131 OFRSaEMP ACCTS IP-I.L-SSI TOTAL USED VEHICLE INVENTORY ANALYSIS | CARS TRUCKS 1 INVENTORY DAYS IN INVENTORY INvT^CiRY DAYS IN INVENTORY | 1-20 2I-30 OVER 30 120 21-30 OVER 30 UNITS DOLLARS UNIT DAYS SUPPLY DOLLAR DAYS SUPPLY COMPUTATIONS; COMPUTATIONS: | USED CAR UNIT DAYS SUPPLY ;;;;^";;£"-- ----- ^ ■ USED TRUCK UNIT DAYS SUPPLY 1 TOTAL INV UNITS IPAGE 1 ASSET [ ::f£:,;EH:r 'EEEE^^ USED CAR DOLLAR DAYS SUPPLY: USED TRUCK DOLLAR DAYS SUPPLY | :;:::::: '::::::z: ::Zs.., ! E:I£ ™Ei: ASSETS LINE 3 MONTH ARE OTHER INCOME AND OTHER DEDUCTIONS AND PERSONNEL SUMMARY SECTIONS PROPERLY COMPLETED? REMINDER: Slolcmcnt consii's of — P09C I, Boloncc Sheet — Page 2, Slotcmcnt ol Income ond Eipcnsc — Pogc 3. DepoYtmcnIol Gross Prodt AnolYiis ond Pogc 4, Monogcmcnl Opctoting Inlormolion — REMOVE CARBONS AND STAPLE INTO SETS Moil Orlglnol (While) ond Flnt Corbon Copv IGrccn) to Regional Office prior lo 10th ol monHi. 67 Senator Nelson. Our next witness is Mr. Thomas C. Mann, presi- dent of the Automobile Manufacturers Association. The committee appreciates your taking time to come here today, Mr. Mann. Your statement will be printed in full in the record. We are sorry we took you out of the order that we had agreed upon. You may proceed. (A biographical note on Mr. Mann follows:) Biographical Note Thomas C. Mann, President, Automobile Manufacturers Association, Inc., 1619 Massachusetts Ave., N.AV., Washington, D.C. 20036, is a native of Laredo, Texas, and a retired Foreign Service Officer. From August 1, 1966 to January 31, 1967 he was associated with the Johns Hopkins School of Advanced International Studies, and has been in his present position since that time. Mr. Mann served as Under Secretary of State for Economic Affairs until his departure from Government service on June 30, 1966. He twice served as Assistant Secretary of State for Inter-American Affairs, holding the office first from September 1, 1960 to March 30, 1961 ; his second term in that post began January 3, 1964 and ended when he became Under Secrtary for Economic Affairs in March of 1965. From September 1957 to September 1960, Mr. Mann was Assistant Secretary of State for Economic Affairs. Born in Laredo on November 11, 1912, Mr. Mann was graduated from Baylor University in Waco, Texas, in 1934, receiving Bache- lor of Arts and Bachelor of Law degrees. He practiced law in Laredo from 1934 until 1942. Between 1942, when he joined the Foreign Service, and 1957 Mr. Mann served in several positions in the Department of State and at our Foreign Service posts in Montevideo, Uruguay ; Caracas, Venezuela ; Athens, Greece ; and Guatemala City, Guatemala. He was appointed in 1955 as Ambassador to El Salvador and in 1961 as Ambassador to Mexico. STATEMENT OF THOMAS C. MANN, PRESIDENT, AUTOMOBILE MANTIFACTUREES ASSOCIATION, INC., WASHINGTON, D.C. Mr. Mann. Thank you, Mr. Chairman. As you know, I am appearing before this committee both today and tomorrow. Senator Nelson. Yes. Mr. Mann. And I have a statement here which is rather lengthy for which I apologize. But I did try to be responsive to all seven ques- tions that the chairman asked, and whatever extra time I take today, I yield tomorrow. So, thank you very much for this opportunity, sir. Mr. Chairman, Senators, thank you for this opportunity to present my point of view concerning some of the questions being considered by this committee. Perhaps I should begin by saying a few words about the association I represent. Because of the competitive nature and traditions of the 10 member companies, and because of the requirements of our laws, the associa- tion does not concern itself with what may be properly described as the areas of competition between companies. Thus, the association has no responsibilities in many areas such as service, costs and prices, manufacturer-dealer relationships, warranties of product, advertis- ing, product development, and others. The association's interest in these areas is strictly limited to those aspects which are public knowledge and which in no way affect com- petition. My information on all these subjects is limited to that which is already in the public domain. In the areas in which the association works, individual member com- panies often have conflicting interests and different points of view. 32-493 O — 69 — pt. 1 6 68 Diversity of opinion reflects the intensely competitive nature of the industry and is, in my opinion, desirable. I mention this diversity of interest and opmion here so that every- one will understand that the views I express here are my own and do not necessarily represent the opinions of individual member companies. This applies not only to my written statement but to answers to ques- tions put to me and opinions which I may volunteer during the dis- cussion periods. • j j. u Since several witnesses have described what they consider to be wrong with the industry, perhaps it would lend some perspective to the discussion if, before considering several of the questions posed m this hearing, I were briefly to list some of the things that the industry does well— specifically, the ways in which it contributes to the strength and dynamism of our economy. Notice, Mr. Chairman, I am going to skip some pages here following your suggestion, as it will be in the record, but Senator Cook. Mr. Chairman— Mr. Mann, I am wondering if you would name — do you name in your statement the 10 companies ? Mr. Mann. I don't but I will be happy to do that. Listed alphabeti- cally, the 10 are: American Motors Corp, Checker Motors Corp., Chrysler Corp., the Duplex Division of Warner & Swazey Co., Ford Motor Co., General Motors Corp., International Harvester Corp., Kaiser Jeep Corp., Mack Trucks, Inc., and White Motor Corp. Senator Cook. Thank you, sir. Mr. Mann. The point I make in the next two pages is simply that the automobile industry has more than any other industry in our econ- omy promoted mass consumption and prosperity through mass pro- duction. It is a national industry. I have here, Mr. Chairman, and offer for those who are interested in reading them, some 48 pamphlets on 48 States that we have on the contribution the industry makes to the economic well-being and progress and jobs and taxes, and so forth, in 48 of the 50 States. We haven't finished the other two. You have a copy there and I believe the reporter has one. Senator Nelson. The committee will receive them for the committee files and perhaps, in part, for the record. (The pamphlets referred to will be found in the files of the com- mittee. Six of the pamphlets — those for Alabama, California, Florida, Michigan, Nevada, and New York — are reproduced in appendix III, infra.) (Pp. 2^ of Mr. Mann's prepared statement follow:) The ten companies are taxpayers rather than subsidy receivers. Last year they paid around $4 billion in direct local, state and federal taxes. Similarly, in 1968 motor vehicle owners paid $14.3 billion in special state and federal motor vehicle taxes, one-third of which were taxes on trucks. More than 13 million people are emiployed in the manufacture, distributiooi, maintenance and commercial use of motor vehicles. In one way or another, one out of seven American workers is dependent on the motor vehicle industry for his employment. An estimated 819,000 U.S. businesses, one in every six, depend on the manu- facture, distribution, service and use of motor vehicles. The number of people who, through the direct purchase of stocks, share in the ownership of the industry now stands at about 3 million and millions more participate through mutual funds, insurance company investment portfolios and the like. While Michigan, Missouri, California, Ohio and Wisconsin lead in automotive assembly, the industry is important to the economy of every state in the union. 69 The Association I represent is in the process of compiling data on the contri- bution which the industry makes to the economy of each state. We have completed some 48 of these studies which I have with me and which the Committee or its staff may be interested in looking at. I have no objection to their inclusion in the record if that is the Committee's wish. The industry plays a key role in transi>orting i^eople and goods from one place to another. Eighty-six percent of travelers* use automobiles. Eighty-two percent of commuting workers use automobiles as a means of transport. Ninety percent of all livestock and 65% of all fruits and vegetables are delivered to major markets by trucks. Trucks haul 52% of all inter-city tonnage of manufactured products excluding petroleum and coal products. These figures convey, I hope, not only some idea of the importance of the automotive industry to our economic well being, but als the magnitude of the economic job done by this industry. More than any other industry, it has promoted mass consumption and prosperity through mass production. Mr. Mann. We all agree here that price competition is what we are really talking about and I take it my colleagues here on the panel agree that competition is a good thing. So a large part of what I want to talk with you about is the competitive nature of the industry itself. PRICE COMPETITION Ultimately, competition in price or in an5rthing else is of value because of what it does for the consumer. As you know, the Consumer Price Index considers the average price level in 1957-59 to be 100. The Index for May 1969 shows that the level for all included items has risen to 126.8 while the index of new cars has risen to only 101.8. The index for public transportation, for example, has risen to 148.0, homeownership to 138.0, food to 123.7, medical care to 154.5. The price index for new cars is among the lowest of the major components of the index. If I may ad lib here and say that I think a great many of the problems of the dealers are the same that the manufacturers have, namely, a very, very intense competition and low margins of profit per unit. Senator Nelson. May I ask a question at this stage? If Mr. Ham- mond and Mr. Cohen are correct, the automobile companies subsidize dealer outlets ; in fact, if I understand the testimony, what they are saying is that they intentionally run some of them at a loss. I don't Imow whether you agree that that is true or not. If you do, what justification for that is there? Mr. Mann. Mr. Chairman, if it can be clearly understood that I don't have any knowledge about this area, it is unlawful for us to enter into this area as an association, and that I speak only from what is clearly in the public domain, largely what I get out of reading Automotive News and the newspapers, my own reaction. Senator Cook. Mr. Cliairman, would it also be out of order to ask Mr. Mann to write to at least those on your list who are in direct unit sales — I am not talking about the parts manufacturers, but I am talk- ing about Ford, General Motors, White Motors, International Har- vester — to obtain through your association copies of their standard franchise agreement? Mr. Mann. Senator Cook, I don't even know whether there is a standard franchise agreement. I know very little about details of this kind of thing, but certainly any question that you have I would sub- ♦Defined as trips to and from an out-of-town place for overnight or longer or to and from a place at least 100 miles away. 70 mit to the companies for their consideration. I really don't know what their problems are in this area. Senator Cook. Mr. Chairman, I would like would like to merely suggest really to Mr. Mann that if it would be agreeable with the committee, if he would — and this obviously is a request of condolence on your part, really — if you would write to the manufacturers and ask if they have standard contracts and ask if they would submit them. Senator Nelson. Either by staif, Mr. Watts, or by letter, we will ask them for those forms. It hasn't been the easiest thing, I might sa;^, to get information out of the manufacturers. In terms of the questions raised by Senator Dole about balanced objective hearings, everyone should know that we invited the corporations, all four of them, twice last year, to appear before this committee and they declined to do so. We will invite them again this year. This committee is seeking very diligently to get testimonj^ on all aspects of this problem, but strangely the four big corporations involved don't want to appear before a sena- torial committee. I think that speaks rather loudly for some of the charges that have been made against them before this committee. Mr. Mann. In answer to your question. Senator, and with the reser- vations I made, I would like to say that my own impression is that most dealers, a great many dealers, make a very good profit in their business. I personally know many dealers who are much wealthier than I am and I don't know whether I would be willing to exchange what little assets I have with my colleague on my left, but I would say it was a pretty good bet that if I offered to trade even, that he would come out the loser. Mr. Cohen. Make the offer. [Laughter.] Mr. Hammond. I'll write the contract. [Laughter.] Mr. Mann. Well, you will get very little from me. The first point I want to make to keep this in some perspective, is that I don't think all dealers are on the verge of bankruptcy. I think this is apparent to anyone who knows much about the industry. What was your question, Senator, again ? Senator Nelson. I asked if Mr. Hammond and Mr. Cohen were cor- rect, that the companies establish company-owned outlets and run them intentionally at a loss, yet are still able to make a profit at the manufacturing level. If that is correct — have I stated correctly your position, Mr. Hammond? Mr. Hammond. Yes. Mr. Mann. All right. Now, if I may Senator Nelson. If that is correct, how can that be justified in an economy which is claiming to be a free enterprise capitalistic economy and General Motors is often mentioned as the great exponent of the free enterprise system? If that is the case, how can we justify this? Mr. Mann. You are talking now about the so-called company store. Senator Nelson. Yes. Mr. Mann. There are, I think, various situations that I would im- agine exist. For example, I doubt that it is economically feasible to maintain a dealership in downtown Manhattan and pay the rent, and so forth, that is necessary to pay in that locality. And yet a manufac- turer might well feel that his competitors have an establishment there which may or may not be operated at a profit and that it is necessary 71 for his business to mainitain a presence, let's say, in downtown Manhattan. Senator Dole. To break into that market. Mr. Mann. At least to compete by showing his product in that area. Now, I think that is one situation, one type of situation, where it is just not economically feasible to operate a business in the center of town. I have noticed here in Washington that 25 years ago most of the dealers were in the downtown areas, high rent areas, and I notice that they are moving out to the suburbs as many other businesses are. This is a general thing across the whole economy and I imagine the reason they are moving is that they need more spa<^e, they need cheaper land, they need cheaper rent. And the average customer has an auto- mobile, he has got mobility, and so he gets lower prices if he goes out to a dealer who is in a low-rent area. Senator Nelson. Well, may I ask you Mr. Mann. Now, this is one type of problem that has to do with the company store as I understand it just from what I know from general knowledge. Now, I must say that the practices of the companies, in- dividual companies, all 10 of them, vary very substantially, so I am not trying to speak for them or state what they do. Now, Mr. Cohen, I didn't interrupt you. Mr. Cohen, I am sorry, Mr, Mann, I haven't finished answering this question. Mr, Cohen, I am sorry, Mr, Mann, I have been very quiet all morning. The other problem is that the retail business is an intenseh^ com- petitive business. It is very intensely competitive. You will find, as in all businesses, some businessmen who are better businessmen, better salesmen, and who make a very large profit, and you will find a com- petitor down the street or two and a half miles away who doesn't make a profit and who operates at a loss. The company then, I would imagine, has the option of either closing down that location or allowing the dealer to go bankrupt. If he were truly in debt, this is what would happen in economic terms. They have the option of trying to bring in new management, better management, giving him the finances he needs. And it is a very expensive operation. I think a dealership costs anywhere from a half million dollars to a million dollars if you have the right equipment in your service establishment. And the manufacturer may feel that it is necessary for him in order to maintain his share of the market to help finance the dealer. Now, it may be that he considers a dealer with a very bad record, let's say, of being able to make a profit. If the manufacturer puts in a substantial sum of money, he may feel that he wants his own management there and his own control and I think this is what we mean by the voting stock, something of this kind. He wants con- trol. But it is also true, Mr, Chairman, if my general understanding is correct, that the man who does get financing— and he is not forced to take it from the manufacturer, he can get it from a bank — ^the man who does get financing is always able to, by repaying the loan, regain full control of the franchise. It is also my understanding that all manufacturers desire to get out of the retail business just as fast as they possibly can, consistent 72 with the necessity of maintaining dealerships that are representative across the Nation. Senator Nelson. Are you saying manufacturers are trymg to get out of the dealerships? Mr. Mann. Yes, sir. I don't know of any dealership that isn t for sale to somebody with a demonstrated capaxiity to serve the customers of the manufacturer in a given area. Now, I repeat again, with all the inhibitions, with all the limita- tions that I expressed in the opening paragraph of my statement. We do not get into this. I am just talking from public knowledge aiid not on behalf of any company. But I would be surprised, Mr. Chair- man, if there were any dealership that is not for sale to a person with a demonstrated capacity to operate it successfully. In fact, good dealers are in great demand. And companies compete with each other for good dealers. Senator Cook. Mr. Chairman, I might say in regard to that state- ment that I do know of one major corporation on his list that started, oh, a year or so ago, to sell its wholly owned dealerships to its man- agers and, as a matter of fact, I had occasion to advise one gentle- man who has not only bought the one that he had but has purchased one in another community and is in the process of trying to acquire another one in another. And this is all on his own capital. And this is not corporate financed funds that he is doing this through. I am familiar with that. Mr. Mann. I think it is fair to say, Mr. Chairman, that the ideas of a truly independent successful dealer, able to sell merchandise and to give good service, really was conceived of by the manufacturers as a way to sell and service their products. I am coming to that later in my statement. And they have stoutly resisted over the years any at- tempt to destroy the independent character of the dealer because they believe, as I understand it, that this suits their own interests. I don't know whether that answers your question, Mr. Chairman, but Senator Nelson. Well, I realize- Mr. Mann. I am not the most knowledgeable person on details. If you were to ask me what does a contract look like I couldn't tell you because I have never seen one and we don't talk to the manu- facturers about this. Senator Nelson. I realize.you are handicapped by the fact that you are not, on these questions, speaking for them. I would hope to have the companies here to speak for themselves. However, with a cursory glance at the provisions of those franchises, as a lawyer I would advise any sensible businessman not to sign one, if the provisions as described in the testimony are correct, because it is a one-way street. But I don't expect you to respond to that. Mr. Mann. Well, there are many thousands of dealers who have signed them and who have gone in on a shoestring and I know of sev- eral personally who are now millionaires. Senator Cook. I do, too. Mr. Mann. And I suppose it must be roughly the same kind of agreement. There must be some similarities between them. Senator Nelson. All I am saying is that, obviously, from the legal standpoint, it is not an arm's length agreement. It may very well be 73 that — I am sure it is tme that a good many dealers have become wealthy men and it is because they were good businessmen. But at any moment, if they signed these kinds of franchise agreements, at any moment the company could destroy them. That is all I am saying. Mr. Mann. I think the real problem in here is competition and the difference in the business abilities of people. Senator Cook. Mr. Chairman, I am not sure you can make that total analysis, that at any moment it can be canceled. Mr. Cohen certainly stated in his statement that, for instance, with the Chrysler Corp., that some of them are even lifetime contracts, that they are canceled for cause. Now, I think this cause has a definite connotation and I think Mr. Hammond would agree with this. Certainly I want to say as a lawyer I never wrote a contract for my clients that I didn't try to get everything for my clients and nothing for the fellow he was signing with. I also must confess that I am not quite convinced that we could make this broad statement that a franchise can be taken away just at any moment. Mr. Hammond is in court on many dealerships that are still in existence. Obviously if the corporation wanted to take away the franchise by reason of the fact that somebody filed a multi- million dollar suit against him he could do it, but I don't think in this instance that the manufacturers have taken away those franchises. That is correct, Mr. Hammond ? Mr. Hammond. I would say not withstanding the existence of the good faith act, and not withstanding the theoretical protection that appears to exist on the law, there have been practically no successes by dealers in lawsuits against the manufacturers. Senator Cook. Yes, but what I am saying to you, though, is that even though there may not have been successes based on law and fact, the franchise has not summarily been canceled by reason of the fact that a dealership filed a suit against his manufacturer. Mr. Hammond. The effect of the disparity in power between the manufacturer and the dealer to test the legal rights are such that even if the law. Senator, were many times better, the dealer would have no practical, meaningful right to get legal redress. Senator Cook. But you are not answering my question. The question is that the franchise has not been denied during the course of this law- suit. The point I am trying to make is that the statement has been made that here is a franchise that once it is signed can be summarily taken away at any time by the whim or caprice of the manufacturer, and I am saying this is not really the case. In the instance of some of the lawsuits that you have, the people are in business and they will continue in business. Mr. Hammond. I have never had a lawsuit where the manufacturer was enjoined to continue the business relationship. I would estimate that there have been well over a thousand suits brought under the Good Faith Act and there are only two to my knowledge, and they are the ones that were mentioned by Mr. Cohen, where there was any success in the securing of injunctive relief, and they stand out as exceptions. Senator Cook. Mr. Hammond, this is for the relief that was re- quested in the action. What I am saying to you, Mr. Cohen, you are here today and I think your statement was an exceptionally fine one, but you are not concerned that because you are here today, that Chrys- 74 ler Motor Corp. is going to knock on your door tomorrow and tell you that you no longer have a franchise, are you ? Mr. Cohen. I would not say that would keep me from being here because I would be here anyhow. But I do not want to get the impres- sion across that what you said is totally accurate. Mr. Mann has been very kind to allow me when he drew No. 2 slot to speak in his st^d and Senator Nelson saw the time limitations and I appreciate that, but I think there is one thing we should go into here that you have raised a question on. Senator Cook, and that is the causes of termi- nation. For example Senator Nelson. May I interrupt just a moment? I think maybe the Senator made his remark based on an interpretation of my state- ment. I said that if a dealer signed some of the franchises that you commented on, "at any moment" it could be ended. Mr. Cohen. Minimum sales responsibility. Senator Nelson. In a literal interpretation of my remark, a 1-year franchise could at the end of 8 months be terminated. I did not intend that. At any moment the manufacturer could make a decision that he could get rid of this fellow is what I meant. Senator Cook. I am glad the chairman clarified it. Senator Nelson. I did not mean he canceled the franchise, because he obviously could not do that. Mr. Mann. Mr. Chairman, there is one other thing on this thin^ we are talking about here. I do not think we should imagine that this serfdom, if it is serfdom we are talking about, is obligatory. There are four automobile passenger car manufacturers in the United States and I have a long list here, let us say a dozen substantial foreign manufac- turers. One of the freedoms that a good franchise dealer has is the freedom to cancel himself the franchise agreement on short notice and to decide that he wants to represent another manufacturer. Now, that is rather an important freedom. And I do not think we should leave the impression here that anybody is obliged to sign a franchise agreement or that having signed it, that the dealer is bound in eternal serfdom to a particular manufacturer. It may be that some- body does not like one manufacturer's practices. Well, how about all the others ? Or is everybody wrong ? How about the foreign manufac- turer? There are a good many of them and dealers do move. My point is that since we are talking about serfdom, dealers do move from one manufacturer to another. I know personally of sev- eral who have done this. And they have done it several times. I am just trying to keep this in perspective. A contract is signed. From the manufacturer's point of view, his interest is in having a good businessman who can sell his products, who can maintain his share of the market in the locality which the dealer serves. If the dealer does not do that and his sales begin to drop in that particular locality, the manufacturer obviously has a problem. Now, they do not have problems when sales go well and service is good and the customers do not complain. Things go very well. And I think this is true of the majority of dealers. We are really talking about perhaps in some of these cases, in some of these areas, at least, a minority of dealers. My colleague on my left does not represent the largest dealer organization in the United States. He represents an independent group 75 Mr. Cohen. Absolutely. Mr. Mann (continuing) . Located in one locality. Mr. Cohen. No. I would like to correct that, Mr. Mann. We are in 41 States and one foreign country. Mr. Mann. Fine. I do not say, Mr. Chairman, that, like anything else, it is all black or all white. There are problems and I personally welcome a discussion such as this, but I make these statements to try to get a little bit of perspective into some of the things we have been talking about. Senator Nelson. Do either of you have any comments to make on that? , ,, Mr. Cohen. Well, because of the time I think I should not make any comment at this time. I would hope that Mr. Mann would some day have lunch with me and we can go over some of these things to- gether and maybe I can give him a little better understanding of what I am saying and maybe he can give me a little better understanding of what he said. Mr. Mann. It will be my pleasure. Senator Nelson. The closed session of the Senate has been canceled, so you can proceed with this statement. Mr. Mann. Fine. We were talking about price performance and how this benefits the consumer, Mr. Chairman. And I have just pointed out that according to the price index, the price of new cars — and this is one way of judging the quality of competition— hase risen very, very little in a time of inflation and at a time when other costs are rising. In contrast with the 1.8 percentage increase in the car price index since the 1957-59 base period, official indexes show the following in- creases in some important elements entering into the cost of manufac- turing an automobile: Iron and steel, up 10 percent; nonferrous metals, up 34 percent; ^lass, up 15 percent; metal working machinery, up 32 percent commercial and factory buildings, up 45 percent; aver- age hourly wages in motor vehicle manufacturing, up 55 percent. Another way of looking at performance in price would be to com- pare the average price actually paid for a new car. I mean by that with today's inflated dollars as compared with dollars of more value some few years ago. Based on Survey Research Center data, average expenditures for new cars have increased by only 1.2 percent per year between 1959 and 1968. This increase does not take into account in- flation or the general improvement in the quality of cars (for ex- ample, a better laminated windshield) or the increase in equipment features on the car (for example, the rate, of installation of air con- ditioning in new cars — and I believe they sell for around $400 per unit^-has risen from 6.2 percent in 1959 to 43.3 percent in 1968). I think that is a remarkable achievement in price performance. As I understand the record of these hearings, the critics have not contended that the industry has a poor price performance record. Rather they speculate that it could have been better. And they seem to be saying that automotive prices are not ultimately determined in the marketplace but are contrived in advance by manufacturers. One suspects that this thesis is, in part at least, the result of a lack of under- standing how the industry' actually operates in the real world. While I have no firsthand knowledge about individual company product development or pricing procedures, it is common knowledge that it 76 takes 2 to 4 years to design, develop, and produce a new model auto- mobile. In considering whether a new model should be produced, any man- ufacturer obviously must consider a number of factors. He must con- sider whether the proposed new model offers something to the public which his prior offerings and his competitors' products do not have. He must estimate the level of customer demand for the new product. And because of the "leadtime*' involved, he must attempt to antici- pate what changes there will be in customer j>references in this inter- val. He must guess what his competitors will be offering when he offers his new product. He must determine whether new technological developments can be relied upon to reduce cost. He must attempt to estimate the future levels of personal income and take into account general economic trends which may affect sales. Obviously, many of these estimates involve subjective judgments which can neither be proved nor disproved in advance. These and the size of the capital required to bring out a new model help to explain why this is a high risk industry. Even more important, the manufac- turer knows that most of his potential customers now have cars and do not have to buy any new car — that they will not buy unless they are offered a superior product at an attractive price. There are no pat formulas for success as the failure of many automotive manufac- turers and the sifting fortunes of those who have survived (which I shall refer to later) attest to. At any point during this process, a company may well conclude that its hoped for new model will not sell or will not sell at a price which makes its production worthwhile. Under these circumstances, the model may well have to be dropped. All of the time, effort, and money expended upon it may be lost. However, let us assume that a manufacturer has surmounted these difficulties, developed a new model and initiated production. Tlie next step is to make a decision as to the price which will be asked for this new product. This is not a "fixed" price. It is an initial offering price arrived at after consider- ing all of the factors which are important in the marketplace. No manufacturer can price his product much above comparable models of his competitors without diminishing his own volume of sales. I do not think this is unique to the automobile industry. I think it applies to chewing gum and everything you buy in the stores. The prices for competitive products are more or less the same and this is the way the competitive system is supposed to work, as I under- stand it. Likewise, there are limits to a manufacturer's ability to reduce prices to meet competition and still, risks considered, make a profit adequate to attract investors. I have tried to describe some of the factors which must be con- sidered by a manufacturer in arriving at the initial offering price. It may happen that this price is not competitive. Mistakes in judgment may have been made. Or conditions may have changed. In 1958 imported cars demonstrated a demand for smaller cars. American Motors responded with its Rambler, the first American compact. Other domestic producers followed with their compacts. In 1967, in response to a resurgence of foreign car sales American Motors sharply reduced the price of the Rambler American to a position midway between domestic compacts and imports. 77 The recent introduction by Ford of the Mustang and then the Maverick are other examples of changed conditions. The Mustang forced other manufaercent of its objective, the dealer is required to pay only 25 percent of the salesman's awards, while those not making their objectives pay 50 percent. Chrysler-Plymouth's "Step up the Beat" program, which runs from April 24 through June 30, involves all lines. The 15 top volume dealers and 165 dealer group winners will receive a three-day trip to New York for the premiere of 1969 models, followed by another three days in Montreal. A fast-start feature provides three-day regional trips to the 15 volume leaders and 165 group leaders at the end of May. C-P salesmen are competing for cash awards on a point basis. American Motors has three plans under way — two of them strictly for sales- men. The first, offers a $20 cash bonus to salesmen for the sale of each Rebel, Ambassador or Javeline built prior to Jan. 1, 1968. The second, effective for the month of May, offers another $20 to salesmen for the sale of any Javelin. The third program, in effect May 11-June 30, offers a trip to Puerto Rico for dealers, weekend trips for sales managers and merchandise prize points for salesmen. Top-volume dealerships in each group will win the trips. Salesme^n who delivered up to five cars in the first 10 days of the contest receive bonus points for each car they sell after that. Exhibit 12 (Automobile Manufacturers Association's exhibit No. 2: Article by I>ougla& A. Condra, "Sales Incentive Contests Spon.sored by 8 Divisions," Automotive News, January 27, 1969) Sales Incentive Contents Sponsored bt 8 Divisions (By Douglas A. Condra) Sales incentive contests, most of them aimed at building momentum through the rest of the winter, are being conducted by eight of the domestic auto indus- try's 10 divisions. Some contests are designed to clean up the few remaining unused 1968 models in dealer stocks, and others are pushing '69s built early in the model run. At Greneral Motors, Chevrolet has a plan in effect which carries travel awards for dealers and merchandise prize points for sales managers and salesmen. Pontiac is offering cash awards to salesmen and savings bonds to sales managers, and Oldsmobile is conducting its traditional prize points contests for salesmen. Cadillac and Buiek are ndt offering incentive plans. A Ford Division program has travel awards for dealers, and Lincoln-Mercury features cash awards for salesmen on Montegos. Chrysler-Plymouth and Dodge Divisions have similar wholesale-retail cam- paigns offering cash payments for qualifying dealerships, and are winding up programs which offered trips to dealers and sales managers. American Motors dealers and sales managers may win trips under the current plan. Chevrolet's "Selling Showdown," which includes used cars, runs from Jan. 1 to Feb. 28 and is divided into three periods. The first, Jan. 1-20, was used to 80 determine the number of points per unit a salesman can win in the second (Jan. 21-Feb. 10) period. The more oars he sells, the higher his point rate will be. The number of cars he sells in the second period gains him actual prize points, in addition to determining his point rate for the third period. Double-point credit is given on new Camaros, staition wagons, convertible®. Chevy Vans, CE-20 and CS-20 Series pickups and Suburbans, and some dealer-designated used units. The sales manager receives prize points equaling 10 percent of his sales force s total. , , . .. The dealer travel award, given according to percentage over sales objective, is a "Jet Set Holiday" trip to San Francisco, from where the dealers may be flown daily to various pleasure spots and returned to San Francisco each evening. Chevrolet and the dealers share equally in the cost of the contest, and a dealer may earn up to half his investment back by exceeding his objective. The dealer's entry fee is $45, not subject to recovery. Oldsmobile's contest— its usual early-year program— provides prize points for salesmen on retail delivery of any new Oldsmobile model. It started Jan. 1 and rims through Feb. 28. -r^ , „ Four Pontiac incentive programs^all carrying "The Great Pontiac Breakaway theme, are underway. One plan which applies to Custom S. LeMans, Catalina and Bonneville models other than station wagons and convertibles, provides a $50 bonus to the dealership for each car sold with specific equipment. It is in effect Dec. 21 -Jan. 31. The spec- ified equipment includes Cordova top, front disk brakes, custom wheel covers and remote control deck lid. A sales managers' contest, also running Dec. 21-Jan. 31, provides a savings bond for the winning manager in each of several groups of dealerships. It is based on best percentage over sales objective and does not include fleet sales. A third contest, in effect Jan. 1-Feb. 28, provides the dealer with a mailing list bearing names of multiple-car owners of comi)etitive makes. A salesman receives a $25 cash bonus from the factory for each new Pontiac he sells to anyone on the mailing list. The fourth Pontiac program, involving optional dealer participation and no fac- tory money, is aimed at moving older unused cars in dealer stocks. It provides cash bonuses for salesmen on any 1969 model, except Grand Prix, built before Nov. 1 and in stock on Dec. 21. Bonuses are set by the dealer. The plan ends Jan. 31. Ford Division is conducting a national program featuring a week's trip to Ha- waii for dealers and wives. Dealers are divided into groups, with some competing against objectives and others competing against each other. The dates are Jan. 1 to Feb. 28. The division's 35 districts are conducting various contests for sales managers and salesmen, most of which feature cash. Lincoln-Mercury offers cash payments for salesmen on Montegos sold and de- livered from stock. The contest started Dec. 1 and was due to end in December, but was extended through January. The payments start at $25 for the second car sold by a salesman, and increases with each unit to $60 per car for nine cars or more. Chrysler-Plymouth is conducting a "Great Sale Bonus" program, which started Jan. 1 and runs through April 30. It has two phases — a wholesale phase involving cars purchased by the dealer from Jan. 1 through March 31, and a retail delivery phase involving new 1968-69 models sold from Jan. 1 through April 30. Three levels of cash payments are provided on retail sales for dealers who qualify by buying specified numbers of wholesale units. Level 1 payments^— Valiant, Belvedere, $10 per unit; Barracuda, $20; Fury, $15, and Chrysler, $15. Level 2— Valiant, Belvedere, $20 ; Barracuda, $50 ; Fury, $30, and Chrysler, $35. Level 3— Valiant, Belevedere, $30 ; Barracuda, $75 ; Fury, $45. and Chrysler, $50. To qualify for the first level in January, a dealer must buy 25 percent of his total wholesale objective by Jan. 30. If he does not qualify in January, he may become eligible for first-level pay- ments in February by buying 55 percent of his total objective by Feb. 27. However, payments under the circumstances are not retroactive to January sales. He may also qualify for the first level in March or April by buying 80 percent of his objective by March 29, but here, again, payments are not retroactive to January or February. To attain second-level payments, a dealer must increase his units from 100 to 124 percent of his total wholesale objective by March 29. He may qualify for the 81 third level by increasing his units to at least 125 percent of his total objective by March 29. Qualifying dealers will earn a $50 r)er unit bonus for retail delivery of any 1969 Fury or Chrysler with a shipping order indicating the car was scheduled for pro- duction prior to Nov. 1, 1968. "Dodge Fever Booster '69," a program similar to that of Chrysler-Plymouth's, also runs from Jan. l-April 30. Dodge's level 1 payment — Dart, Coroneit, Charger, $10 per unit and Polara, Montaco, $15. Level 2— Dart, Coronet Charger. $20 ; Polara, $30, and Monaco, $3o. Level 3 — Dart, Coronet, Charger, $30 ; Polara. 45, and Monaco, $50. American Motors' "Sell-In '69" new-car plan, which ends Feb. 28, offers an eight- day cruise of the Rhine River in April for 300 dealers and wives. Sales managers may win five-day trips to Nasi^au or to Mexico City. The trips will be awarded on the basis of percentage of new-car sales over as- signed quotas. Exhibit 13 (Automobile Manufacturers Association's exhibit No. 3 : Article by Douglas A. Condra. "Eight Divisions Offer Incentives to Spur Sales — Factories Expected to Further Loosen Purse Strings," Automotive News, May 26, 1969) Eight Divisions Offesi Incentives to Spur Sales — Factories Expected to Further Loosen Purse Strings Soon By Douglas A. Condra Eight of the U.S. auto industry's 10 car-making divisions are offering incentive programs to their dealers in an effort to spur lagging new-car sales. All but American Motors and Cadillac have at least one incentive program going for dealers. Most of the campaigns are annual affairs at about this time of year, but there are some specials designed to trim the industry's huge stockpile of new cars. More such special programs are expected soon. Some dealers have been caught in a pinch between the factory — which may have built too many cars — and the customer, who appears to be reacting to government efforts to curb inflation by not spending his money. The super-competitive market this spring has placed a strain on dealers who did not plan correctly. "It's been a dilly," said one veteran Chrysler-Plymouth dealer. "We've had to outguess the factory, the competition and the customer. The sales contests are vicious now compared with a few years ago. They used to be designed just to sell a few extra cars." Both Chrysler Corp. divisions are conducting annual buy-and-sell incentive programs for their dealers. Chevrolet and Buick have annual contests in prog- ress, and Pontiac is offering bonuses on cars in stock built before April 1. Olds- mobile, Ford and Lincoln-Mercury Divisions are offering plans which provide trips, prizes and cash awards. AMC recently made a special mailing to sporty-car owners, offering them $100 off on the price of a new Javelin. "We don't have any contests going now," said one Rambler dealer, "but when the IBM cards start slowing down, somebody in central office is going to say, 'let's give'." Dodge's traditional buy-and-sell program — this year called "Clean Sweep" — involves cash payments to dealers if they meet purchase quotas, and additional payments if they meet sales quotas before the 1970 new-model introduction date. The campaign, which started May 1, will end on announcement day, at which time the factory's 5 percent rebate for cars in dealer stocks takes effect. Payments are set at several levels. Under the buy program, they start at $10 per car for Dart. Coronet and Charger and $20 for Dodge. Payments at this level are to dealers who buy up to 100 percent of their purchase quota. A dealer in this category may qualify for $10 payment on the sale of any car after he sells 51 percent of his buy quota. After he sells 75 percent of the quota he receives $15 for Dart, Coronet or Charger sale and $20 for each Dodge sale. If he sells over 100 percent of his quota, the payments are $25 for Dart, Coronet and Charger and $40 for Dodge. To achieve maximum payments in the program, a dealer must buy over 125 percent of his assigned quota. He then qualifies for a $20 payment on Dart, $30 on Coronet or Charger and $50 on Dodge. 82 On the selling end, such a dealer receives $25 for any car sold after he sells 51 percent of his quota. After 75 percent is achieved, he receives $45 for Dart, Coronet or Charger and $60 for Dodge, and after 100 percent of quota, he gets $75 for Dart, Coronet or Charger and $140 for Dodge. The payment levels are not retroactive. A similar plan, with different payment levels, is offered on Dodge trucks. Dodge is also conducting a "Grand Slam" contest — a three-phase program involving trips for dealers and sales managers, prize drawings in the five Dodge sales areas and salesmen's prize points. It started March 21 and will end June 30. Chrysler-Plymouth's buy-sell campaign, called "Twin Double," involves pay- ments to dealers on a basis similar to the Dodge campaign, but the buy portion involves only Fury and Chrysler cars. If the big-car buy quota is met by a dealer, he becomes eligible for rebates on Belvedere and Baracuda. Valiant, which underwent a recent price cut and dealer discount reduction, is not included in the program. Plymouth dealers were to receive rebates for Valiants in inventory, constituting the difference between the new and old wholesale price. Under the C-P plan, payments on Fury and Chrysler start at $20 per unit after a dealer buys 80 percent of his purchase quota and sells 50 percent of his selling quota. If he buys 80 percent of his purchase quota and sells 100 percent, he gets $60 per car for Fury and Chrysler, and if he buys 100 percent of his purchase quota and sells 100 percent, he gets $120 per big-car unit. A dealer who buys 125 percent of his purchase quota and sells 100 percent receives $190 per unit. Payments on Belvedere and Barracuda start at $10 per unit and range up to $80 per unit. A March-June contest, "Action-Time, '69," is also under way at C-P. Based on sales objectives, it offers 10-day international trips for winning dealers and a fast-start trip to Montreal. Prize points are available for salesmen. Lincoln-Mercury's three programs include an "Indy 500 Pari-Mutuel" for salesmen, under which a salesman receives a $15 "share" for sale of any full- size Mercury. He then selects the Indianapolis driver he thinks will win and, if the driver wins, the salesman collects the $15 share. The contest started May 11 and ends May 31. Another L-M plan involves bonus payments for sales of Mercury line cars built before January of this year. Dealerships must hit 80 percent of assigned objectives before they can collect bonus payments. The third contest, "Write Your Own Ticket to Palm Springs," offers trips to the resort area to the top 20 selling dealers from April 11-June 30. Lincoln-Mercury recently ended enother program under which salesmen received trading stamps for any car sold. Ford Division is conducting a "Maverick Gold Rush" program for salesmen and sales managers on Maverick "companion" units, which include all but top- of-the-line, wagons and Maverick. The April-June program offers bonus points to salesmen, who work on a volume basis, for sale of such units. Sales managers receive a percentage override on their salesmen's bonus points. Prizes may be taken in cash, merchandise or trips. Dealers participate in the program by furnishing up to 50 percent of the prize funds. A dealership's contribution can be reduced to as low as 25 percent if it achieves a total car-truck sales quota. Ford also offers free floor planning on any Thunderbird invoiced after May 1, and a rebate plan ranging up to $200 on any T-Bird on quota. Chevrolet's yearly May-June program, entitled "Pacesetters Sale," to tie in with Camaro's role as the Indianapolis 500 pace car, offers trips to Mexico City and Acapulco to winning dealers, other resort trips to new and used-car sales managers and prize points for salesmen. Pontiac's bonus plan offers the salesman $25 on his second sale of any car in stock built before April 1, and $50 on any such car sold thereafter. The contest runs through May. Buick has its usual "Rivera Club" plan going, offering salesmen who sell three Riveras in an alloted time a chance to win an Opel GT and cash awards. Buick recently wound up its 100-day contest, under which half the sales force of each qualifying dealership attends a special "stag day," at which they may draw for runs through May. Oldsmobile's March 21-June 10 contest offers trips to dealers and prize points to sales managers and salesmen after they reach assigned sales quotas. 83 Exhibit 14 (Automobile Manufacturers Association's exhibit No. 4: Article, "More Contests to Exhort Dealers," Ward's Automotive Report, March 17, 1969) More Contests To Exhort Dealers Chrysler Corp. during March-April has upped the anite to $75 per unit from $59 announced previously for the sale of each car of certain of its makes built prior to Nov. 1, 1968, and delivered in the program period. In addition, GM has launched a Camaro contest for its salesmen, Chevrolet an incentive for Chevy Van sales during Mar. 1-^June 30 if a competitive truck is taken in on a trade, and Pontiac a $25 per unit ineenltive for Firebird. In a Feb. 21-May 10 cam- paign Pontiac Div. dealers compete for cruises, and GMC Truck & Coach dealers Mar.l-June 10 compete for trips. Exhibit 15 (Automobile Manufacturers Association's exhibit No. 5: Article, "Chevy Has a $2,000 Car, II !", Ward's Automotive Report, April 7, 1969) Chevy Has a $2,000 Oar, II! Chevrolet Div. for April has what is tags as a "Special Value Program" for the Nova, formerly known as the Chevy II. Under the program Ohevy Nova dealers will receive from the factory a $52 discount at the wholesale delivered price level on Novas with four-cylinder engine. Torque Drive transmission, whitewall tires and AM radio. What this means is that Chevrolet is moving into concerted action during competitor Maverick's introductory period with a consumer message that spells P-R-I-C-E all the way. Ford will be touting the below-$2,000 price ($1,995) of its new Maverick in an advertising barrage. But don't be surprised if Chevy dealers take the same tact with Nova advertising in certain marketing areas in coming weeks. Niova is priced close enough to $2,000 to get the dealer advertised price down to that level with some factory encouragement, which it is getting. Chevrolet's message to potential Maverick buyers : Yes, there is a choice. This doesn't necessarily mean Chevy will sell a burgeoning number of four- cylinder Novas, but it does promise more showroom traffic and the possibility of more sales of six-cylinder Novas and other models. Exhibit 16 (Automobile Manufacturers Association's exhibit No. 6: Article by Charles B. Camp, "Auto Economy Kick — More New-Car Buyers Choose Smaller Models Over Big, Costly Ones — Frugality Traced to Inflation, Tax Hikes; Detroit Profits May Suffer, Analysts Say — Price Battle Spurs the Trend," the Wall Street Journal, July 1, 1969) Auto Economy Kick — More New-Car Buyers Choose Smaller Models Over Big, Costly Ones — Frugality Traced to Inflation, Tax Hikes; Detroit Profits May Suffer, Analysts Say — Price Battle Spurs the Trend (By Charles B. Camp) Late last year Georgene Schneeberger of AUentown, Pa., bought a 1969 Chrysler New Yorker with air conditioning, power steering, power brakes and a vinyl- covered roof. It cost $5,600. This spring she traded it in on a $2,100 Maverick, the Ford Motor Go's new small car. The most costly option on her Maverick is a radio ; the car doesn't even have an automatic shift. "I did it primarily for economy," says Miss Schneeberger, who is a nurse. Though she obviously lost a sizable amount on depreciation of the Chrysler, the 32-493 O — 69 — pt. 1 7 84 trade resulted in a sharp reduction of her automotive debt — and a 40Vi drop in her monthly car payments. Much to Detroit's distress, a growing number of car buyers are in an equally frugal frame of mind. Mindful of the pinch put on their pocketbooks by infla- tion, higher taxes and rising interest rates, many big-car fanciers are turning to cars that are cheaper to buy and more economical to operate. COMPACT SALES RISE 25 PERCENT Of course, few motorists are going so far as to get rid of almost-new cars like Miss Schneeberger's Chrysler just because they're big. But more and more people who find themselves in the market for new cars are choosing the smaller, less costly compact or intermediate models. During first five months of this year, auto industry figures showed deliveries of domestic compact cars rose 25% over the year-earlier period while total new car sales remained unchanged. The in- crease was not at the expense of low-cost imports, moreover ; sales of small foreign cars are running 5% ahead of last year — while sales of some big American cars are down as much as 40%. "The pressure is on the consumer," says David Healy, automotive analyst for Argus Research Corp., an investment advisory service. "He simply has less money left over at the end of the month for car payments." One such consumer is Donald J. Kennedy, a Winter Park, Fla., father of five who just picked a $3,300 Rambler station wagon over bigger wagons costing up to $900 more. "I'd like a larger car," he says, "but these days who can afford one? The price of everything is going up, and recently I got word my property taxes are going up 25%, too." The dealer who sold Mr. Kennedy his car says he's hearing such comments with increasing frequency. "Everyone I sell to these days would buy a larger car if they felt their pocketbooks could stand it," says the dealer, Raymond Reed Jr. of Kissimmee, Fla. "But almost nobody is moving up to a larger car now. They're all moving laterally or down. REVERSES FOUR- YEAR TREND Many other new car dealers agree. "Since 1964, the trend had been all toward large family cars, but about the first of this year things began to reverse them- selves," says Roy Benson, sales manager of a Seattle Chrysler-Plymouth dealer. A Detroit car dealer says his sales of full-sized cars have "just about stopped," while compact cars now account for close to 40% of his sales, compared with less than 30% at the start of this year. Medium-sized intermediate models ac- count for most of the remainder of his sales. Motorists are learning that buying a compact car doesn't necessarily mean they have to give up all the comforts ordinarily associated with more expensive cars. Many are finding they can dress up a small car with optional equipment and still wind up with a lower price tag than if they had started with a big model. "They aren't sacrificing the extras; they're saving their money on the base price of the car," says Walter Creech, general manager of Raynal Brothers Dodge Inc. in Detroit. He says the average Dart compact delivered by his outlet carries a price tag of $2,700 to $2,800, compared with about $2,100 for a stripped- down model. But, Mr. Creech adds, the average dressed-up Dart is still $450 to $800 less than a full-sized car with typical options. The savings on operating expenses for those who buy smaller cars can be con- siderable. Miss Schneeberger, the new Maverick owner, says she used to spend $5 a week for just enough gasoline to get her back and forth to work in her Chrysler. Now the same amount of money takes her to and from work all week and pays for gasoline for weekend excursions as well. "Insurance on the big car was costing me almost $300 a year," she says. "The Maverick insurance costs $104." UNLOADING A GAS-GUZZLER The prospect of saving on gasoline prompted Phil Boike, a Detroit pipe fitter, to trade in his 1968 Plymouth Road Runner, a sporty intermediate car, on a six-cylinder 1969 Dodge Dart for a second car. "That Road Runner was too pow- erful and drank too much gas to suit me," Mr. Boike says. Auto makers admit the trend to smaller cars disturbs them. "Everybody makes more money when the public buys big cars," says one Detroit executive. Analysts of the industry agree. "This could hurt the industry's profits, especially if small 85 cars continue to sell at the direct expense of big ones," says Mr. Healy of Argus Research. Dealers are unhappy, too. Their profit margins on compacts are considerably smaller than on bigger cars to begin with, and many complain that economy- conscious car buyers are making margins even slimmer by bargaining harder these days. "Our gross profit lyer car is reaUy getting skinny," says one West Ooast dealer. "We have to fight for every deal. People are really price-shopping— $20 either way can make or break a deal." Ironically, the industry itself has been encouraging the trend. Since the intro- duction of the Maverick — ostensibly as an import-fighter — in the low priced market in mid-April, all four of the big domestic auto makers have been furi- ously advertising and promoting and even cutting prices of their small cars. Mr. Mann. To sum up what I have said about price competition at the manufacturer's level : Prices are not static. The effective price to the dealer changes in response to changing conditions in the market- place and the efforts of each manufacturer to increase his sales and share of the market. These changes benefit the consumer and par- tially explain the excellent price performance of the automotive industry. There are other aspects of price competition that I would like briefly to refer to. There is also intensive price competition at the retail level. I do not think there is any need to describe this in detail. It is a matter of com- mon knowledge that dealers compete vigorously with others handling the same make as well as with dealers handling different makes. This competition at the dealer level is, of course, reflected back to the manu- facturer. It is a major element leading to the previously described price competition at the manufacturing level. There is price competition not only between different makes of new cars but between new cars and used cars, and I think this is very im- portant as a self-taught economist. The fact that there is a very strong used car market in this country which provides direct competition for new car sales is of considerable importance. There is also competition between new cars and other forms of trans- poration and between new cars and nonautomotive products and ser- vices. A prospective buyer of a new car has a wide range of options. He may elect to keep the car he has for a while longer. He may decide to buy a used car. He may decide to do without a car and use other forms of transportation. He may decide to invest his savings, buy a house or to take a trip or to do a number of other things. The result of all this is that each manufacturer is forced to improve his product and keep his prices down. At this point, I should say a few words about alleged price "domi- nance" of the industry by a single company. It would be wrong to say that the pricing decisions of any one of the four major domestic passenger car manufacturers has no effect on the others. In a competitive economic system something would be wrong if any manufacturer could ignore his competitor's prices and charge whatever he wished. No one in the auto industry can do this. However, domestic manufacturers and foreign firms able to ship a substantial volume of cars into the United States, can each influence prices in a downward direction. In this sense, they all have "dominance." If, on the other hand, "dominance" is meant to imply the ability to raise prices by restricting overall supply, the evidence I have seen leads me to conclude that no automotive manufacturer has this capa- 86 bility. Should any producer attempt to raise prices by restricting out- put it seems clear to me that it would be acting against its own interests because its competitors, having the ability to increase their production, could quickly fill the vacuum and, in the process, increase their sales and shares of the market. Self-interest in this competitive setting is the best price protection the consumer can have. So much for price competition. THE DEALER DISTRIBUTIGN SYSTEM On another area of inquiry, the dealer distribution system, I am re- sponding here not so much to Avhat we have heard today but to the questions posed by the chairman. I know of no "artificial" barriers to entry of new companies into the automobile industry. There are a num- ber of natural ones in this industry just as there are in others. The most obvious of these is the existence of efficient competitive firms w4iich produce superior products. Another is the substantial investment re- quired for large-scale production of a complex machine. Another is the teclmical, managerial, and other skills which a large organization re- quires in order to be efficient. Another is the need for an effective system for sales and servicing. If we think of these so-called barriers in terms of producing and selling an automobile which is inferior in performance and quality at the price of products now being offered the consumer, they can be formidable. If, on the other hand, someone comes up with a bet- ter mousetrap — with a better or lower priced automobile than those now available — these "barriers" disappear. This appears again to me to be entirely compatible with the basic principles of our economic system. One question posed in this hearing is whether newcomers can mar- ket their products on their merits. The answer to this question is, I think, in the affirmative. Manu- facturer-dealer agreements are nonexclusive: Dealers may and do sell competitive cars, both within the framework of a single business at the same location and within the framework of multiple outlets operated by the same owner as separate and distinct operations. One company has stated in these barings that of its more than 14,000 dealers, more than 1,600 handle at the same locations new vehicles produced by domestic or foreign competitors. Another has estimated that of its approximately 7,000 dealers, around 440 sell cars made by other manufacturers. Another manufacturer has estimated that of its more than 6,300 dealers about 1,000 sell cars made by other manu- facturers. I understand that more than one-fourth of the dealers of the fourth domestic passenger car manufacturer sell the products of competitors. These figures might well be higher were it not for the belief on the part of some dealers that they can sell more efficiently and effectively by concentrating on one car line ; and by the belief on the part of others that the substantial additional investment required to sell and service more than one line would not be justified by the increase in sales that might result from selling other products. However this may be, deal- ers do sell and service competitors' products and also switch from one manufacturer to another. Good dealers, like other good businessmen, are hard to come by. There is competition among manufacturers for dealers able to sell 87 cars and to keep their customers satisfied by providing good service. Manufacturers give careful consideration to the advice and counsel of such dealers. The contention seems to be that notwithstanding the freedom of dealers to sell a competitor's product their wills are forced by "pres- sures" of manufacturers. Perhaps what is needed is a generally ac- cepted definition of the word "pressures." What one person may con- sider the exercise of his legitimate right to stress the merits of his product and to promote its sale may be regarded by another as a cam- paign to force the will of dealers. Nothing that I have seen and read in the press in my two and a half years with the association leads me to believe that dealers are timid about pressing their own independent points of view or de- fending in various forums what they consider to be their own indi- vidual rights and interests. They have what appears to me to be a very active, articulate, and effective national organization. Now, since I have been enlightened by Mr. Cohen, I will say they have at least two. Mr. Cohen. Thank you. Mr. Mann. The dealer system is not based simply on an abstract idea about how to market cars. Other methods have been tried. The present system evolved to meet a number of legitimate needs: The need, and I mean of manufacturers, for dependable local busi- nessmen capable of marketing in their communities a complicated, ex- pensive machine under intensely competitive conditions ; The need for dependable local businessmen capable of providing the facilities, equipment and mechanical skills necessary to service a prod- uct which is not only complex but highly mobile ; The need for local businessmen capable of jjroviding information concerning current and probable future demand for automotive prod- ucts to manufacturers engaged in high-risk, large-scale production operations. It is not an accident that the dealer system has been adopted through- out the world by major automotive manufacturers, both domestic and foreign. And I think I have already said that I believe nobody is more interested in perpetuating the independence of dealers than the manu- facturers themselves. The distribution system does not, of course, guarantee success for either the manufacturer or the dealers. Efficient systems did not pre- vent the discontinuance of the DeSoto, the Edsel, or the Corvair. A distribution system will not make up for a product which consumers are unwilling to buy. It is rather a system which, up to this point in time, automobile manufacturers have found to be the most efficient and effective way to distribute and service their products. A newcomer to the manufacturing industry is, however, not obliged to use the existing dealer network. He is free to market and service his cars in any way he chooses. He could decide, for example, to dis- tribute and service his product through a large retail chain enterprise which sells a variety of products. And I have reference there to Sears and Montgomery Ward or any number of firms of that kind. He could decide to establish his own independent dealer network as German and Japanese manufacturers have recently demonstrated can be done in a relatively short period of time. He is free to convince franchise 88 dealers handling his competitors' products that they should also dis- tribute his product— or to convince them that they should handle only his product. He could sell directly to retail buyers or distribute only through factory-owned retail outlets. Now, Mr. Chairman, I pass to the question of the number of com- petitors or concentration that we have heard about, and Senator Cook. Excuse me just a moment. Mr. Chairman, are we going to complete this statement ? Senator Nelson (presiding). I had hoped to rather than adjourn and come back. Senator Cook. It was my understanding that the debate on the floor starts again at 1 o'clock and I would like to be there as soon thereafter as I could be. Mr. Mann. I have no objection to finishing tomorrow, Mr. Chair- man, if that is your pleasure. Senator Nelson. All right. Why do you not go until 1 o'clock, then, and you can finish your statement tomorrow. Mr. Mann (reading). NUMBER OF COMPETITORS Prior to the mid-1920's, the high profits made in those years by a few successful automobile manufacturers attracted a large number of entrepreneurs. Hundreds of companies failed and in doing so dem- onstrated that the industry was not only potentially high profit but also high risk. Those who survived the intense competition presum- ably did so because they were more efficient and because consumers chose to buy their products. The passenger car companies which survived continued to compete with each other. There are several ways to judge the quality of the competition among them : One is the price performance of the industry. As pointed out ear- lier, this performance record is excellent. Another way to judge quality of competition is by looking at the areas of competition between the companies. It would be theoretically possible, for example, for one company to concentrate its efforts in producing small economy cars. Another might produce a slightly larger "compact" car, another an "intermediate" size car and another, large luxury cars. But instead the companies traditionally have met each other in head-on competition in a wide range of automotive prod- ucts. It should be noted that different companies lead in different product groups. As the record of these hearings show, for example, in 1967 Chrysler led in sales of domestic compacts. Ford led in sales of domestic specialty cars and General Motors led in sales of domestic intermediates. Another way to judge the quality of competition is by the variety of choice which is offered the public. The more than 360 different model cars produced by domestic manufacturers offer the consumer a wide range of choice in product price, in size, functional character- istics, style and other features. In addition, the options available, in- cluding some of those mentioned by Mr. Colien, to the consumer pro- vide him with an almost unlimited number of vehicle combinations to choose from. It is much more difficult for manufacturers to offer a 89 great variety of models and options than it is to offer a few. The fact they offer such a great variety is solid evidence of competition. Another way of judging the quality of competition is by looking at the industry's record of change and innovation. All anyone has to do is to compare the automobile of today with those of yesteryear to see the many improvements that have been made in handling and sta- bility (for example, lowering the center of gravity and improving cornering characteristics), in passenger comfort and convenience (for example, power steering, power brakes, air conditioning, reduction of noise levels), in materials (for example, high strength fibers, new al- loys) and in many other areas. I will speak about safety innovations a little bit later. This record of continuous innovation is also solid evidence of com- petition. Another way to judge competition is by looking at each company's share of the market. In the post-World War II period General Motors' share of new car sales has varied from 38 percent in 1946 up to 51 per- cent in 1954, down to 42 percent in 1959, up to 52 percent in 1962, down to 47 percent in 1968. Ford's sales, which reached a peak of some 60 percent in the early 1920's, were under 19 percent in 1948, up to over 30 percent in 1954, down to 24 percent in 1968. Chrysler's share was al- most 26 percent in 1946, down to less than 10 percent in 1962 and up to over 16 percent in 1968. American Motors' share was about 2 per- cent in the mid-1950's (prior to its introduction of the compact) , up to about 7 percent in 1960 and down to about 3 percent in 1968. I would like to say at this point, Mr. Chairman, that I really do not share Mr. Hammond's pessimism about the future of American Motors. I know the people there. The management is really first rate. The engineering skills are good. They are aggressive, they are confident, and their rec- ord in the past few months, far from suggesting that they are about to go under, shows a steady improvement. Senator Cook. I think the real answer to that question will be whether American Motors will join Mr. Hammond or stay with your organization. Mr. Hammond. May I add that I concur with the judgment of the management of American Motors and the quality of their product. I think on all counts that they are great. But I remain with the other problem. Senator Cook. Let me get back to this business of competition you were talking about, the fact that whatever one does everybody else does and they all stay in line with an intended degree of mediocrity apparently. It seems to me none of us had any what is commonly referred to as the buses until the Volkswagen introduced the bus into the United States and immediately Ford went into it and Dodge went into it, General Motors went into it with the Chevrolet, and after Volkswagen got as much of that market as it could get, it moved to a small station wagon. So, I think this proves basically the point of competitive market and the acquisition to that degree. I passed a note over to the chairman just a minute ago on the research and development on these projects. I only hope that the overrun on re- search and development in the automobile industry is not as disastrous as it is in the Defense Department. 90 Mr. Mann. We cannot afford those kinds of mistakes, Senator, and still survive. Thank you very much, Senator. Every company must earn its place in the market each model year by competing for customer preference. These changes in the fortunes of particular companies are solid evidence of competitive striving. A great deal has been said about the number of domestic manu- facturers of passenger cars. The correct picture is not of a single giant towering over three small, weak, defenseless firms. The correct pic- ture shows four aggressive, experienced domestic producers that, in the process of competitive striving over the years, have grown into efficient, innovative corporations. Each is large by almost any stand- ard. Each believes it has a superior product. Each has confidence in its future. The correct picture would also show — and I think this is very im- portant — more than a dozen foreign competitors. It is quite a bit more than a dozen. I selected only the 12 largest, each of which is striving to increase its sales in the United States and other markets. The U.S. market is especially attractive to foreign automobile manufacturers. They are highly efficient producers with a high degree of technol- ogy. They have an advantage over domestic manufacturers in wage rates. They have an advantage in tariff barriers. Our tariffs on automotive products, which were among the lowest in the world, were further reduced in the recent Kennedy round ; yet our automobile manufacturers have never asked for protection against foreign competition. By contrast, many foreign countries maintain, in addition to higher tariffs, formidable nontariff barriers against our automotive exports. It is worth while noting, in this connection, that foreign manu- facturers cite superior technology, managerial skills, and competitive efficiency of American manufacturers in justification of this lack of reciprocity — a thesis which is exactly the opposite of a point of view which has been expressed in these hearings. Partly because of larger markets created by regional trading arrangements — thereby creating markets more comparable to ours in size — it is also interesting to note that the trend abroad is toward larger and fewer, not smaller and more numerous, automotive manufacturing enterprises, the merger between Leyland and British Motors is one example but not by any means the only one. The passenger car manufacturing industry is in a very real sense a world industry. Foreign passenger car manufacturers compete with American manufacturers in all countries which have liberal policies toward automotive imports. Our domestic market is truly an inter- national market. That there is real and effective competition here at home between foreign and domestic manufacturers is evident from the fact that foreign manufacturers achieved about 10.2 percent of sales in 1959, declined to about 4.9 percent in 1962^ — I presume that is because of American Motors compact and its competition there, and because of vigorous price and product competition from the U.S. companies as well — and then they fought their way back to about 10.5 percent of the domestic market in 1968. In sum, the American consumer may choose not only from the products of the four domestic automobile 91 manufacturers but from the products of a dozen or more foreign manu- facturers as well. I do not mean to imply by all of this that I believe the quality of competition is determined by numbers. At most numbers is only a sin- gle criterion and not a very reliable one at that. Contrary to what some have said, I believe competition can be just as vigorous between a relatively small number of firms as between a larger number. To the extent, however, that numbers of competitors have relevance to the quality of competition, the number in the U.S. market is closer to 14 than to four. I do not think there is a great deal to be gained by debating theo- retical concepts about optimum size of manufacturing establishments. I doubt that anyone knows what the answers are. I especially doubt whether general theories, intended to apply to all industries, are neces- sarily applicable to the automobile industry as it actually functions in the real world. The process of designing, testing, mass producing, marketing, and servicing a highly mobile machine consisting of 15,000 parts is unique in many respects. The capital required is large. Risks are high. Managerial, engineering, marketing, and many other skills are required in depth. Efficient automobile producers are, I believe, likely to be large in any case. We can be sure, however, that the risk to our national economic strength and well-being would be very considerable if the Govern- ment should attempt artificially to reconstruct the automobile indus- try according to theoretical concepts. Let us suppose, for the sake of argument, that governments should artificially fix limits on the share in our market which any manufacturer could have. Would not the most efficient few slacken their competitive efforts when they approached the limits of their allotted share ? What would the incen- tive be to improve the product or reduce price to the consumer if com- panies had no hope of substantially increasing sales and profits? What assurance would there be that price to the consumer would not increase? Or let us suppose, for the sake of argument, that having created a large number of small companies, they were all left free to compete with each other. What reason would there be to believe that some would not become more efficient than others? What reason is there to believe that the less efficient producers would not gradually be eliminated as they were in the past ? And what reason do we have for believing that the companies who survived and enlarged their share of the market would not again be made targets of attack simply because they had succeeded in producing a better or a cheaper product for the consumer ? Do you want to stop here, Mr. Chairman, or shall I go on ? Senator Nelsox. We will recess until tomorrow morning at 9 o'clock rather than 10 o'clock. We may have some questions from some mem- bers of the committee, which you may respond to. If any of you wish to comment in writing on the statements of the other witnesses, feel free to do so and it will be printed in the record. (The following statement was subsequently received pursuant to the foregoing invitation :) 92 Supplemental Statement of Raphael Cohen, Chairman of Executive Committee — MIDCDA /The MIDCDA truly regrets that the afternoon session of the Subcommittee on Monopoly of the Senate Small Business Committee was curtailed, due to other pressing Senate business. AVe realize that this was unavoidable. You were kind enough to give us the opportunity to comment in writing on the remarks and ideas put forth by other panelists. This paper is that document. On most of the opinions expressed by Mr. Alexander Hammond, antitrust and dealer attorney, we are in full agreement. We do believe that he could have been clearer on the so-called "extra cars". IThe automobile manufacturer work on a system termed, in accounting circles as liquidating cost. That is to say that all fixed overhead items are computed and then this overhead is divided into a fixed amount of production. To translate into simple terms, if total fixed overhead was one hundred dollars, and this was divided by a planned production of ten cars, the fixed overhead would be ten dollars a car. However, were the manufacturer able to build 20 cars, the fixed overhead would be reduced to five dollars a car, if 40 cars, to $2.50 a car and so on. Fixed overhead expenses do not fluctuate, they remain constant. So what we believe Mr. Hammond was trying to point out is that the additional cars over the figured production bring exceedingly higher profits to the manufacturer. Now to translate this into retail distribution. If General Motors made $1000.00 per car, and by setting up their own retail distribution they sold 100 additional units they could not sell through their franchise system, they would realize $100,000.00 in additional manufacturing profits. In turn, if on the retail level they lost $300.00 per unit, they would lose only $30,000.00. So you can see that when a manufacturer sets up his own retail outlets, he can offset retail losses by realiz- ing higher wholesale profits. His franchisee being only a retail distributor has no such benefit. Therefore, in competing with his own retail outlets, he can easily afford to undersell them. You might ask why then does he not set up his own distribution system and do away withthe dealer? He desires to make the greatest profit possible, and when he destroys his own franchise system, he will lose many dollars that he would not have necessarily had to. This acts as a price subsidy to his own outlets. We would truly recommend that this Committee request a full investigation into dual distribution by the Department of Justice. Now we would like to pass on to the statement of Mr. Thomas Mann, President of the Automobile Manufacturers Association, a small exclusive organization of only 10 members. We find many disagreements with Mr. Mann's statement and we desire to comment most fully. We have no doubt that the auto industry contributes greatly to the economic well-being of this country. Mr. Mann points out all the financial contributions the industry has made to our society. However, I believe the society has re- warded this industry with great wealth. General Motors' profits, year after year, are proof that his members, on the whole, cannot apply for any of our National Poverty Programs. While on the subject of aflluence, the President of the Automobile Manufacturers Association left an impression that the ma- jority of car dealers are millionaires. This is false. The majority of dealers are hard pressed to show decent returns, and they are far from the wealthy group Mr. Mann's pronouncements painted. One of the reasons the manufacturers have found dealers diflScult to obtain, is their own dictatorial attitudes, as made ap- parent by the terms of our franchise agreement. I wa'^ truly surprised to find Mr. Mann using the Consumer Price Index (CPI) figures to illustrate the competitive nature of the auto industry. I would not doubt that the AMA would be satisfied that the figures show them not being contributors to the National inflationary trends. However, I really did not believe that they would want these figures discussed in open forum. What has the industry done to keep prices down, or rather to convince the Bureau of Labor Statistics that they have? I am not completely aware of all the factors, but I do know some which leave the figures open to suspicion : A. The constant changing of model names, wheelbases and equipment de- fies any logical comparison with the 1957 to 1959 base used by BIS in ar- riving at the CPI on cars. B. Dealer discounts have been lowered, and since dealers operate from cost upward instead of list downward, this has tended to reduce the Manu- 93 facturer's suggested list prices while increasing dealer and consumer cost. C. Quality improvements have also received credit by the Bureau of Labor Statistics. A good sell to the statisticians could accomplish several satisfactory results for the industry. Since most figures requested' by your committee, and other committees of Congress, have been held confidential competitive information by the auto manufacturers, what figures are being given to the Bureau of Labor Statistics to show their true value? I am sure that the consumers who have purchased cars over the past 12 years might find these figures open to severe doubt. As a dealer, I would definitely doubt the validity of these figures. I believe it essential to make one clear statement on the role of those who are responsible for arriving at the CPI figures. At no time am I doubting their integrity or their qualifications. However, they can only work with figures made available to them. Corporate secrecy is decreasing the likelihood of arriving at the best possible figures. I believe Mr. Mann's interpretation of all critics not questioning the pricing performance of the manufacturers is not in agreement with mine. General Motors could reduce prices tomorrow and still sustain their excellent profit performance. But I believe this would eliminate at least two so called competi- tors and possibly three. Mr. Mann further stated he really is not totally in- formed. So why criticize others whose knowledge may be a little better? On page 6, Mr. Mann illustrates how closely guarded product information is from one manufacturer to the other. I have found styling over the past five years to be alarmingly similar. So either the industry contains better "guesses" than Mr. Mann estimates, or each manufacturer ha's its own agency similar to the CIA. On page 8 of Mr. Mann's statement, he makes reference to reductions of American Motors in the pricing of their Rambler American. American Motors did reduce the price, but not to the degree of their public pronouncement. The dealer discount was reduced by half of the decrease announced. So dealers stopped discounting prices on the model decreased and the consumer savings were negligible. On Chrysler's price decrease on Valiants, the practice was very similar. Chrysler further removed all these models from dealer incentive programs. These were nothing more than promotional programs. On dealer incentives, they are not price decreases but promotional devices. Since incentives have become a part of common yearly practice, I am sure that corporate accountants have figured them in when costing out their cars. On page 10, Mr. Mann makes reference to pricing practices on used cars acting as competition to new cars. The used car purchaser is in a less advantageous position than a new car purchaser. Comparison from car to car is most diflScult since a new 1969 Dodge Coronet is the same car in every showroom. To the con- sumer purchasing a used car, condition, mileage and warranty are substantially different. The profit on used cars is substantially higher than on new cars. Many dealers have been sustained and profited handsomely from their used car op- erations, while carrying the new car department at marginal profits. Mr. Mann's statements on dealer franchising systems raise some interesting points. He gives some .statistics on dual franchising. Would the three major man- ufacturer disclose how many of their products are dualed with their leading com- petition? That is to say, how many Ford-Chevrolet duals are there? How about Chrysler-Buick or Mercury-Oldsmobile agencies? Please do not misinterpret my meaning. I am not proposing that there could be any benefit to the consumer if there were. But I believe that the figures he has used might lead to some misconception of the facts as they exist. While discussing this subject, Mr. Mann speaks of "good dealers." What is the definition of a good dealer? In recent hearings before Senator Hart's Sub- committee on Antitrust and Monopoly. Dr. William Leonard made a most interesting point. He had checked with the Better Business Bureau of Paramus, New Jersey, and found one dealer had a very poor complaint file. These com- plaints were for both selling and servicing practices. Yet with this in existence. Dr. Leonard pointed out that the manufacturer granted this same dealer two additional franchises. Why? Simple, he was a "good dealer;" he sold a high volume of merchandise. Further in the Federal Trade Commission Report on Automotive Warranty, the FTC reports the companies' admitting the fact that they had not cancelled 94 dealers for poor service performance. To the contrary, their records show cancel- lation for lack of sales performance. So it can easily be seen that the use of the title "good dealer" means different things to the manufacturer, dealer and consumer. Mr. Mann speaks of dealer pressure. When last has he discussed this question with a cross-section of franchised dealers? Pressure on the part of the manu- facturer is sophisticated. A dealer who has to look to one manufacturer for products has very little leverage. Why have dealers been protesting to this legis- lative body? Why have State legislatures proposed legislation aimed at giving more protection from pressure to the franchise holder? I must state that Mr. Mann is not qualified by his position or direct knowledge to attempt to discuss this point. Frankly his own admission of the limitations of his knowledge in general lead me to doubt his qualifications to discuss these problems. I was indeed pleased to see that Mr. Mann recognizes that there are now two articulate National dealers associations. It was most distressing to me not be joined by the National Automobile Dealers Association on this panel. They have protested in the press about all these things we are discussing. The reason they chose not to participate escapes me. Certainly they could not be serious about the reasons they stated in the letter to this committee. For many of the subjects we have discussed, they have taken public stands. The president of the AMA states the reasons for the franchised auto dealer. He further points out that .the American system has been adopted by the foreign manufacturer. He might have pointed out that it has been copied by other in- dustries such as the soft ice cream, hamburger, motel and other industries. In fact, franchising has been adopted as the greatest system to merchandise. It assures the franchisor captive customers. It allows him to fix his wholesale prices to as- sure himself maximum profit. It gives him a customer without any other source of supply, a captive to all the reasons for auto franchising which were not cov- ered in Mr. Mann's statement. Mr. Mann has made a feeble attempt to show that General Motors does not dominate the industry. I call it feeble because it cannot hold up under careful examination. The 38 percent figure in 194G took an unusual period after World War II. All autos were in short supply, and there was not one single manufac- turer who could not market any vehicle on four wheels. Once. the shortage was over, smaller manufacturers could not keep pace with an integrated giant who built facilities to manufacture most of its own parts. General Motors could begin tomorrow to eliminate its remaining competitors. Our antiquated Antitrust laws are the only thing standing in their path. In statements by Lynn Townsend, Chairman of the Board of Chrysler Cor- poration, we are constantly told that we must conform to the patterns set by the leader. General Motors. This was part of the method used from 1963 to 1968 to increase Chrysler's share of the market. Our own true iimovative contribution was our extended warranty. Now that it has been duplicated by all of Chrysler's competitors, it appears to be in the process of being phased out. On our foreign competitors, it has been the decision not to go after that market. The domestic auto industry chose not to build a Volkswagen type car, as far as size and styling goes. It has been the domestic manufacturer who has chosen to change styles to keep an ever increasing demand for something new. This is not stated as a criticism, but only as a fact, to point out that the success of the foreign manufacturers has been partially due to the decision of the domestic manufacturers not to compete. , . . .c t^ i It will be interesting to see the effect the soon-to-be-marketed mini-cars of 1 orcl and General Motors, and I am not making reference to the Ford Maverick, will have on foreign-car sales. As a Chrysler Corporation dealer, I truly hope we will again conform and introduce a mini-car. At that point we will be able to ascertain iust how we will affect the foreign imports. .,, . . ^, . ^i Competition can be fierce when there are only two entrants. But is this the competition that benefits the greatest segment of society? I claim it is not. More competitors makes more meaningful competition. , , .„ , ^^ ^ As far as artificial restructuring of the industry is concerned, I will leave that up to those whose expertise lies in this area. But the need for new domestic entry is urgent and some consideration and study is my whole-hearted recommendation. Mr Mann makes an excellent point of "Macy's not telling Gimbel s, or vice versa However, I pointed out that the manufacturer insists by contract on this relationship with its dealers. We disclose our figures; however, we do not re- ce ve like treatment from the manufacturer. The Justice Department should take 95 immediate action to eliminate the need for dealers to supply their manufacturers with their operating statements. This committee should institute such a request. In all, I am in agreement with Mr. Mann on one major point. He is not suffi- ciently or personally informed to truly discuss the problems that are being dis- cussed. Some of the representatives of the manufacturers, who sat in the audience during the hearing, could have spoken from a first hand knowledge. I believe Thomas Mann to be a man of ability and integrity. However, his position with the AMA does not qualify him for the role in which he was cast before your committee. Senator Nelson. We will recess until 9 o'clock tomorrow morning. (Whereupon, at 1 :05 p.m., the hearing was recessed, to reconvene at 9 a.m., Thursday, July 10, 1969.) THE ROLE OF GIANT CORPORATIONS IN THE AMERICAN AND WORLD ECONOMIES: AUTOMOBILE INDUSTRY— 1969 THURSDAY, JULY 10, 1969 U.S. Senate, Subcommittee on Monopoly of the Select Committee on Small Business, Washington^ B.C. The subcommittee met, pursuant to recess, at 9:10 a.m., in room G-308, New Senate Office Building, Senator Gaylord Nelson (chair- man of the subconmiittee) presiding. Present : Senators Nelson, Dole, and Cook. Also present : Chester H. Smith, staff director and general counsel ; Raymond D. Watts, counsel ; and James P. Duffy III, minority counsel. Senator Nelson. The subcommittee will resume its hearings. Mr. Mann was interrupted midway through his statement yesterday, so, Mr. Mann, we will be pleased to have you complete your statement. If you find it possible to do any summarizing it may be helpful in terms of our time. STATEMENT OF THOMAS C. MANN^Resumed Mr. Mann. Thank you, Mr. Chairman. I think we were down to the part dealing with the confidentiality of divisional financial data and product costs. Senator Nelson. Yes. Mr. Mann (reading). THE confidentiality OF DIVISIONAL FINANCIAL DATA AND PRODUCTION COSTS The question is asked : Is there too much "secrecy" about internal financial data of the automotive industry ? I should first like to point out that there is nothing new about the fact that "Gimbels doesn't tell Macy's." Automotive companies are no more secretive about their internal data than other industries and perhaps less so than most. There is a great deal of information already available to the public. Each automotive manufacturer provides annual and quarterly financial reports and makes reports to the SEC and to the financial com- munity. The information available to the public includes industry or company data, or both, on production and sales, investment and (97) 98 employment, product characteristics and features, and information on research, engineering, and the production process. A wide variety of information has been provided the Government over the years. The question of whether there should be additional disclosure of corporate financial information with respect to registration statements is currently under intensive study by the Securities and Exchange Commission. A large number of business firms, including many asso- ciation members, have filed extensive comments with the SEC on this issue. These comments are a matter of public record. In view of these proceedings, it seems to me premature to debate the question of the need for more data before we know what additional data, if any, will be required by the SEC.^ I would be less than candid, however, if I did not question \Vhether the public interest would be served by disclosing financial data which traditionally has been considered confidential by all industries. As re- flected in the comments to the SEC, this is a matter of concern to other industries as well. I assume that this committee would consider that all businesses should be subject to the same disclosure regulations. The disclosure of detailed financial data by a company would enable competitors to determine its points of weakness and strength. The competitors could then avoid a competitor's strengths and exploit his weaknesses. Detailed knowledge of a competitor's cost and profit data would, for example, assist a manufacturer in making decisions about his own production of a competitive unit. Accounting methods and procedures themselves are considered important managerial tools and proprietary in nature; release of detailed data through which these methods and procedures could be revealed would be, in my opinion, undesirable. The release of confidential data would be especially burdensome for the innovator. If advantages gained through research, the development of better management techniques, better cost accounting methods, and in other ways were revealed almost immediately through the require- ment of disclosures of detailed data, there would be less incentive to find ways to reduce costs, increase productivity, improve quality, or re- duce prices. It is important to underscore that the competitive position of U.S. manufacturers would be prejudiced if U.S. companies were obliged to disclose their costs while their foreign competitors were not. This does not seem to me to be a prudent thing to do especiallv at a time when the United States is having balance-of -payments difficulties. I do not doubt for a minute that our foreign competitors would know how to use this internal data to their advantage both at home and abroad. As I understand it, some courts and officials of the Department of Justice have, in the past, taken the view that, generally speaking, the exchange or disclosure of cost as well as other internal information by competitors can lead to less rather than more competition. I would be surprised, for example, if the Department of Justice would not attack as anticompetitive any exchange of cost and profit data between the companies. It seems to me, in sum, that the public interest in informing inves- tors, or whatever other advantage might be gained by disclosure in 1 See Appendix VII in Part lA of this record. 99 detail of confidential information, should be balanced against the anti- competitive effects of such action. TRAFFIC SAFETY Now I turn, Mr. Chairman, to the subject of traffic safety. Last year about 100 million vehicles of all kinds traveled an esti- mated 1 trillion miles in the United States. There were about 5.5 fatali- ties for each hundred million miles traveled. Accordinjr to the data I have seen, this rate is the lowest in the world and considerably lower than it was in the United States some years ajro. In 1935, for example, the rate was 15.9 per hundred million miles traveled. Nevertheless, the rate is too high and there is general agreement that it should be re- duced. The question is: How can this be done? The Department of Transportation is, in my opinion, now moving in the right direction. It has promulgated a number of vehicle safety standards. It has pro- grams aimed at driver and pedestrian habits. The best available data, for example, suggests that alcohol is involved in a very substantial per- centage of fatal traffic accidents. There is evidence that consumption of alcohol by pedestrians is a significant factor in the number of fatal pedestrian accidents. The simple use of passenger restraints, which are now standard equipment on all new vehicles, would probably save more lives than any other single thing that could be done; yet reports on the number of people who actually use them is not encour- aging. Another example : There is a great deal of data which suggests that a significant percentage of traffic fatalities involve violations of traffic laws ; better driver education programs and better enforcement of traffic laws would probably pay big dividends in terms of saving lives. There is a respectable evidence that an improvement in the way in- jured motorists are treated at the scene of the accident and in hospitals would save a signficant number of lives. There are also programs designed to save lives by making roadways safer. The fatality rate on the new Interstate System is, for example, substantially lower than on roads and streets designed for the horse and buggy days. Divided lanes, elimination of intersection crossings, and control of ingress and egress to the roadway partially explain this. Another example : Since a significant percentage of deaths is caused by vehicles colliding with a fixed object after they leave the roadway, it is, I believe, generally accepted that a signficant number of lives can be saved simply by making roadway signs so that they will "break away" from their base when struck and by installing safer, and where appro- priate, energy absorbing, roadside barriers. Finally, there are programs aimed at assuring the principal safety features of vehicles in use (the average age of automobiles on the road is 5 years and many are 10 or more years old) are regularly inspected and properly maintained. Surely the value of these programs is evident. I do not mean to imply, Mr. Chairman, that it is possible to make accurate quantitative estimates of the number of deaths that are at- tributable to each of these component parts of an effective traffic safety program. Much of today's data is suspect and we need, among other things, to develop a better data collection methodology. There is also 32^93 O — 69 — pt. 1- 100 evidence that many accidents have several ratlier than a single cause. Nor do I mean to imply that improving the safety feature of vehicles is not an important part of traffic safety. It clearly is. Rather, my point is that if we are to succeed in our aim of signifi- cantly reducing the fatality rate (or the number of fatalities in ab- solute terms) at a time when our human and car population, and the hundreds of millions of miles traveled, continue rapidly to increase, it will be necessary to attack the problem in all of its aspects — the vehicle, the driver and passenger, the pedestrian, the roadway, the inspection and maintenance of cars in use, and proper treatment of the injured. By effectively dealing with one component of the traffic safety problem we can hope to reduce the rate by, let us say, some 10 percent, by deal- ing with another component, perhaps another 10 percent, and so on. The cumulative effect of dealing with each component part of the problem could, however, and presumably would, bring about a very significant reduction in the rate. I wish I could assure this committee that the fatality rate is likely to be very significantly reduced by concentrating on the vehicle alone, while ignoring the other important aspects of traffic safety. But it would be irresponsible for me to do so. There is no evidence that defects in vehicles — which are properly maintained and used for pur- poses for which they were designed — cause a significant percentage of fatal accidents. Senator Nelson. What was that last statement ? I did not hear the last statement. Mr. Mann. There is no evidence that defects in vehicles — which are properly maintained and used for the purposes for which they were designed — cause a significant percentage of fatal accidents. Senator Nelson. I am not sure I understand that. The National Traffic Safety Council argues, for example, that the use of the seat- belt substantially reduces injury and death. Mr. Mann. Yes, sir. Senator Nelson. Some statistics seem to indicate that about half the people who are killed in an accident would survive if they wore a belt, and about half who receive permanent injuries would not receive per- manent injuries if they used a belt. Are you saying that these kinds of devices are not an important factor in safety? Mr. Mann. No, sir. Just a moment ago, I said just exactly what the chairman has just gotten through saying. Senator Nelson. Then I do not understand that last sentence. Mr. Mann. May I explain it, sir. You take a car that is in good shape and you drive it 70 miles an hour with tires inflated at one-half of what they should be and you try to take a corner, you will not have the kind of control that you should have. An automobile is a very complex machine and it has got to be used in the way that it is supposed to be used and for the ]^urposes for which it was designed. Let me give you another example. If you take a station wagon, and underinflate the tires, drive 80 miles an hour and load it down to twice the capacity for which it was designed, then obviously you are not going to have the same kind of control when you go around a very sharp turn at very high speeds that you would if it weie not over- loaded and if the tires were properly inflated. Or take another example. Suppose you have a car that is 10 years old and the brake linings are worn out and you have not bothered 101 to replace them — to maintain them — and you come to an intersection where the light is red and you ought to stop but you are unable to stop and you go through the light and you get hit. So what I am saying is that excluding that type of thing, either due to failure to maintain the principal safety features of the car, or failure by overloading or underinflating tires or any of the other abuses to which cars are sub- jected, if you eliminate those, that kind of thing, there is no substan- tial evidence that defects in automobiles are the primary cause of any significant number of fatal accidents. Senator Nelson. I do not know what you mean by a defect but let me give you an example. It has been proven, I guess beyond any sliadow of doubt, that the automobile industry itself put on the orig- inal equipment tires which in fact were inadequate to carry the car and the normal passenger load. That case was proved, although the automobile industry denied it, when we introduced the tire safety legislation. The fact is that in the District Court of San Francisco the expert witness for the defendant, for the defense, said that the tire that was put on that car, as soon as they had four passengers, the four passengers in it who were in it and who were injured, that if you drove it all day long at a normal speed, that at some stage he would "expect the tire to explode." In other words, the industry was putting tires on automobiles then. I think still is, that were inadequate for the purpose for which the car was designed. Now, how do you explain that ? Mr. Mann. Well, Senator Senator Nelson. In other words, that is a defect in the automobile. Mr. Mann. Senator, you are telling me about a case that I do not have any personal knowledge of. What I do know is that there are standards on tires, there are standards on rims, and those standards are judged by the Government, and I believe by most knowledgeable people in the field, to be adequate. We comply with those standards. Senator. I would like for you to come up and see some of our tire test- ing facilities in Detroit if you would like to. We go to a great deal of ])ain to try to put the right tire on the right car and they are tested. They are tested on dynamometers. They are tested under pressure. Tliey are tested allowing for a reasonable margin of safety. Now, it is true, and you have seen it and I have seen it, that you can find station wagons that are loaded far beyond their capacity. A sta- tion wagon is not a truck and if it is used as a truck, that is not the purpose for which it is designed. It is not going to be as safe. Senator Nelson. I am not talking about overloading the auto- mobile. I am talking about tlie cases that were proved beyond, I think, a doubt whatsoever, that automobiles — that is the reason this legislation finally passed. The automobile industry opposed the safety legislation. It opposed the tire safety legislation. I introduced that legislation. They came to my office and argued it was not necessary, but finally the proof came through that original equipment tires put on according to the specifications required by the automobile manu- facturers themselves were inadequate. Many of those automobiles were overloaded the moment you put in the normal number of passengers for which the automobile was built, and in some of them, without putting in more than one passenger. That is just a fact that 102 Mr. Mann. Well, Senator, you are talking about a fact or an alleged fact that you know about and that I do not know about, and let me say this, that I think the standards, the safety standards, are sup- ported by the automobile manufacturers. I think they are a good thing, safety standards, for the reason that the competitive system works best when it responds to the demand in the marketplace, and let us face it : There was not any great demand for safety ; that is to say, a manufacturer who added to the cost of his vehicle by putting on features which his competitor did not have lost out. This really is the economic justification for standards. I think that is the economic justification for standards. I think standards are good. Now, we have disagreements about cost -benefit problems. We have disagreements about how you should design a car, perhaps, or what load weight, and this kind of thing, and I simply do not know about the particular lawsuit in California that you are talking about. I do not have any knowledge of that and I cannot respond to that. But I do know that the companies make a great effort to make these cars as safe as they possibly can. Senator Nelson. Well, you raise the question about the driver not properly inflating his tire. There is no question that many drivers do fail to maintain their tires properly. A good part of that is that it is pretty hard to find out from the manufacturer how to do it. It is lost in the book some place. The safety legislation now requires a decal put on the dashboard which gives the weight of the automobile, and so forth. But you raise a question and all I am saying is that the industry, due to the competition, I assume, has tried to economize on tires. If you produce 8 million automobiles, you are talking about 40 million tires, and if you put $5 of additional quality into a tire, you are talking about $200 million, which is a lot of money. But the facts are pretty clear and I will give them to you, since you represent the automobile industry and know what the industry has been doing. They have been putting on tires that were inadequate. After the tire safety legislation, some standards that are totally inadequate were established simply because there was a new law. The Department of Transportation does not have the expertise, and neither have they received very much cooperation from the industry in my judgment, in establishing the standards. But the fact that the public ought to know is that very cheap tires were put on the automobiles by the industry, a good many cheap tires that were inadequate, and 1 think the proof is as clear as a bell. And the industry got by with this for years. It took legislation to undertake to tackle the problem. When you talk about the driver being at fault for not inflating his tire, that is correct, but the industry has been a fault for putting on inadequate tires and in fact, I think anybody who studied it would say the industry has not done very much about building safety into the automobile and that is why Con- gress passed legislation. The public was getting disgusted with the failure of the industry to assume a responsibility for exactly the rea- son that you state, that they felt that there was not any demand. In fact, that is what the industry said repeatedly. There is no gi-eat de- mand for safety features, and so forth. But they have gotten away with a lot and I just want to put that in the record at this point. I will submit that case for the record in which the issue was tried in a 103 lawsuit and proved beyond any doubt, plus some other material that ought to go in the record at tliis stage on the question of the adequacy of tires j^ut on by the manufacturers themselves. (The chairman subsequently submitted the following memorandum and judicial opinion :) Exhibit 16A (Subcommittee chairman's exhibit No. 4 (subsequently submitted) : Summary of relevant facts and the opinion of the California Court of Appeal, First District, Division 2, in the case of Barth v. B. F. Goodrich Tire Company et al., 71 Cal. Rptr. 306 (1968) ) A. SUMMARY OF RELEVANT FACTS On April 17, 1962, Shirley Barth was killed as the result of a blowout of the left rear tire of the 1961 Chevrolet station wagon she was driving, with five women passengers. The accident occurred in San Mateo County, California on a flat, straight road. Mrs. Earth's husband and the surviving passengers sued the manufacturer of the tire that failed for her wrongful death and their in- juries. A jury trial resulted in verdicts and substantial money judgments against the manufacturer. The defendant tire manufactux*er's expert witnesses, at the trial, testified that rear tires specified by the automobile manufacturer for the vehicle in question were 25 percent overloaded when the station wagon was carrying six 150 pound passengers. The judgment against the tire manufacturer was aflSrmed on appeal. The opinion of the appellate court follows. B. OPINION OF THE COURT (From Vol. 71, California Reporter) Theodore H. Barth et al., Plaintiffs, Respondents and Appellants, v. B. F. Goodrich Tire Company, a Corporation, Defendant and Appellant, Perry & Whitelaw, Inc., Defendant and Respondent Carole Clark et al.. Plaintiffs, Respondents and Appellants, v. B. F. Goodrich Tire Company, a Corporation, Defendant and Appellant, Perry & AVhitelaw, Inc., Defendant and Respondent [Civ. 23891, Court of Appeal, First District, Division 2, Aug. 27, 1968, Hearing Denied, Oct. 23, 1968.) Action against tire manufacturer and supplier and installer for damages sus- tained as a result of automobile accident that occurred after blowout. The Superior Court, City and County of San Francisco, Edward Molkenbuhr, J., entered judgment against manufacturer but in favor of installer. The manu- facturer appealed from judgments against it. Plaintiffs cross-appealed from judgments in favor of installer. The Court of Appeal, Taylor, J., held that, inter alia, doctrine of strict liability was applicable to installer of tire that blew out. causing automobile accident, where installer, an authorized disitributor of tires made by manufacturer, supplied and installed tire in question pursuant to agree- ment with manufacturer to service manufacturers national accounts. Judgments against manufacturer affirmed, judgments in favor of installer reversed. 1. Pleading (3=:>245(4) Permitting punitive damage amendment after defendant's experts had testi- fied at trial was not improper in view of 12-day recess proffered to defendant to meet amendment. 2. Damages <^;z:^215{2) Showing that tire manufacturer knew of danger of overloading and deliber- ately neglected, for business reasons, to caution customers and unknowing public, justified punitive damage charge based on grounds of fraud, malice and oppres- sion, in products liability action arising from automobile accident that occurred after blowout. 104 3. Appeal and Error 60 Remarriage of a surviving spouse is not admissible on issue of damages in a wrongful death case. 5. Torts 16 Evidence, in action against tire manufacturer for damages sustained as a result of automobile accident that occurred after blowout, authorized instruction that a manufacturer and seller are strictly liable when an article they place on the market, knowing that it is to be used without inspection for defects, has at that time a defect that causes injury to a human being. 11. AutomoMles c3=:?i6 In view of evidence of tire manufacturer's asserted knowledge that normal use of vehicle with six passengers would result in an overload that would cause tires to rupture and its admitted failure to issue any warnings concerning over- loading of tires, it was proper to give instruction that if directions or warnings as to use of a particular product are reasonably required in order to prevent the use of such product from becoming unreasonably dangerous, the failure to give such warnings or directions, if any, renders the product defective. 12. Sales <^;=^U6(2) Evidence, in action against tire manufacturer for damages sustained as the result of automobile accident that occurred after blowout, authorized instruction on issue of breach of warranty of merchantability. 13. Sales <3=>273(5) Under statute providing that in case of a contract to sell or a sale of a specified article under its patent or other trade name there is no implied warranty as to its fitness for any particular purpose, the mere description or ordering of an article by its trade name is not conclusive if other conditions exist that would raise an implied warranty of its character. AVest's Ann. Com. Code, § 231.1. U. Sales G=^273i5) In view of fact that purchase of tires was made by automobile owner pursuant to its national arrangement with tire manufacturer to supply its fleets with 105 tires, implied warranty of fitness was not precluded by reason of fact that automobile owner had ordered tires by trade name. West's Ann.Com.Code, § 2315. 15. Sales 0=^255 Manufacturer's warranty of tires, if any, extended to passengers wlio were injured as a result of accident that occurred after blowout. 16. Negligence G:^68 To avoid contributory negligence, one need be only ordinarily careful and prudent. 17. Automobiles G::::>16 Doctrine of strict liability was applicable to installer of tire that blew out, causing automobile accident, where installer, an authorized distributor of tires made by codefendant manufacturer, supplied and installed tire in question pursuant to agreement with manufacturer to service manufacturer's national accounts. 18. Torts 0=^14.1 A wholesale distributor who neither manufactures the product nor has posses- sion of the goods can be held to doctrine of strict liability. (Key-number headnotes copyrighted by the West Publishing Co.) <> sN ^ H: 4: :(: * Hoberg, Finger, Brown & Abramson. San Francisco, for Barth and Clark, and others. Sedgwick, Detert, Moran & Arnold, Scott Conley, Bacon, Mundhenk, Stone, O'Brien & Hammond, AV. F. Stone, San Francisco, for B. F. Goodrich Co. Low, Ball & Norton, San Francisco, for Perry & Whitelaw, Inc. Taylor, Associate Justice. The cross-appeals in this products liability litigation arose from an accident that occurred after the left rear tire of a station wagon blew out and the car went out of control, over an embankment and turned over. The husband (Theo- dore H. Barth) and minor children (William Henry and Julie Lynne Barth, by their father and guardian ad litem) of the deceased driver (Mrs. Shirley Sue Barth), and three of the four surviving passengers (Carole Clark, Patrica Ridgway and Elizabeth Gordon) tiled their respective actions for wrongful death and personal injuries against the manufacturer of the tire, B. F. Goodrich Tire Company (hereafter Goodrich), and the .supplier and installer, Perry & Whitelaw, Inc. The actions were consolidated for a jury trial which resulted in verdicts against Goodrich of $207,375 for Barth, $6,000 for Clark, et al.. and in favor of Perry & Whitelaw. Goodrich appeals from the judgments in favor of Barth and Clark, et al., contending that the cumulative effect of the errors of the trial court during the trial and in its instructions to the jury deprived it of a fair trial. Barth and Clark cross-appeal from the judgments in favor of Perry & Whitelaw, contend- ing that the trial court erroneously instructed the jury that the strict liability of Perry & Whitelaw depended on its "sale" of the tire. As there are no contentions concerning the suflBciency of the evidence, only those facts i^ertinent to the issues raised are set forth. The facts relating to the Goodrich appeal and the Barth and Clark cross-appeal are set forth separately. I. THE GOODRICH APPEAL TJio facts Viewing the record most strongly in favor of the judgment, the following facts appear: On the afternoon of April 17, 1962, Shirley Barth was driving a 1961 Chevrolet six to nine passenger station wagon northbound along the coast high- way in San Mateo County with five passenger friends. At the scene of the acci- dent, the coast highway is a flat and straight two-lane road, 32 feet wide. The speed limit was 65 miles per hour. Just after Shirley Barth had passed the Pigeon Point lighthouse, the passengers heard a loud bang from undemeith as if something had exploded, a sound similar to a blowout. One of them said: "It may have been a blowout. Maybe we should stop and check." Shirley was doing her best to control the car and started to apply the brakes lightly. The car began to fishtail across the center of the highway, swerved back and forth, then went over the right embankment after striking a guardrail and turned over end-to- end before coming to rest 30 feet off the highway. All of the surviving passen- 106 gers and some expert witnesses fixed the speed of ttie vehicle just before the accident at between and 60 miles an hour; Goodrich's expert at between 58 and 70 miles an hour. The 1961 Chevrolet station wagon with a trailer hitch was owned by Service Leasing Corporation and leased to American Floor Machine Company, Inc. (hereafter American), a manufacturer and distributor of all types of floor main- tenance equipment. In September 1961, American assigned the station wagon to branch manager Barth as his own vehicle. Shirley Barth was permitted to drive the vehicle. American had 35 factory-owned branches in each major city of the country, all selling the same kind of equipment and followed the same vehicle-leasing practice at all of its branches and generally using trailers owned by American. American also had made arrangements with Goodrich on a na- tional basis to furnish replacement tires for American's vehicles. In October 1961, Barth had the brakes and wheels of the station wagon aligned at the House of Brakes in San Francisco. A notation on the invoice at that time noted "drums have hard spots." Barth concluded that the brake company wanted to sell him a new set of drums but thought the price was out of line. Thereafter, the brakes were fine and no other changes were made in the station wagon except for the purchase of new tires, discussed below. When Barth took the vehicle over from his predecessor, it had been equipped with Monroe load level- ers to keep the car level when it was pulling the trailer. Barth did not know that the load levelers would affect the load-carrying capacity of the trailer. In November 1961, the station wagon needed new tires. Pursuant to company procedure, Barth was informed by American's home oflBce in Ohio that two 800 X 14 black de luxe Goodrich Silvertown rayon tubeless tires for his car had been ordered through the Biltmore Company of Chicago (a midwestern Goodrich dis- tributor, hereafter Biltmore). Shortly thereafter, Barth received a purchase order to pick up the tires in San Francisco at Perry & Whitelaw, a wholesale and retail Goodrich distributor who sold tires to individuals and serviced na- tional accounts. On November 9, 1961. an employee of American took the vehicle to Perry & Whitelaw, who installed two tires from its stock on the rear wheels, in accordance with a standard mechanical procedure, and provided a Goodrich form warranty, including a warranty against blowouts, with its name and ad- dress stamped on it. The guarantee period was 24 months. Barth checked the serial numbers on the warranty against the tires but could not say whether he had read any of the particular provisions of the warranty. In December, by the same procedure, two other tires were obtained for the station wagon. The tires that had been obtained in November were switched to the front wheels and the two new tires put on the rear wheels. On March 7, 1962, the tires were again rotated so that the tires that had been obtained in November 1961 were placed on the rear wheels. These were the tires that were on the rear wheels at the time of the accident on April 17, 1962. Seventy-five percent of Barth's work involved trips once a week selling equip- ment in northern California and Nevada. He normally carried in the station wagon a sanding machine, a floor polisher and a vacuum cleaner. In addition, about once a week he hauled an automatic floor scrubber weighing about 870 pounds for demonstration purposes in a two-wheel hydraulically operated Selma IM 46 trailer with a capacity of 1,500 pounds. He never carried more than 300 pounds in the station wagon itself and 1,000 pounds in the trailer. Every two weeks or so, he checked the tire pressure. He maintained 24 pounds of pressure in the front and 28 pounds in the rear. He never found any substantial variance in the pressure of the tires. There were no flats or punctures. According to the tire industry approved "Tire Guide," an 800 x 14 tire was recommended for use on all 1961 Chevrolet station wagons like the Barth ve- hicle. The Barth vehicle was designated as either a six or nine passenger vehicle designed for passengers and equipment or other property. The owners' manual distributed with the vehicle in question indicated nothing about tire safety but only (jave the recommended pressure for comfort of passengers and the life of the tire. A service bulletin issued by Goodrich to its dealers showed recommended pres- sures of 24 to 28 pounds for the tires in question, but this bulletin was not fur- nished to customers and included nothing about the weight that could be carried by the tires on a station wagon. Neither this publication nor any other issued by Goodrich informed the public of any tire weight limits. The tire experts called by Goodrich testified that the maximum carrying ca- pacity of a tire of the type in question, according to the standards then set by 107 the Tire and Rim Association, was 1.175 pounds and that increased tire pres- sure would not increase the carrying capacity of the tire. They testified that if a tire is overloaded and runs into a chuckhole or other road obstructions it would be more vulnerable to a failure of the type found in the Barth tire, that an overload of 2.1 to 50 percent would be severe, and that if the tire was loaded 25 percent over the tire and rim carrying capacity, it would be exi>ected to rup- ture before the tread was gone. The engineering .specifications for a 1961 Chevrolet station wagon indicated that on a loaded nine passenger station wagon, for which tires of the type here involved were specified, the rear wheels would carry 3.430 pounds. Thus' each of the rear wheels would carry 1,715 pounds. Therefore, with six 150 pound pas- sengers riding in the vehicle, each rear tire would be overloaded by 232 pounds or about 25 percent. Accordingly, with six ladies averaging such weight in the car, the rear tires would be overloaded and the overloaded condition would be such that the tires could be expected to rupture before the tread wore out. Goodrich knew that its tires were subject to overload and asked the car manu- facturers to be more observant of recommended loads. But it never informed the public or its individual customers of the problem. Goodrich supplied the tires to the car manufacturer under these circumstances as the business was a highly competitive one. It knew that a certain percentage of tires sold would be exposed to overloading condition.s. Goodrich's witness, Poole, after describing in great detail the steps involved in the construction of a tire, testified that at the end of the process of tire manu- facture and inspection. Goodrich ran into defective tires all the time. The final inspection before the tires went to the market is made by a quality control man who inspects 10 percent of the tires. This final inspection reveals both major and minor defects apparetnly missed in the previous insi^ections in a number of tires. The remaining 90 percent of the tires shipped out do not have the benefit of such a final inspection but would be subjedt to the same defects as those discovered in the 10 percent. Goodrich's expert, Keltner, who had been with the organization for 391/2 years, testified that if a tire carries more than 10 percent above the load authorized by the Tire and Rim Association, it would be excessively overloaded, and that the Tire and Rim Association manual states that no increase in the load is permitted for higher inflations than those shown on the table. He also admitted that when Goodrich sent its tires out to the automobile manufacturers, it did not know what model car the tires would be used on as this was entirely up to the auto- mobile manufacturer. Accordingly, if Goodrich received from General Motors an order for a supply of the kind of tires here involved, the order would be routinely filled and no inquiry made as to the use of the tire. He indicated that General Motors had its own limited testing program to satisfy it that the tires would not be overloaded to the extent that they believed harmful. Once Goodrich became a supplier approved by General Motors, a very important factor. General Motors had satisfied itself that the Goodrich tire would operate satisfactorily on its automobiles. Neither General Motors nor any other automobile manufac- turer made available to Goodrich or any tire supplier the weight of the vehicle on which the tire would be used, and in 1961. Goodrich was unable to obtain this kind of information from General Motors. Robert L. Collins, who had been with General Motors for 17 years, primarily working on body and chassis design, including tires, was called by Goodrich as an expert and testified that General Motors had never attempted to make a secret of the weights of their cars. Another Goodrich witness, Joseph B. Bidwell, the head of the Engineering Mechanics Department at General Motors Research Laboratories, stated that General Motors made no efforts to conceal from tire manufacturers the make and model of vehicles for which the tires would be used ; that if General Motors knew the weight of the vehicle, the information would be made available to the tire manufacturers, if requested. Bidwell and Collins stated that General Motors, in determining the tires to be used on its vehicles, made no effort to fix the rated tire carrying capacity. The only criterion u.sed was whether the tires were performing satisfactorily on the car. There were no other tests to determine if the maximum capacity would be •'rather difficult." Accordingly, the owners" manual did not say anything about the weight that could be carried in station wagou.><. As far as General Motors was concerned, "it would be all right, tire-wise" to carry nine 200 pound persons and their luggage in a 1961 Chevrolet station wagon. General Motors did not agree with the reliance of some of Goodrich's ex- 108 perts on Tire and Rim Association 1961 standards as a maximum. In fact, it ig- nored the Tire and Rim Association's recommended load carrying capacity. In the opinion of General Motors, 46 percent more weight than the maximum rec- ommended by the Tire and Rim Association would not overload the tires. Gen- eral Motors did not advise the purchasers of its vehicles that there was any less danger in running over a chuckhole if the vehicle were empty than if there were nine persons in it nor did it make recommendations about a trailer or the use of load levelers. As far as General Motors was concerned, the load on the tire could be doubled with complete safety if the tire pressure was increased. The only effect would be a harsher ride. Goodrich never complained that its tires were being overloaded by General Motors. Tire manufacturers do not put out literature to the consumer relating to the overloading of tires, nor ever inform the public or anyone else that there could be any danger in overloading Goodrich tires. Furthermore, Goodrich never made any recommendations that there were certain types of roads on which their tires could or should not be driven. Customers were not warned that if they ran into a chuckhole a tire failure might result. Goodrich never excluded the applica- tion of its tire warranty to any conditions of overload or driving at sustained high speeds over rough roads. In fact, in 1961, Goodrich ran an advertisement in Newsweek, Reader's Digest (and possibly Life Magazine), that was rerun in the Oakland Tribune six to ten times, showing a tire with a sidewall comparable in strength to the one here, being driven over sharp rocks and boulders. Goodrich paid 50 percent of the cost of the rerun of this advertisement in the local paper. Goodrich's expert, Keltner, had never seen or heard of such an advertisement and testified that such treat- ment of a tire would constitute an abuse that could cause an incipient failure in any tire in the world. He also stated, "* * * anybody that drives a car over one mile an hour across that kind of condition would be foolish." Keltner also testified as to the harm to the tire from the use of load levelers on a vehicle, although the load leveler itself does not increase the stress on the tires. However, a Goodrich-approved parts manual sent to its distributors, in- cluding Perry & Whitelaw, included Monroe load levelers of the type here in- volved, as a Goodrich-approved part. Some Goodrich dealers installed load level- ers and Goodrich never put out anything recommending against the installation of load levelers. Goodrich never advised that greater stress would be imposed on the tires if load levelers were so used. Perry & Whitelaw installed Monroe load levelers but never so advised its customers. Goodrich also never put out any literature on the subject of towing trailers or referred specifically to one of the size normally pulled by the Earth wagon. Goodrich neither warned against pulling trailers nor recommended that a differ- ent type of tire should be used on a vehicle that did. As a dealer. Perry & White- law also never warned against this practice. Mr. Whitelaw testified that they never issued any such warning, as he pulled one all around the United States. Neither Goodrich nor Perry & Whitelaw ever indicated it would be improper to haul a trailer loaded to its rated capacity of 1,500 pounds. Perry & Whitelaw was never told by Goodrich and did not tell its own customers how a trailer should be loaded or balanced. The 4-ply rayon tubeless tire here involved was available for examination by the various expert witnesses at the trial. The blowout or rupture on the tire occurred on the side away from the road .so that the user would not have been aware of any incipient damage unless he had been under the car a short time before the tire failure occurred. There was a definite crack in the interliner which allowed air to escape into the outerply. This created a bubble in the outer- most ply that grew large and burst. The experts disagreed as to the classification of the rupture. Goodrich and Perry & Whitelaw's expert called it a "sidewall flex break" ;^ the Barth and Clark expert Meyers indicated that the tire was broken above the "bead" toward the tread, while a sidewall flex break is usually higher, near the shoulder of the tire. Meyers saw no indication that the Barth tire had been overloaded or under- ' A tire consists of a rubber tread that is bound to nylon, or rayon cords impregnated witli rubber and otlier materials that are called "plys" and which, laid perpendicular to e.ich other, form the sidewalls. Attached to these "plys" are "beads" that are made up of a number of turns of steel wires insulated with rubber compounds and repeated in fabric. These "beads" hold tight and taut the finished tire along the circumference of the sidewalls which come in contact with the rim of the wheel. Under conditions of heat, the rubber loses its adhesive ability with the cords and allows the cords and plys to separate. 109 inflated or that anything in the driving had anything to do with the failure of the tire. In addition to overloading, the cause of the tire failure could be attrib- uted to a combination of structural characteristics typical of Goodrich tires during the period of time in question. According to Meyers, the defect in the Barth tire was recognized by the industry as due to a defect in manufacture as distinguished from an "adjustable condition" on the tire warranties, which would include road hazards. The Good- rich "Adjustment Procedures" manual for retailers stated that tires with a flex break in the lower sidewall or near the shoulder "may be adjusted on a service rendered basis under the Road Hazard Warranty." Goodrich's expert Poole testified that in his opinion, a rupture or failure of a tire in the particular location here involved, starts from either overloading or under-inflation. As a result of either, the cords will weaken, and the continued flexing of the sidewalls while the tire is in motion will cause the tire to fail. He further stated that the failure could also be started by a blow to the tire. How- ever, if the tire had been overloaded or underinflated at the time of such a blow, the blow might not necessarily rupture the cords but would weaken the cords. In Poole's opinion, the ultimate failure of the Barth tire began with a blow of some kind. Goodrich's expert Hull stated that there was no sign of abuse or evidence that the tire had failed because of any fault, but that the tire might have re- ceivetl a blow from running over a chuckhole or as the rasult of an impact with a curb. This blow could have occurred as little as 50 miles or as much as 1,000 miles before the tire ruptured. As far as wear was concerned, (50 percent of the wear was left on the tire, which meant that the tire was in excellent condition with no falling off beyond the outer ribs. Bull stated that the tire gave promise of giving mileage up to 35,000 to 40,000 miles ; that GO percent of the tread was left and uniforndy worn, without bruises or cuts, and that the tire would have to have been carefully driven to be in this condition. According to Bull, the tire was deflated a little more than standard or normal. Bull did not rule out the possibility of a defect in the tire. Mr. Whitelaw also testified that the evenness of the wear and deep tread re- maining on the Barth tire after 1(>,7(M» miles was readily visible : in his opinion, the particular tire did not appear to have l)een abused and was doing a good job mileage-wise. [1-3] Goodrich first asserts that the court erred in permitting a punitive dam- age amendment to the Clark and Barth causes of action after the Goodrich ex- perts had testified at the trial. We think, however, that the 12 day recess prof- fered to Goodrich to meet this amendment was ample and that the uncontro- verted evidence, showing that Goodrich knew of the danger of overloading and deliberately neglected, for business reasons, to caution customers and the un- knowing public, would clearly justify the punitive damage charge based on grounds of fraud, malice and oppression) (Donnelly v. Soulthern Pac. Co., 18 Cal.2d 803. 118 P.2d 465; Morgan v. French, 70 Cal.App.2d 785, 161 P.2d 800; Sturges V. Charles L. Harney, Inc., 165 Cal.App.2d 306, 331 P.2d 1072). While the amendment should have been limited to the nonwrongful death causes of action (Prob.Code, §573; Code Civ.Proc. §377; Doak v. Superior Court, 257 A.C.A. 943, 953, 65 Cal.Rptr. 193), the error was of no consequence since the jury allowed no punitive damages. It is doubtful whether the admission of evidence of Goodrich's financial condi- tion under the punitive damages allegation affected the judgement in this ca.se since Goodrich is universally recognized as a large and prosperous corporation. But, in any event, such evidence was admissible since the punitive damage amendment properly applied to the nonwrongful death causes of action (Parrott V. Bank of America, 97 Cal.App.2d 14. 217 P.2d 89, 35 A.L. R.2d 263). Further- more, although the judgment was large, we do not regard the damages as ex- cessive as a matter of law. [4] Goodrich contends that evidence of Barth's remarriage a year and a half after Shirley's death should have been admitted to mitigate damages. It is the well established rule in most states, including California, that the remarriage of a surviving spouse is not admissible on the issue of damages in a wrongful death case (Benwell v. Dean, 249 Cal.App.2d 345, 57 Cal. Rptr. 394; 87 A.L.R.2d 252) and this court is neither inclined nor does it have the authority to change this rule. no The instructions We turn to the various alleged errors in the instructions to the jury on strict^ liability, breach of warranty and negligence. 1. Strict Liability. Goodi-ich first argues that the jury should not have been instructed on the doctrine of strict liability as Barth failed to plead and prove that the tire was being used as intended. Goodrich concedes that the tire was not used for any other purpose except as a tire but argues that because of misuse and abuse and overloading or underinflation, Barth and Clark deprived themselves of the pro- tection of the doctrine. [5] As stated in Greenman v. Yuba Power Products, Inc., o9 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897, 13 A.L.R.Sd 1049 : "A manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be u.sed without inspection for defects, proves to have a defect that causes injury to a human being" (p. 62, 27 Cal.Rptr. p. 700, 377 P.2d p. 900) . "To establish the manufacturer's liability it was .suflScient that plaintiff proved that he was injured while using the Shopsmith in a way it was intended to be used as a result of a defect in design and manufacture of which plaintiff was not aware that made the Sliopsmith unsafe for its Intended use" (p. 64, 27 Cal. Rptr. p. 701, 377 P.2d p. 901). Here, the great perponderance of evidence indicates that Barth did not abuse the product or used it for other than the intended purpose. There is no evidence that the tires were at any time underinflated as Goodrich claims. Rather, the uncontroverted evidence indicates that Barth checked the tires every two weeks and that at all times, the pressure was between 24 and 28 pounds for the front and rear tires, respectively, as recommended by the owners' manual. Goodrich's own witnesses admitted that it had never informed the public of any danger of overloading arising out of the normal use of a six passenger vehicle as in this case, and General Motors' experts, called by Goodrich, testified that the tires could have supported double their normal carrying weight and still not have been overloaded. Most of the evidence indicated that the vehicle was not being driven at an excessive speed, but, in any event, there was no evidence that Goodrich ever advised its dealers or customers as to the effect of such speeds on the tires. The testimony of Goodrich's own experts indicated that since 60 percent of the tread was left on the tire in question, it must have been carefully and well driven, and that there was no evidence of abuse. [6] In view of the overwhelming evidence that the tire was being used as in- tended, and had been driven carefully and at reasonable speeds, the trial court properly concluded that plaintiffs had produced suflScient evidence on the doctrine of strict liability and properly instructed the jury thereon. [7, 8] Goodrich next argues that the trial court erred in its instructions on the burden of proof bv refusing to give its proposed Instruction No. 31 (set forth below in the footnote).'' In Alvarez v. Felker Mfg. Co., 230 Cal.App.2d 987, 1003, 41 Cal.Rptr. 514, this court (Division One) held a substantially similar instruc- tion to be a misstatement of the law insofar as the manufacturer's strict liability in tort is concerned. The trial court is not compelled to redraft a proposed inac- curate instruction (Hyde v. Avalon Air Transport, Inc., 243 Cal.App.2d 88, Cal.- Rptr. 309). The record indicates that the general instructions on the burden of proof were adequate and correct. [9] There is no merit in Goodrich's contention that the court erred in in- structing the jury that the contributory negligence of Shirley was not a defense to the causes of action based on strict liability. As stated in the comment in section 402 of the Restatement Second of Torts, since the doctrine of strict liability is not based on the negligence of the seller, the contributory negligence of the plaintiff is not a denfense when such negligence consists merely in a failure to discover the defect in the product or to guard against the possibility of its existence. The only form of plaintiff's negligence that is a defense to strict liability is that which consists in voluntarily and unreasonably proceeding to encounter a known danger, more commonly referred to as assumption of risk. For such a defense to arise, the user or consumer must become aware of the -Instruction No. ."?! : "If .vou should find that it is just as probable that the accident in question was proximately cause P 37 Finally, Goodrich argues that the court erroneously refused to instruct that the violation of the Go mile per hour maximum speed limit created by section '>2349 of the A ehicle Code would create a rebuttable presumption of negligence on the part of Shirley. The record indicates that the trial court, at the request of Good- rich, read to the jury the basic speed law (Veh.Code. §22350) and specifically indicated that a violation of the basic rule constituted negligence. Goodrich com- plains that the court thereafter instructed the jury concerning the proper equip- ment of motor vehicles on the basis of section 26300 of the Vehicle Code and then stated that a violation of that section created a presumption of negligence, but failed to again six^cifically mention the effect of violating section 22,349. Rather than being prejudicial, we thnk the omission of the reference to section 22349 of the Vehicle Code was unduly favorable to Goodrich. The jury was told that driving a vehicle at a speed greater than 65 miles per hour was negligent as a matter of law and that under no circumstances could a speiHl in excess of 65 miles an hour be justified. If the jury had been instructed, as Goodrich suggests, that the violation of the section only created a presumption of negligence that could be overcome by other evidence showing that the conduct was excusable or justified, Barth and Clark would have benefited and Goodrich clearly was not prejudiced. We conclude that in view of the overwhelming evidence of the liability of Good- rich on the theory of strict liability alone, and the fact that there are no conten- tions concerning the sufiiciency of the evidence. Goodrich has not met its burden predicating reversible error on the rulings of the trial court during trial and the instructions to the jury. We hold that the judgments in favor of Barth and Clark against Goodrich must be afiirmed. II. THE BARTH AND CLARK CROSS-APPEAL Facts In October 1961, shortly after taking over the station wagon, Barth was in- formed by his predecessor that instead of following the former procedure of us- ing credit cards for needed equipment on company cars, American had made ar- rangements with Goodrich, on a national basis, to furnish replacement tires, etc. for American's fleet of vehicles. On October 28. Barth wrote an interoffice memo to American's home oflSce in Toledo, indicating that he needed two new tires and in(iuiring whether he should continue to drive the vehicle which then had 33,000 miles on it. He received a reply dated November 3 indicating that he should con- tinue to drive the station wagon until the 1963 models came out and that two new tires had been ordered for him from Biltmore (a midwestern Goodrich dis- tributor "who handless our tire business" ) . Barth also received a copy of a latter dated November 3 from American's Toledo office to Biltmore asking Biltmore to issue a draw number to B. F. Good- rich in San Francisco, for two 800 x 14 black deluxe B. F. Goodrich Silvertown ravon tubeless tires for the station wagon. Shortly thereafter, Barth received a copy of Biltmore's draw order, dated No- vember 6, indicating that the tires were to be picked up in San Francisco at Perry & Whitelaw On November 9, 1961, an employee of American took the station wagon to Perry & Whitelaw who installed two tires from its stock on the rear wheels and provided a Goodrich form warranty, including a warranty against blowouts, with its name and address stamped on it. As a wholesale and retail Goodrich distributor, Perry & Whitelaw sold tires to individuals and serviced Goodrich's national fleet accounts. Some of these national accounts dealt directly with Perry & Whitelaw : others, like American, dealt through an intermediary, such as Biltmore, a mid-western Goodrich dis- tributor, similar to Perry & Whitelaw. Perry & Whitelaw had received the Biltmore draw order, advising them to re- lease the tires to American. Perry & Whitelaw's invoice indicated that the tires were sold to Goodrich, were to be delivered to American, and charged to Bilt- more Perry & Whitelaw sent this invoice to Goodrich, who, in turn, billed Bilt- ■'•You cannot find in this case that the decedent Shirley Sue Barth, or the plaintiff Theodore H Barth Vere or either of them was RUilty of S,°"*"^utory negligence unless vou believe from the evidence that said decedent or Theodore H. Barth dul something Which an ordinarily careful and prudent person, acting under the same or s;milar cir- cumstances would not have done, or failed to do something which an ordinarily careful and prudent person would have done under those circumstances. 114 more, and allowed Perry & Whitelaw a service charge for handling the trans- action, as well as a credit for the tires removed from its stock. On national accounts, such as American, Perry & Whitelaw did not know the exact amount of this credit until informed of it by Goodrich, as the amount depended on the prices established by Goodrich with the home office of the national account. In the instant case. Perry & AVhitelaw received $4.13 for mounting the tires and a net credit of $40.08 for the tires. ,„,.., • , <- ». For a national account like American, Perry & Whitelaw was required to ob- tain a draw order from Biltmore in order to obtain a credit for the tires taken from its stock. This procedure differed substantially from that followed in an individual transaction, where Perry & Whitelaw would measure the remaining tread, charge the customer for the tread used, give the customer a new tire, send the old tire to Goodrich and receive a credit from Goodrich for the difference be- tween what it collected from the customer and its basic cost of the tire. The only question on the cross-appeal is whether the trial court erred in in- structing the jury as follows, at the request of Perry & Whitelaw : "Before strict liability in tort may be imposed against defendant Perry & Whitelaw, Inc., it must be proved by a preponderance of the evidence * * * not only * * * [that] the tire in question when placed on the market had a defect at that time, and that the defect, if any, was a proximate cause of the accident, but, also, that Perry & Whitelaw, Inc. sold the tire in question to the employer of Theodore Barth. "A sale is a transfer or an agreement to transfer goods to a buyer for a price. In this case it is for you to determine whether the sale of the tire was made by Perry & Whitelaw, Inc., as seller, to the employer of Theodore Barth, as buyer, at the time and place alleged by the plaintiff." Barth and Clark contend that these instructions constituted prejudicial error as the jury was left to determine the question of whether the particular trans- action was a sale, and was told that unless they found a sale from Perry & Whitelaw, strict liability could not be imposed on Perry & Whitelaw. The definition of a sale in the above quoted instruction is not in accord with the definition of a seller for the purpose of the doctrine of strict liability, adopted as the law of this state in Greenman v. Yuba City Products, Inc., supra, and set forth in section 402A of the Restatement Second of Torts, as follows : "(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if : "(a) the seller is engaged in the business of selling such a product, and "(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold. "(2) The rule stated in Sub.section (1) applies although "(a) the seller has exercised all possible care in the preparation and sale of his product, and "(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller." Comment f of the Restatement Second of Torts points out that as to the busi- ness of selling, the doctrine of strict liability applies to any persmi engaged in the business of selling products for use or consumption therefore including any manufacturer, wholesaler or retail dealer or distributor as well as operators of restaurants. It is not necessary that the seller be engaged solely in the business of selling such products. The only group of persons exempted from the rule is the occasional seller w^ho is not engaged in that activity as part of his business, like a housewife who, on occasion, sells to her neighbor a jar of jam or a pound of sugar. The Restatement comment further points out that the basis for the 8 The procedure is set forth as follows in the Goodrich Fleet Sales Manual issued to distributors: "Fleet National Accoiintn. Under this plan, all deliveries are invoiced by B. F. Goodrich Tire Company at prices established with the home office of the national "B. F. Goodrich Stores and dealers are to bill their B. F. Goodrich Zone Office for all tires, batteries, or highway tvpe retreads delivered to these Fleet National Accounts. "Do not issue billinp: direct to the customer for merchandise delivered, and no charge is to bo made for applying new tires or installing new batteries. However, solid tire press on charges should be billed at the local rate as Industrial Solid tire prices to Fleet National Accounts do not include application. The usual rate is ITi cents per cross section inch. "B. F. Goodrich Stores and dealers receive a sales and servic«> commission for all new tires, batteries, and highway type retreads delivered to Fleet National Accounts. This sales and service commission" pays the store or dealer for the normal service of mounting new tires and installing new batteries at the retailers premises." 115 rule is the ancient one of the special responsibility for the safety of the public undertaken by one who enters into the business of supplying human beings with products that may endanger the safety of their persons and property and the forced reliance on that undertaking on the part of those who purchase such goods. Clearly. Perry & Whitelaw was a distributor within the Restatement definition of the term seller for the purpose of the application of the doctrine of strict liability and the instructions were erroneous. Although there have been no cases directly in point in California, our view is in accord with the rationale for the doctrine of strict liability, set forth by our Supreme Court in Vandemark v. Ford Motor Co., supra, 61 Cal.2d on pages 262 and 263, 37 Cal.Rptr. at page 899, 391 P.2d at page 171 : "Retailers like manu- facturers are engaged in the biisincsH of distributing goods to the publie. They are an integral part of the overall produeing and marketing enterprise that .should bear the cost of injuries resulting from defective products. (See Green- man v. Yuba Power Products, Inc., r.9 Cal.2d 57, 63, 27 Cal.Rptr. 697, 377 P.2d 897.) In some cases the retailer may be the only member of that enterprise resonably available to the injured plaintiff. In other cases the retailer himself may play a substantial part in insuring that the product is safe or may be in a position to exert pressure on the manufacturer to that end; the retailer's strict liability thus serves as an added incentive to safety. Strict liability on the manu- facturer and retailer alike affords nw^imum protection to the injured plaintiff and works no injustice to the defendants, for they can adjust the costs of such protection between them in the course of their continuing business relationship." (Italics supplied.) Perry & Whitelaw argues that the instruction was proper as it was not a "seller"' of the tire to American but only served as a conduit for the sale that was made by Goodrich through Biltmore to American; that the situation is analogous to" a transaction where Perry & Whitelaw merely installed a tire ordered by a customer from another retailer or wholesaler. But neither the transfer of title to the goods nor a sale is required. For example, in Greyhound Corporation v. Brown (1959) 269 Ala. 520, 113 So.2d 916, and Gray Line Co. V. Goodyear Tire & Rubber Company (9 Cir. 1960) 280 F.2d 294, the bus company was allowed to recover damages from a tire supply company sustained as the result of a blowout of a tire owned by the tire company and placed on the bus by a tire supply company. In both of the above cases, the tires on the bus were furnished by the tire company to the bus company under the terms of a national agreement, "under which title to the tire so supplied remained in the tire com- pany. And, in McKisson v. Sales Affiliates, Inc. (Tex.S.Ct.l967) 416 S.W.2d 787," the court said : "One who delivers an advertising sample to another with the expectation of profiting therefrom through future sales is in the same position as one who sells the product." ( P. 792. ) Perry & Whitelaw argues it merely installed the tires in question for the minor fee of $4.13 and realized no profit on the transaction. The uncontroverted evi- dence, however, indicates that its role was not that minor. As an authorized Good- rich distributor. Perry & Whitelaw benefited from servicing Goodrich's national accounts, like American, in addition to its other retail and wholesale business. The tire in question was removed from Perry & Whitelaw's stock of tires, and besides the installation fee. Perry & Whitelaw received a credit from Goodrich for the cost to it of the tire. In addition. Perry & Whitelaw stamped its name on the Goodrich form warranty. The only significant difference between this transaction and the usual retail one, was the fact that Perry & Whitelaw did not know the exact amount of its credit at the time of the transaction, as this depended on the contractual agreement as to price made between Goodrich and American. Clearly, Perry & Whitelaw was a part of the overall marketing enterprise for Goodrich tires. Furthermore, in the instant case, apart from Goodrich, Perry & Whitelaw was the only other party who had any knowledge or expertise as to the proper weight to be carried by the tires. It had access to the Tire and Rim Association manual as well as to other "service" publications and service briefings provided by Good- rich. However, Perry «& Whitelaw never communicated any information of this kind to the public unless specifically asked. [17] We think that the reasons set forth in Greenman, supra, for applying the doctrine to the retailer apply to a distributor and supplier such as Perry & White- law. As indicated in Greenman, the reasons for placing losses due to defective products on the manufacturers and suppliers are to provide maximum protection for the consumer and the fact that the overall producing and marketing enterprise 32-493 O — 69— pt. 1 9 116 is in a better position to insure against the liability and to distribute it to the public by adding the cost thereof to the price of the product. As pointed out by one eminentVommentator (Prosser, Strict Liability to the Consumer in California, 18 Hastings L.J. 0. 20) : "The rationale of risk spreading and compensating the vic- tim has no special relevancy to cases involving injuries resulting from the use of defective goods. The reasoning would seem to apply not only in cases involving personal injuries arising from the sale of defective goods, but equally to any case where an injury results from the risk creating conduct of the seller in any stage of the production and distribution of goods" (italics partially supplied; fn. 62). (See also, R. Steflfen, Enterprise Liability : Some Exploratory Comments, 17 Hast- ings L.J. 165.) [18] Our view that as a distributor and supplier, Perry & Whitelaw was strictly liable to the consumer and ultimate user, is also supported by the decisions of our Supreme Court, a pioneer in the development of the law of products liability. It is established that a wholesaler distributor who neither manufactures the product nor has possession of the goods can be held to the doctrine of strict liability (Canifax v. Hercules Powder Co., supra). In Martinez v. Nichols Con- veyor, etc. Co., 243 Cal.App.2d 795, 799, 52 Cal.Rptr. 842, a sister appellate court assumed that the rule also applies to lessors and bailors, citing Cintrone v. Hertz Truck Leasing, supra.'' Several recent decisions in other jurisdictions have also followed the sug- gestion that all suppliers in the chain of getting goods from the manufacturer to the consumer should be held (see Prosser, 50 Minn.L.Rev. 791). For example, in McKisson v. Sales Affiliates, Inc., supra, the plaintiff's wife owned a beauty shop and received from the salesman of the distributor a sample of its permanent wave preparation. After she sustained injuries resulting from the use of the preparation on her own hair, her husband filed an action against the distributor of the product. The court held that the distributor was liable under the doctrine of strict liability, citing section 402A of the Restatement Second of Torts. In McKee v. Brunswick Corporation (7 cir. 1965) 354 F.2d 577, the seller of a boat, as well as the designer and manufacturer thereof, and the manufacturer and supplier of an ignition coil that subsequently proved defective, were all held liable under the doctrine of strict liability to the passengers of the owner of the private pleasure boat which exploded. In Blitzstein v. Ford Motor Company (5 Cir. 1961) 288 F.2d 738, the plaintiff purchased an English Ford automobile from a dealer in Birmingham, Alabama. After an explosion that occurred when he turned on the ignition, he brought suit against the English manufacturer and the American distributor in Dearborn. The federal court, following Alabama law, had no jurisdiction over the English manufacturer, but reversed a verdict in favor of Ford, the American distributor in Dearborn, as the jury could reasonably have found that the American Ford Company was negligent in marketing a product that was inherently dangerous. The judgments in favor of Perry & Whitelaw against Barth and Clark are reversed, and the judgments in favor of Barth and Clark against Goodrich are affirmed. Plaintiffs to recover costs on appeal. Shoemaker, P. J., and Agee, J., concur. Mr. Mann. Senator, aside from the fact that I do not know about this particular case, you have really said two things as I understand it. One is that the standards which have been promulgated for tires — ^ After taking: judicial notice of the growth of tlie business of renting motor vehicles, trucks and pleasure cars, the court pointed out that the nature of the U-drive enterprise was such that a heavy burden of responsibility for the safety of lessees and for members of the public had to be imposed on it. The court said 212 A. 2d at pages 777 and 778 : "A bailor for hire, such as a person in the U-drive-it business, puts motor vehicles in the stream of commerce in a fashion not unlike a manufacturer or retailer. In fact such a bailor puts the vehicle he bu.vs and then rents to the public to more sustained use on the highways than most ordinary car purchasers. The very nature of the business is such that the bailee, his employees, passengers and the traveling public are exposed to a greater quantum of potential danger of harm from defective vehicles than usuall,v arises out of sales by the manufacturer. We held In Santor the liability of the manufacturer might be exDressed in terms of strict llabilltv in tort. Santor v. A &" M Karagheusian, Inc., supra, 44 N.J. [52] at 66-67. 207 A. 2d 305 [16 A.L.R..Sd 670] ; see also. Restatement (Second), Torts, 5 402A, comment M, pp. 9-10 (Ten. Draft No. 10. 1964). By analogy the same rule should be made applicable to the U-drive-it bailor-bailee relationship. Such a renUil must be regardetl as accompanied by a representation that the vehicle Is fit for operation on the public highways." 117 we do not manufacture tires, you understand that. We buy tires and put them on our cars. Senator Nelson. Does the industry tell the manufacturer of the tire what the specs should be ? Mr. Mann. I do not really know. Senator Nelson. I think that is correct. The industry tells the manu- facturer of the tire what quality tire they want. Mr. Mann. Well, I know it is true that they do require a tire which meets their safety requirements. Let me say this, that there is a differ- ence between saying that a manufacturer who adds a large number of expensive items on the car and prices his product out of the market camiot really do that if his competitors do not do likewise. I tried to say that earlier. This is really the justification for standards. But to go from that and say that the manufacturers were not working at safety and interested in safety, I think is a big step. Senator, and I hope you will think about that aspect of it. Every major innovation in the automobile today was developed — I am going to come to that a little later in my statement here — ^by the automotive industry itself. The various stages of developing safety glass, including the lami- nated glass, the development of the energy absorbing steering column, the research done 10 or 15 years ago by Cornell — financed in whole or in part by the automobile industry, to determine how people were killed in accidents, what happened to them — this w-as all done 10 or 15 years before this was discussed in any public forum. One company developed an energy absorbing steering column on its own at a cost of several million dollars and several years' efforts and this was avail- able as optional equipment as nearly all of these safety features were before the safety standards went into effect. What the safety stand- ards did was not to develop any brand new ideas that the industry hadn't thought of but it was to enable the manufacturers to move to- gether without pricing their products out of the market by making what were previously optional features standard equipment on the automobiles. Now, up to that point, I concede that safety standards are a very good thing. Now, if you say that a particular safety standard is inadequate — this is something that has been debated by the experts. We have experts and the Government has its experts. The tire industry has its. I don't personally have any reason to believe that the standards on tires are grossly inadequate at the present time, but I am not really a tire engineer. I would be interested to know why you think that is true. Senator Nelson. Well, in the first place, the standards established — I think the Transportation Department will concede — are not very high standards and on the tests they made, admittedly not a sufficient number, a substantial percentage of the tires tested flunked the very minimum standards established by the Department of Transporta- tion. That report was released a month ago, or thereabouts, I would say. So what everybody who knows anything in the industry will say is that the standards weren't very high and a substantial percentage of the tires flunked those standards. I don't think there is any ques- tion about the evidence on it. I will put that in the record at this 118 point also and send it to you. Safety standards on tires, adequate ones, have not been established. But I think it is correct that it became necessary to establish tire safety standards because the industry, be- cause of competition, I assume, felt that they had to put in low quality tires on many cars, and they did. And we had to have auto safety standards because they thought for competition purposes they couldn't install these safety features unless they Avere required to do so. But that wasn't the reaction of either the tire or the auto industry at the time it was proposed in the Congress. This was an interference with free enterprise. I listened to the tire manufacturers in my office say- ing it was absolutely unnecessary. They opposed it all the way. I think it is just an important point to make. (Senator Nelson subsequently submitted, for insertion at this point, the following note and materials :) Exhibit 16B (Subcommittee chairman's exhibit No. 5 ( subsequenltly submitted) : Materials related to tire safety : (lA) Introductory note. (B) .Test results (preliminary) publisihed by the National Highway Safety Bureau, Department of Trans- portation, Jan. 2, 1969. (C) Press release of Senator Gaylord Nelson concern- ing the tire tests, May 11, 1969) A. INTEODUOrOBY NOTE Federal Motor Vehicle Safety Standard 109, effective January 1, 1968, es- tablished minimum safety performance standards for passenger car tires. There follows a preliminary report of the National Highway Safety Bureau on the results of tests conducted to ascertain compliance with the standard. There next follows a press release containing a synthesis of and comment on the Bureau's data, prepared by the oflSce of Senator Gaylord Nelson. B. TEST RESULTS (PRELIMINARY) PUBLISHED BY THE NATIONAL HIGHWAY SAFETTT BUREIAU, DEPARTMENT OF TRANSPORTATION, JANUARY 2, 1969 Purpose of Tests Federal Motor Vehicle Safety Standard 109, effective January 1, 1968, es- tablished minimum safety performance standards for passenger car tires. To ascertain compliance by domestic and foreign tire manufacturers with this standard, the Bureau is conducting a series of tests on samples of a cross sec- tion of makes, sizes, and market designation of tires. These tests are carried out on special testing wheels by independent testing laboratories under contract. Nature of Tests Under this program tires are tested to determine whether they meet the safety performance requirements of the standard with respect to the following : Endurance. — freedom from failure for a prolonged period under load. High Speed. — freedom from failure at high speed operation. Strength. — ability to withstand penetration. Bead Unseating. — ability to adhere to rim. Dimensions. — freedom from distortions in shape. Labeling. — verification of accuracy of information on tire. HOW TO READ DATA Manufacturers selling the tires included in the sample are listed alphabetically The table should be read as follows : END HI SPD STR BEAD (bead DIM LAB Size-brand (endurance) (high-speed) (strength) unseating) (dimension) (labeling) (Numericalsizeof tire)., failed/tested failed/tested failed/tested failed/tested failed/tested failed/tested (Market designation of tire.) 119 Note that the total at the end of each line gives the number of that type of tire tested on one or more tests. This total is smaller than the sum of tires tested on the individual tests because most tires are tested for labeling before being separated into three groups for additional tests. The total at the bottom of each vertical line gives the total failures among all tires subjected to that test. The overall total gives, for the indicated manufacturer, the total tires that failed all tests, among all tires tested. Note also that wliere no tires of a listed size — brand designation are listed as having been tested (a zero number of tires tested), such tires are pending Bureau testing. Size and brand End HiSpd Str Bead Dim Lab Total ARMSTRONG RUBBER CO. 6.50-13/PT 100 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.50-13 PT 120/4 Ply/N... 0/2 0/2 0/2 0/2 0/2 1/6 0/6 6.00-13/PT 120 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.95-14/PT 120 _ .0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.35-14/PT 100 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.35-14 Premium Coronet 0/1 1/1 0/1 0/1 0/1 0/3 0/3 7.75-14/PT 120 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-14 PT 100/4 Ply/N 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-14 5 Star/4/2/N/FG.... _... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/Rhino 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.25-14 Premium Coronet. __ 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14 PT 120/4 Ply/N 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14 PT 100 4 Ply/N 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14 5 Star/2/2/N/FG 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.55-14 Premium Coronet 0/0 0/1 0/0 0/0 0/0 0/0 0/0 8.85-14/PT 120 0/0 0/0 0/0 0/0 0/0 0/0 0/0 H70-14/SuperHPC 0/1 0/1 0/1 0/1 0/1 0/3 0/3 F70-14/Quick Tire .0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-15/PT 120 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.15-15/Premium Coronet 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15-15/PT120 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.15-15/PT 100 0/0 1/0 0/0 1/0 0/0 1/0 0/0 8.45-15 PT 120/4 Ply/N. 0/1 0/1 0/1 0/1 0/1 0/3 0/0 9.00-15 Premium Coronet 0/0 0/0 0/0 0/0 0/0 0/0 0/0 9.00-15 PT 100/4 Ply/N 0/1 0/1 0/1 0/1 0/1 0/3 0/3 9.00-15/PT 120 0/0 0/0 0/0 0/0 0/0 0/0 0/0 9.00-15/5Star 0/0 0/0 0/0 0/0 0/0 0/0 0/0 Total Overall total CONTINENTAL TIRE CO. 165SR14/2/6 Rayon Continental... Total.. Overall total COOPER TIRE & RUBBER CO. 6.50-13 Starfire .0/0 0/0 0/0 0/0 0/0 0/0 0/0 6.50/6.00-13 Starfire Imperial ..0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.00-13 Starfire Imperial 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.35-14 Starfire 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.35-14/4 Ply/R Lifeliner ...0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-14 Lifeliner Premium .0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-14/4 Ply/R Starfire Imperial 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/4 Ply/R Lifeliner Premium 0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.25-14 Starfire Imperial ...0/0 0/0 0/0 0/0 0/0 0/0 0/0 F70-14 Wide Runner 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-15 Starfire 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.15-15 Lifeliner.. 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.45-15/4 Ply/N Starfire Imperial.. .0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total Overall total DENMAN RUBBER MANUFACTURING CO. 7.35-14/4 Ply/N Elegante Premium. 8.15-15/4 Ply/N Elegante Premium Total Overall total . 0/16 1/16 0/16 0/16 0/16 0/48 1/48 - 0/1 0/1 0/1 0/1 0/1 0/3 0/3 - 0/1 0/1 0/1 0/1 0/1 0/3 0/3 - 0/7 0/7 0/7 0/7 0/7 0/21 . 0/21 - 0/1 - 0/1 0/1 0/1 0/1 0/1 0/1 0/1 0/1 0/1 0/3 0/3 0/3 0/3 . 0/2 0/2 0/2 0/2 0/2 0/6 - 0/6 . — ■ — 120 Size and brand End HiSpd Str Bead Dim Lab Total DUNLOP TIRE & RUBBER CO. 6.50-13/4 Ply/R CT - 2/6 0/6 1/6 0/6 0/6 0/18 3/18 7.35-14 Gold Seal 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-14/4 Ply/R Gold Seal C60 0/4 1/4 0/4 0/4 0/4 0/12 1/12 8.25-14/4 Ply/N Gold Seal. _ 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.55-14/4 Ply/N Gold Seal 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15-15/4 Ply/N Gold Seal C60 0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total - - 2/13 1/13 1/13 0/13 0/13 0/39 Overall total -..- -. - 4/39 FIRESTONE TIRE & RUBBER CO. 6.50-13/4 Ply/N Champion 1/2 0/2 0/2 0/2 0/2 0/6 1/6 6.50-13/2 Ply/R Deluxe Champion 0/4 1/4 0/0 0/0 4/4 0/12 5/12 6.50-13/4 Ply/N N-500 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.50-13/4 Ply/N Safety Champion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.00-13/4 Ply/N N-500 0/2 0/2 0/2 0/2 0/2 0/6 0/6 7.00-13 Deluxe Champion 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.00-13 Town and Country - 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.95-14 Champion 0/0 0/0 0/0 0/0 0/0 0/0 0/0 6.95-14 Deluxe Champion.... 0/3 0/3 0/2 0/2 1/3 0/9 1/9 7.35-14/4 Ply/N Safety Champion 0/3 0/3 0/2 0/2 1/3 0/9 1/9 7.35-14/2 Ply/R Deluxe Champion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.35-14 Champion-. 0/2 0/2 0/2 0/2 0/2 0/6 0/6 7.75-14 Champion-. .-- -0/2 0/2 0/2 0/2 0/2 0/6 0/6 7.75-14 N 500 - 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-14/4 Ply/N Safety Champion 0/3 0/3 0/3 0/3 0/3 0/9 0/9 7.75-14/2 Ply/N Deluxe Champion --- 0/1 0/1 0/1 0/1 0/1 0/3 0/3 «i5-14 Town and Country 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/4 Ply/N Safety Champion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/2 Ply/PY Deluxe Champion-.-- -..0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/4 Ply/N 500 0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.25-14/4 Ply/N 500 SS 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.55-14/2 Ply/R Deluxe Champion. - 0/2 0/2 0/2 0/2 0/2 1/6 1/6 8.55 Town and Country 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.55-14 500 ..0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.55-14/4 Ply/N Safety Champion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.55-14/4 Ply/N Champion. 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.85-14 Deluxe Champion -.0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.85-14/4 Ply/N 500 0/1 0/1 0/1 0/1 0/1 0/3 0/3 E70-14 Wide Oval Deluxe Champion 0/2 0/2 0/2 0/2 0/2 0/6 0/6 F70-14 Wide Oval Sports 2 Ply/N -.- 0/1 0/1 0/0 0/0 1/1 0/3 1/3 215R14F-100 Rayon Radial Ply (Seconds).... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-15 Deluxe Champion -- 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-15 Safety Champion 0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.15-15 Champion -- 0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.15-15/4 Ply/N Safety Champion . 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15-15 4 Ply/N 500 1/3 0/3 0/3 0/3 0/3 0/9 1/9 8.45-15 Champion -- 0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.85-15/4 Ply/N 500 -- 0/1 0/1 0/1 0/1 0/1 0/3 0/3 9.00-15/4 Ply N Safety 0/2 0/2 0/2 0/2 0/2 0/6 0/6 9.00-15500 - 0/0 0/0 0/0 0/0 0/0 0/0 0/0 H70-15 Wide OvaVSuper Sport 0/2 0/2 0/2 0/2 2/2 0/6 2/6 H70-15/4 Ply/R Town and Country Wide Oval 1/1 0/1 0/1 0/1 0/1 0/3 0/3 205R15F-100 6/2 Radial Ply Nylon 0/2 0/2 0/2 0/2 0/2 0/6 0/6 Total 2/61 1/61 0/54 0/54 9/61 1/183 Overall total - ---- - 13/183 GATES RUBBER CO. 6.50-13 Air Float 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.00-13 Air Float Deluxe -.-- 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.35-14 Air Float Supreme 0/0 0/0 0/0 0/0 0/0 0/0 00 7.75-14/4 Ply/N Air Float Supreme 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/Super Silent Safety 0/0 0/0 0/0 0/0 0/0 0/0 00 8.55-14/4 Ply/N Air Float Supreme 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15-15 Air Float Deluxe- . 0/0 0/0 0/0 0/0 0/p 00 00 8.45-15/4 Ply/PY Super Silent Safety 0/1 0/1 0/1 0/1 1 03 03 G70-15/4 Ply/N Commando XT Special... -,--. 0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total .--- 0/4 0/4 0/4 0/4 0/4 0/12 - Overall total - - 0/12 GENERAL TIRE & RUBBER CO. 6.50-13/4 Ply/N Safety Jet - 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.50-13/4 Ply/N Safety Jet -- 0/0 0/0 0/0 0/0 0/0 0/0 00 6.50-13 Jet Air 11 0/0 0/0 0/0 0/0 0/0 0/0 0/0 6.50-13 Winter Cleat.. .0/0 0/0 0/0 0/0 0/0 0/0 7.00-13/4 Ply/N Safety Jet 1/3 0/3 0/3 0/3 0/3 9 19 700-13JetAir 0/0 0/0 0/0 0/0 0/0 0/0 0/0 121 Size and brand End HiSpd Str Bead Dim Lab Total 6.95-14 Jet Air 1 1 0/0 0/0 0/0 0/0 0/0 0/0 0/0 6.95-14/4 Ply/N Safety Jet... 0/1 0/1 1 01 1 03 03 7.35-14/4 Ply/N Safety Jet 0/3 0/3 0/3 0/3 0/3 0/9 0/9 7.55-14 Jet Air 1 1.. 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.7S-14 Safety Jet ....0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-14/4 Ply/N Jet Air II 0/1 0/1 0/1 1 O/l 3 3 8.25-14/4 Ply/N Jet Air 1 1 O/l 0/1 1 1 1 3 3 8.25-14/2 Ply/N Jet Air 1 1.. 0/1 0/1 0/1 0/1 1 3 3 8.25-14 General Jet 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.55-14 Jet Air II 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-15 Safety Jet 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.15-15/4 Ply/N Jet Air 1 1_._ 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15-15/4 Ply/N General Jet.... 1/1 0/1 0/1 0/1 0/1 0/3 1/3 8.45-15 Safety Jet 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.45-15 Dual 90 0/1 0/1 0/1 0/1 0/1 0/3 0/3 9.00-15/4 Ply/N Safety Jet _. 7/10 0/6 1/6 0/6 0/6 0/18 8/11 9.00-15/4 Ply/N Jet Arr I L. 0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total.. 9/24 0/21 1/21 0/21 0/21 0/63 Overall total 10/67 B. F. GOODRICH TIRE CO. 6.50-13/2 Ply/RSilvertown 660 ...0/4 1/4 2/4 0/4 0/4 0/12 3/12 6.50-13/Custom Long Miler 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.00/6.50-13 4 Ply/PYSilvertown 770 ..0/1 1/1 0/1 0/1 0/1 0/3 1/3 7.00/6.50 13 4 Ply/N Custom Long Miler 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.00-13/4 Ply/RSilvertown 660 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.95-14/2 Ply/RSilvertow/n 660 0/1 1/1 0/1 0/1 0/1 0/3 1/3 6.95-14/4 Ply/N Silvertown 770 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.95-14/4 Ply/N Custom Long Miler 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.35-14/2 Ply/R Silvertown 660 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.35-14/4 Ply/PY Silvertown 770 0/2 1/2 0/2 0/2 0/2 0/6 1/6 7.75-14/2 Ply/PY Silvertown 660 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-14/4 Ply/Py Silvertown 770 0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.25-14/2 Ply/R Silvertown 660 .,0/1 I/l 0/1 0/1 0/1 1/3 1/3 8.25-14/4 Ply/PY Silvertown 770 .,0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.55-14/2 Ply/R Silvertown 660 0/3 1/3 0/3 0/3 0/3 0/9 1/9 8.55-14/4 Ply/PY Silvertown 770 __.. 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.85-14/4 Ply/NHTSilvertown 770... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 185R14/6 Ply/R Silvertown 990... .,0/1 . 0/1 0/1 0/1 0/1 0/3 0/3 195R14/6 Ply/R Silvertown 990 ..0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-15/4 Ply/N Custom Long Miler. ...0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15/15 Silvertown 660 .,,. 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15-15 Custom Long Miler.. 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.45-15/2 Ply/R Silvertown 660 0/1 0/0 0/1 0/1 0/1 0/3 0/3 8.45-15 Silvertown 770 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.85-15 Custom Long Miler... 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.85/9.00/9.15-15/4 Ply/PY TrailmakerSilvertown 0/0 0/0 0/0 0/0 0/0 0/0 0/0 9.00-15 Silvertown 770 ..0/0 0/0 0/0 0/0 0/0 0/0 0/0 H70-15 Wide Profile ..0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total : 0/31 6/31 2/31 0/31 0/31 0/93 Overall total. 8/93 GOODYEAR TIRE & RUBBER CO. 6.50-13/2 ply/PY Power Cushion .1/5 1/5 1/5 0/5 0/5 0/15 3/15 6.50-13 Power Cushion 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.00-13 Power Cushion.. 0/9 0/9 4/9 0/9 0/9 0/27 4/27 6.45-14/2 Ply/PY Power Cushion 0/1 0/1 0/1 0/1 0/1 0/3 C/3 6.95-14/4 Ply/N All Weather 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.95-14/4 Ply/PY Custom Power Cushion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.35-14/4 Ply/N Safety All Weather 0/3 0/3 0/3 0/3 0/3 0/9 0/9 7.35-14/4 Ply/PY Power Cushion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.35-14/4 Ply/PY Custom Power Cushion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-14/4 Ply/PY Custom Power Cushion .0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-14/2 Ply/PY Power Cushion 0/5 0/5 0/15 0/5 0/5 0/15 1/15 7.75-14 All Weather.... .,, 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-14/4 Ply/N Safety All Weather .0/2 0/2 0/2 0/2 0/2 0/6 0/6 ,7.75-14 Marathon 0/0 0/0 0/0 0/0 0/0 0/0 0/0 '7.35/7.75-14 Thunderbird 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.25-14/4 Ply/PY Custom Power Cushion ....0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.25-14 All Weather ..,_ 0/0 0/0 0/0 0/0 0/0 0/0 0/0 18.25-14/2 Ply/PY Power Cushion 0/3 0/3 0/3 0/3 0/3 0/9 0/9 " 25-14/4 Ply/N Marathon 0/2 0/2 0/2 0/2 0/2 0/6 0/6 55-14/4 Ply/N Marathon 0/2 0/2 0/2 0/2 0/2 0/6 0/6 55-14/2 Ply/PY Power Cushion 0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.55-14/4 Ply/PY Custom Power Cushion... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 H70-14/4 Ply/PY Speedway Wide Tread 0/1 0/1 0/1 0/1 0/1 0/3 0/3 H78-14 2/2 Ply-PY/FG Belted Bias Power Cushion 0/1 0/1 0/1 0/1 0/1 0/3 0/3 185R14/6 Ply/R Radial Power Cushion ....0/1 0/1 0/1 0/1 0/1 0/3 0/3 F70-14/4 Ply/PG Custom Wide Tread 0/2 0/2 0/2 0/2 0/2 0/6 0/6 D70-1 4/4 Ply/PG Custom Wide Tread 0/1 0/1 0/1 0/1 0/1 0/3 0/3 E70-14 Custom Wide Tread 0/0 0/0 0/0 0/0 0/0 0/0 0/0 122 Size and brand End HiSpd Str Bead Dim Lab Total F78-14 Power Cushion 0/0 0/0 0/0 0/0 0/0 0/0 0/0 mAl'^erl!!^!::.:::::"::::::".: -oo oo o/o o/o o/o o/o o/o 195R14/6/2 Ply/R Radial Power Cushion --0/1 1 1 1 1 3 3 225R14 Radial Power Cushion - 00 00 00 0/0 00 00 205R14 Radial Power Cushion.. Op 7.75-15/2 Ply/PY Power Cushion.. -- 1/1 0/1 0/1 0/ 0/3 1/3 7.7^15 All Weather Safety... 0/0 0/0 0/0 1/1 1/1 0/3 13 7.75-15 Custom Power Cushion --00 00 00 00 00 00 00 8.15-15/2 Ply/PY Power Cushion. -02 2 2 2 2 0/6 0/6 8 15-15 Marathon 0/0 0/0 0/0 0/0 0/0 0/0 0/0 s.-ilSmpoweVcushion::::::::::....-. o/o o/o 00/ 0/0 0/0 0/0 0/0 8.45-15/2 Ply/PY Power Cushion 0/3 1/3 0/0 1/3 0/9 2/9 8.45-15/4 PlJ/N Safety All Weather 0/2 0/2 0/2 0/2 0/2 6 0/6 8 45-15 Double Eaele 0/0 0/0 0/0 0/0 0/0 0/0 /OO mU C stm PoVeVCushion\\-::::::.. -oo o/o o/o 0,0 0/0 0/0 9.00-15/4 Ply/N Marathon - - ---0 1 1 1 1 1 3 0/3 9.00-15 Power Cushion - -00 00 00 00 00 00 00 9.00-15 Custom Power Cushion 0/0 9.15-15/4 Ply/PY Custom Power Cushion -.-0 5 5 5 5 5 15 0/15 215R15/6 Ply/R Power Cushion.... v--- 9/,\ 9/,\ T, n'/\ ?//i Kn n'/7 H70-15 2/2 Polyglas Belted Bias Custom Wide Tread.. -.0 1 1 1 1 1 3 3 F70-15 Speedway Wide Tread 0/0 0/0 0/0 0/0 0/0 0/0 0/3 G70-15 2/2 Polyglas Belted Bias Custom Wide Tread..... 1 1 1 1 1 3 3 235R15 Power Cushion — - 0/0 0/0 0/0 0/0 0/0 0/0 0/0 205R15 Power Cushion 0/0 0/0 0/0 0/0 0/0 0/0 0/0 Total --- 2/64 2/64 6/61 6/61 2/65 0/195 Overall total - - - ..^2/195 LEE TIRE & RUBBER CO. F78-14GT Belted Fiberglas2/2Ply-PY/FG Belted Bias... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total 0/1 0/1 0/1 0/1 0/1 0/3 . Overall total ^'^ MANSFIELD TIRE & RUBBER CO. 6 50-13/4 PIv/N Premium --- 0/0 0/0 0/0 0/0 0/0 0/0 0/0 6 40/6 50-13 4 Ply/N T^^^^^^^ - — 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6 95^ 35- 4 4 Ply/N Premium 0/0 0/0 0/0 0/0 0/0 0/0 6 95^31 4 4 P^/N Turnpike Triomphe.... -00 0/0 0/0 0/0 0/0 0/0 0/0 7 35-14/4 Ply/N Safe Service - - -0/0 0/0 0/0 0/0 0/0 0/0 7 75-14/4 PIv/N Premium -- 0/1 1/1 0/1 0/1 0/1 0/3 1/3 8 2^4/4 Ply/N Premium — 00 0/0 0/0 0/0 0/0 0/0 8 2l4 6Ply/NSafeSmice"::::::- 0/0 0/0 0/0 0/0 0/0 85- 44 p|y> Turnpike Triomphe...- -.0/0 0/0 0/0 0/0 0/0 8.5^14 4 PlJ/N Premium...... 00 00 00 00 00 00 00 8.55-14/4Ply/N Ultra Premium.. 0/1 0/1 0/1 0/1 0/1 0/3 3 8 85/9 35-14 4 PIv/N Premium 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7 75^5/4 PlvVpemium 0/0 0/0 0/0 0/0 7 75^5/4 PIv/N Safe SeTvice"''" 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8ll5 4Py/NpSm^^^ -" -00 0/0 0/0 0/0 0/0 0/0 0/0 sit 5/4 PIWNsKrvice" 0/0 0/0 0/0 0/0 0/0 0/0 sfellipiBuu'apYemiV 0/0 0/0 0/0 0/0 0/0 / R 95/9 00-15 4 PIv/N Premium -. 1/1 0/1 0/1 0/1 0/1 0/3 1/3 roSi5-i5TurnyTr?om^he::::;:::::::::-..:.-. o/o o/o o/o o/o o/o o/o o/o Total ...-- - -- 1/5 1/5 0/5 0/5 0/5 0/15 . Overall total - -- ^/" MC CREARY TIRE & RUBBER CO. 7 75-14/4 PIv/N Scott - 0/0 0/0 0/0 0/0 0/0 0/0 0/0 825^44Pv/NSco 01 01 0/1 0/1 0/1 0/3 0/3 9:oluSffiSTSe service--:::::::-". oi o/i o/i o/i o/i 0/3 0/3 E78-14/4 PIv/PY Scot Hawk 0/1 0/1 0/1 0/1 0/1 0/3 0/3 lu/4plpY Scot Hawk:::::::::::::..-- o/o o/o o/o o/o o/o o/o o/o 8.15-15/4 Ply/N scot Major.. 3 3 9 15-15/4 PIv/N Scot Maior ...0/1 0/1 0/1 0/1 0/1 0/3 U/3 F78-15/4 piyVpY Scot Hawkv:: :::::::::::::::: .:: . - . . 0/0 0/0 0/0 0/0 0/0 0/0 0/0 Total 0/5 0/5 0/5 0/5 0/5 0/15 .. Overall total -- .....--O/IS 123 Size and brand End HiSpd Str Bead Dim Lab Total MOHAWK TIRE & RUBBER CO. 7.35-14/4 Ply/N Airflo 16/36 0/5 0/5 0/5 0/5 0/15 16/46 7.35-14/4 Ply/N Bonanza...- O/l 0/1 0/1 0/1 0/1 0/3 0/3 7.75-14/4 Ply/N Bonanza 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/4 Ply/N Airflo -. 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.55-14/4 Ply/N Bonanza I 1/5 0/5 0/5 0/5 0/5 0/15 1/15 E70~14/XR70 Wide Track 2/2 N/FG Belted Bias 0/1 0/1 0/1 0/1 0/1 0/3 0/3 G70-14/XR70 Wide Track 2/2 N/FG Belted Bias.... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 7.75-15/4 Ply/N Airflo 0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total 17/472 o/16 0/16 0/16 0/16 0/483 Overall total 17/79 UNIROYAL, INC. 6.50-13/4 Ply/N Super Safety 800 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.50-13/2 Ply/R Laredo 0/2 1/2 0/2 0/2 0/2 0/6 1/6 6.50-13/4 Ply/N Safety Air Ride 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.50-13/4 Ply/N Tiger Paw 0/2 0/2 0/2 0/2 0/2 0/6 0/6 7.00-13/2 Ply/R Laredo _ 0/4 0/4 0/4 0/4 0/4 0/12 0/12 6.95-14/4 Ply/N Tiger Paw.. _ _... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 6.95-14/2 Ply/R Laredo 0/3 0/3 0/3 0/3 0/3 0/9 0/9 7.35-14/4 Ply/N Laredo 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.35-14/2 Ply/R Laredo 0/2 1/2 0/0 0/0 2/2 0/6 2/6 7.35-14/4 Ply/N Super Safety 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-14/4 Ply/N Laredo 0/3 0/3 0/3 0/3 1/3 0/9 0/9 7.75-14/2~ Ply/R Laredo 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.25-14/4 Ply/N Laredo.. _ _ 0/4 0/4 0/4 0/4 0/4 0/12 0/12 8.25-14/4 Ply/N Super Safety 800... ._.. 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.25-14/4 Ply/N Tiger Paw.. _... 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.55-14/4 Ply/N Laredo ...0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.55-14/4 Ply/N Tiger Paw... _ 2/5 0/5 0/5 0/5 0/5 0/15 2/15 8.85-14/4 Ply/N Winter Patrol... 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.85-14/4 Ply/N Tiger Paw 0/1 0/1 0/1 0/1 0/1 0/3 0/3 E70-14/2 Ply/R Tiger Paw Wide Oval ..0/0 0/0 0/0 0/0 0/0 0/0 0/0 F70-14/2 Ply/R Tiger Paw Wide Oval 0/0 0/0 0/0 0/0 0/0 0/0 0/0 7.75-15/2 Ply/R Laredo 0/1 0/1 0/1 0/1 0/1 0/3 0/3 8.15-15/4 Ply/R Laredo 0/1 0/1 0/1 0/1 O/l 0/3 0/3 8.15-15/4 Ply/N Tiger Paw .0/2 0/2 0/2 0/2 0/2 0/6 0/6 8.45-15/4 Ply/N Laredo 0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.45-15/4 Ply/N Master Royalty Steel Rein, tread ..0/0 0/0 0/0 0/0 0/0 0/0 0/0 8.85-15/4 Ply/N Laredo 0/0 0/0 0/0 0/0 0/0 0/0 0/0 9.00-15/4 Ply/N Tiger Paw ....0/1 0/1 0/1 0/1 0/1 0/3 0/3 205R15/6/3 Rayon Radial Ply Max 0/0 0/0 0/0 0/0 0/0 0/0 0/0 215R15/6/3 R/N Radial Ply Max 0/1 0/1 0/1 0/1 0/1 0/3 0/3 Total 2/38 1/38 0/36 0/36 2/38 0/114 Overall total... _ 5/114 > Manufactured by Uniroyal for Mohawk. 2 Includes 1 tire manufactured by Uniroyal for Mofiawk. 3 Includes 15 tires manufactured by Uniroyal for Mohawk. C. PRESS RELEASE OF SENATOR GAYLORD NELSON CONCERNING THE TIRE TESTS, MAY 11, 1969 Washington, D.C. — Senator Gaylord Nelson of Wisconsin Sunday released test data from the National Highway Safety Bureau which shows that 18 per cent of the tires tested for compliance with the federal tire safety standard failed one or more tests. "Although the test sampling represents only a small fraction of the total num- ber of tires on the market, the results show a shockingly high failure rate," Nelson said. "This information is vitally important to every American motorist. A concerted effort should be made to assure that it reaches as much of the public as possible," he said. The tests were run on 176 different sizes and brands of tires. Of these, 33 failed one or more tests. Nelson noted that there were over 100,000 different brands and sizes of tires on the market. Tires from all 15 major U.S. tire manufacturers were tested. Two-thirds of the companies had one or more tires which failed the tests. "This is obviously an industry-wide problem," Nelson said. "It is conclusive evidence that the federal tire standards which are essentially the same as the industry's own standards — are totally inadequate and should be updated — a fact that has been known for a long time." 124 The Department of Transportation has recently taken the following action in regard to the tire failures : Persuaded two tire companies (Mohawk and General Tire) to institute recall campaigns on three of their tires which failed the tests. No action has been taken on the other 30 tires, however. Announced an additional testing program of 1900 tires, begun in January, to reconfirm the results of the initial tests. No results have been released at this date. Instituted legal action against the two tire companies who are recalling tires. "Although the Department's action is meaningful as a first step, it simply doesn't go far enough," Nelson said. "The Department ought to pour all available resources into the retesting pro- gram and make the results, with all pertinent safety information, known to the public as soon as each test is completed. Every day that this information is withheld could threaten the safety of millions of American motorists," he said. The retesting program is scheduled for completion at the end of June. Tire test results Follovping is information released by the National Highway Safety Bureau on tires which have been tested for compliance with the minimum federal safety standards for tires, under authority of the National Traffic and Motor Vehicle Safety Act of 1966. Of the 176 tires tested, 33 individual sizes and brands — or 18 percent — failed one or more tests. Fifteen US tire manufacturers were involved in the testing. Two-thirds of these, including the 4 major manufacturers who produce about 75 per cent of all tires, experienced one or more failures. The number of tires chosen for the tests from each tire company was deter- mined by that company's share of the total tire market. The actual selection was done on a random basis. The tests involved only replacement tires. No testing of original equipment tires — which account for % of all tires produced — is being done by the Safety Bureau. The tests were conducted on special testing wheels by independent testing laboratories under contract to the National Highway Safety Bureau. They were performed between June and November, 1968. Endurance. — Freedom from failui'e for a prolonged period under load. High Speed. — Freedom from failure at high speed operation. Strength. — Ability to withstand penetration Bead Unseating. — Ability to adhere to rim Dimensions. — Freedom from distortions in shape Labeling. — Verification of accuracy of information on tires A summary of the data shows the tire manufacturer, the number of tires which were tested and the number which failed the tests : Number Number Number Number Manufacturer tested failed Manufacturer tested failed Armstrong 15 1 B. F. Goodrich 23 6 Continental 1 Goodyear Lee Tire 33 6 Cooper - 6 1 Denman 2 Mansfield. 5 2 Dunlop 5 2 McCreary 5 Firestone 36 8 Mohawk 8 2 Gates 4 Uniroyal 20 3 General 12 3 Attached is a complete listing of all failures by manufacturer, brand name, size ; the tests they failed and the number of tires tested and failed. Following that is a list of the tires which passed all the tests. 125 TIRE TEST FAILURES Manufacturer Brand name and size Tests failed Number of tires Failed Tested Armstrong Dunlop--- Flrestone.. General Tire. B. F. Goodrich. Goodyear. Mansfield Mohawk. UniroyaL Premium Coronet, 7.35-14 High speed.. 6.50-13/4 ply/R CT _ Endurance.. Strength... Gold Seal 060, 7.75-14/4 ply/R High Speed. Champion, 6.50-13/4 ply/N Endurance.. Deluxe Champion, 6.50-13/2 ply/R High speed- Dimension.. Deluxe Champion, 6.95-14. ..do Safety Champion, 7.35-14/4 ply/N do Deluxe Champion, 8.55-14/2 ply/R Labeling.... Sports 2 ply/N, F70-14 wide oval Dimension.. "500" 8.15-15/4 ply/N Endurance.. Super Sport wide oval H70-15 Dimension.. Safety Jet 7.00-13/4 ply/N Endurance.. General Jet 8.15-15/4 ply/N 1 do Safety Jet 9.00-15/4ply/N'.... Endurance.. Strength... Silvertown,660 6.5O-13/2ply/R Highspeed. Strength... PY/Silvertown, 770, 7.00/6.50-13/4ply Highspeed. Silvertown, 660, 6.95-14/2ply/R ..do Silvertown, 7.35-14/4ply/PY..- do Silvertown, 660, 8.25-14/2ply/R.. do Silvertown, 660, 8.55-14/2ply/R .do Power Cushion, 6.50-13/2ply/PY Endurance.. High speed. Strength... Power Cushion 7.00-13 Strength.... Power Cushion 7.75-14/2 ply/PY .do Power Cushion 7.75-15/2ply/PY.. Endurance.. All Weather Safety, 7.75-15 Dimension. . Power Cushion, 8.45-15/2ply/PY High speed. Dimension.. Premium, 7.75-14/4ply/N High speed. Premium, 8.95/9.00-15 4ply/N Endurance. . Airflo, 7.35-14/4ply/N I ....do Bonanza, 8.55-14/4ply/N 2 .do Laredo, 6.50-13/2ply/R High speed. Laredo, 7.35-14/2ply/R Dimension.. Tiger Paw, 8.55-14/4ply/N Endurance.. High speed. 1 6 6 4 2 4 4 3 3 6 1 3 2 3 1 18 6 4 4 1 1 2 1 3 5 5 5 9 5 1 1 3 3 1 1 34 5 2 2 6 7 I Recall campaigns for these tires have been instituted by the tire companies. The figures on failures represent addi- tional testing. Initial tests involved on the average 3 tires for each brand and size. - The Bonanza tire is manufactured for Mohawk by Uniroyal. Note: The initials R, N, and PY following some of the tires refer to tire fabric, rayon, nylon, and polyester, respectively. 126 TIRES WHICH PASSED TESTS ARMSTRONG 6,50-13/PT 100 6.50-13/PT 120/4ply/N 7.00-13/Pt 120 6.95-lVPT 120 7.75-lVPT 100/4ply/N 7.75-lV5Star/V2/N/FG 8.25-lVPremium Coronet 8.25-lVPT 120/4ply/N 8.25-lVPT 100/4ply/N 8.25-IV5 Star/2/2/N/FG H70-lVSuper/HPC 8. 15-15/Premium Coronet 8.45-15/PT 120/4ply/N 9.00-15/PT lOOAply/N CONTINENTAL TIRE COMPANY 165SRIV2/6 Rayon Continental COOPER TIRE & RUBBER COMPANY 6.50/6.00-13 Starflre Imperial 7.35-lV4ply/R/Lifeliner 7.75-lV4ply/R, Starflre Imperial 8.25-l4Aply/R/Lifellner Premium F70-lVWide Runner 8.45-15/4ply/N/Starfire Imperial DENMAN RUBBER MFG. COMPANY ■7-35-lV^ply/N/Elegante Premium 8.15-15/4ply/N/Elegante Premium DUNLOP TIRE & RUBBER COMPANY 8.25-l4Aply/N/Gold Seal B.55-lV4ply/N/Golci Seal 8.15-15/4ply/N/Gold Seal c6o FIRESTONE TIRE & RUBBER COMPANY 6.50-13/4ply/N/N-500 6.50-13/4ply/N/Safety Champion 7.00-13/4ply/N/N-500 7.00-13/Town & Country 7.35-1V2d1v/P/ Deluxe Champion 7.35-lVChampion 7.75-lVChampion 7. 75-lV4ply/N/Safety Champion 7.75-lV2ply/N/Deluxe Chamaion 8,25-lVTown & Country 8.25-l4Aply/N/Safety Champion 8.25-lV2ply/PY/Deluxe Champion 8.25-l4Aply/N/500 8.25-i4Aply/N/500 ss 8.55-lV^ply/N/Safety Champion 8. SS-lV+ply/N/Champion 8.85-lVDeluxe Champion 8.85-lV4ply/N/500 E70-14 Wide Oval Deluxe Champion 215R14 F-100/Rayon Ra-llal Ply (Seconds) 8.15-15/4ply/N/Safety Champion 8.45-15/Champion 8.85-15/4ply/N/500 9.00-15/4ply/N/Safety H70-15Aply/R/Town & Country Wide Oval 205R15 F-lOO 6/2 Radial Ply Nylon GATES RUBBER COMPANY 7.75~lV^ply/N/Alr Float Supreme 8.55-lV4ply/N/Air Float Supreme 8.45-15/4ply/PY/Super Silent Safety G70-15/4ply/N/Commando XT Special GENERAL TIRE & RUBBER COMPANY o.50-13/4oly/N/ Safety Jet 6.95-lV4ply/N/Safety Jet 7.35-lV4ply/N/Safety Jet 7.75-lV4ply/N/Jet Air II 8.25-lV4ply/N/Jet Air II 8.25-lV2ply/N/Jet Air II 8.15-15/4ply/N/Jet Air II 8.45-15/Dual 90 9.00-15/4ply/N/Jet Air II B. F, GOODRICH 7.00/6. 50-13/4ply/N/Custom Long Miler 7.00-13/4ply/R/Silvertown 660 6.95-lV4ply/N Silvertown 770 6.95-lV4ply/N/Custom Long Miler 7.35-lV2ply/R/ Silvertown 65o 7.75-lV2ply/PY/Silvertown 660 7.75-lV4ply/PY/Silvertown 770 8.25-lV''+ply/PY/Silvertown 770 8.55-lV4ply/PY/Silvertown 770 8.85-lV^Dly/N/HT Silvertown 7/0 l85RlV6piy/R/Silvevtown 990 195RlV6ply/R/ Silvertown 990 7.75-15/'J-ply/N/Custom Long Miler 8.15/15/Silvertown 660 8.i;5-15/2ply/R/Sllvertown 660 8.45-15/Silvertown 770 H70-15/Wide Profile GOODYEAR 6.45-lV2ply/PY/Power Cushion 6.95-lV4ply/N/All Weather 6,g5-lV4ply/PY/Custom Power Cushion 7.35-lV4ply/N/Safety All Weather 7.35-lV4ply/PY/Power Cushion 7.35-lV4ply/PY Custom Power Cushion 7.75-lV4ply/PY/Custom Power Cushion 7.75-lV4ply/N/Safety All Weathe.- 8.25-lV2ply/PY/Power Cushion 8 . 25-1 V4ply/N/Marathon 8. 55-lV4ply/N/Marathon 8. 55-lV2ply/PY/PowerCushlon 8.55-lV4ply/PY/Custom Power Cushion H70-l4,4ply/PY/Speedway Wide Tread H78-lV2/2ply-PY/FG, Belted Bias Power Cushion l85RlV6ply/R/Radial Power Cushion F70-lV4ply/PG/Custom Wide Tread D70-lV4ply/PG/Custom Wide Tread 195RlV6/2ply/R/Radial Power Cushion 8.15-15/2ply/PY/Power Cushion 8.45-15/4ply/N/Safety All Weathe- 127 GOODYEAR 9.00-1 5/4ply/N/Marathon 9.15-15Aply/PY/Custom Power Cushion 215R15/6ply/R/Power Cushion H70-15 2/2Polyglas/Beltea Bias Custom Wide Tread P70-15/Speedway Wide Tread G70-15 2/2Polyglas/Belted Bias Custom Wide Tread LEE TIRE & RUBBER COMPANY F78-14 GT Belted Fiberglas, 2/2ply-PY/FG Belted Bias MANSFIELD TIRE & RUBBER CO. 6.40/6.50-13 4ply/N/Turnpik.e 100 8.55-lV4ply/N Ultra Premium 8.85/9. 35-W 4ply/N Premium MCCREARY TIRE & RUBBER COMPANY 8.25-lV4ply/N/Scott 9.00-lV^ply/N/Triple Service E78-lV^ply/PY/Scot Hawk 8.15-15/4ply/N/Scot Major 9. 15-15/4ply/N/Scot Major MOHAWK TIRE & RUBBKR riOMPANY "7. 35-l^^/4ply/N/Bonanza 7 . 75-1 V^ply/N/Bonanza 8.25-lV4ply/N/Airflo E70-lVXR70,Wide Track 2/2 N/FG Belted Bias G70-1VXR70. Wide Track 2/2 N/FG Belted Bias 7. 75-15/^ply/N/Airf lo UNIROYAL, INC. 6.50-13/4ply/N/SuDer Safety 8OO 6.50-13/4ply/N/Safety Air Ride 6.50-13/4ply/N/Tiger Paw 7.00-13/2ply/R/Laredo 6.95-lV^ply/N/Tiger Paw 6 . 95-1 V2ply/R/Laredo 7. 75-lV'''piy/I'f/Laredo 7.75 lV2ply/R/Laredo 8.25-lV''+ply/N/Laredo 8.25-lV^ply/N/Tiger Paw 8. 55-lV^ply/NAaredo 8.85-lV^ply/N/Tlger Paw 7. 75-15/2ply/R/Laredo 8.15-15/^ply/R/Laredo 8.15-15/4ply/N/Tiger Paw 9.00-15/4ply/N/Tiger Paw 215R1 5/6/3 R/N Radial Ply Max 128 Mr. Mann. That was before my Senator Nelson. It became necessary for regulations to be estab- lished by the Congress to require the industry to meet some standards, all the industry, which I guess is a point you concede. ^ Mr. Mann. Yes, sir. I think that is sound economics. Senator, and I think you would agree, too, that it is sound economics that the whole purpose of the competitive system is to produce a product of the high- est possible quality at the lowest possible cost. And in order to stay in business you have got to take into account what your competitors' prices are. This is the real justification of the standards. One company gets way out ahead of all the others and puts on features that cost an extra $200, his sales are going to decline very sharply because the re- cord is very clear that, to give you an example, the single most ef- fective safety feature on a car is the seatbelts and those seatbelts were offered as optional equipment years before the standards. If my memory is correct, and I would like to correct this in the rec- ord after looking it up, I think less than 3 percent of the people bought them, and now that they are obliged to buy them, because they are standard equipment. The tragedy is that very, very few people use them, and as you yourself were saying, the mere use of the fea- tures in the car that are available would reduce fatality rates maybe by — I don't think any of us know exactly what the percentage would be, but it might be as high as 50 percent. This is all I am saying here. I am saying that people are talking about bringing the fatality rate down and there are many, many aspects to traffic safety besides the vehicle. "What I am trying to say is that there are limits in physics to the amount of energy that a car can absorb and the amounts of g. forces that the human body can safely withstand. So if we are serious about really bringing down the fatalities we have got to attack this problem on a wide front. I have spent a great deal of my time working at this and I am just as much in favor of bringing this down, maybe more than most, because I am conscious of it. Senator Nelson. I think the best studies indicate that if you can hold the passenger in his position in the car, when the space within the car isn't compressed so much that there is no room for the passenger, the passenger is going to survive. And our efforts should be aimed at producing an automobile that will protect and conserve the space within that automobile and hold the passengers within that space. And if that is accomplished, you can save most drivers in accidents, according to every study that has been made. I don't want to get off into a safety argument here with you. I personally don't feel that the industry has done adequate work in providing a vehicle that will protect the passenger in that space. Crash bars could be in the auto- mobile in order to protect it when it rolls or turns or crashes. But that is another Mr. Mann. Senator, if you are really interested in this subject, and I am sure you are, I would invite you and your staff, anybody else who wants to come, to come with me to Detroit. We will get you back in a very few hours. We would like to take you through our research centers, show you what we are doing, take you out on the proving grounds to show you the enormous efforts that is being made. We would like to talk to you about the technical problems, and believe me, they are very complex. And I think you would come away with 129 the idea — with the conviction and proof — that the industry has been workinjy hard at safety for many, many years and that they have done a great many things to improve the safety of the automobile. The automobile today is far safer than it was a decade ago. Senator Nelson. We had an interesting example of that I thought about 10 years ago in Wisconsin where an old model T Ford ran into a new Cadillac and the Ford went away without a dent and there was about $700 worth of damage to the Cadillac. Ford had steel in the fender that folded up the Cadillac. But nobody was hurt. Well, go ahead. It is my fault for getting diverted here. Mr. Mann. Senator, you are not really saying that the model T Ford — I used to drive one, I have driven cars for 40-odd years — you are not saying a model T Ford with those two mechanical rear brakes and the steering uncertainty, where you had to manage the windshield wiper by hand, and so forth, you are not saying that is a safer car than a Cadillac today, are you ? Senator Nelson. All I said is they ran into each other and that the Cadillac barely walked away. Go ahead. Mr. Mann. There is no evidence that defects in vehicles which are properly maintained and used for the purposes for which they were designed cause a signficant percentage of fatal accidents. There are limits to the amount of energy which the vehicle itself can absorb as well as limits to tlie forces which the human being can withstand. I repeat, we should and wdll continue to search for every feasible way to make the vehicle safer but we must, if we are to be effective, support a balanced comprehensive program embracing all important aspects of traffic safety. There is no credible evidence I am aware of that innovation in safety would be increased by increasing the number of firms in the industry. There is abundant evidence that automotive manufacturers have been the principal innovators in vehicle safety. Automotive supplier com- panies have also been active in designing and selling safety related automotive components. Manufacturing companies continue individually to conduct large- scale safety research and development programs. As illustrative of the scope and quality of the work being done by individual companies, the committee might be interested in reading the printed report of an auto- motive safety seminar which one of the companies sponsored about a year ago. This is only illustrative. Senator, because this is a report of papers by automotive safety technicians in one seminar held a year ago. Senator Nelson. Who sponsored it ? Mr. Mann. You have a copy up there, I am sure, but if not, I will be happy to hand this to you. Senator Nelson. We will be glad to have it for the committee files. (Note. — A determination was subsequently made to include in the printed record excerpts from the document referred to. They follow:) 130 Exhibit 17 (Automobile Manufacturers Association's exhibit No. 7 (excerpts*): "Pro- ceedings, General Motors Corporation Automotive Safety Seminar, GM Safety Research & Development Laboratory ,'General Motors Proving Ground, Milford, Mich., July 11-12, 1968.") mm GENERAL MOTORS CORPORATION AUTOMOTIVE SAFETY SEMINAR GM SAFETY RESEARCH & DEVELOPMENT LABORATORY General Motors Proving Ground, Milford, Mich., July 11-12, 1968 •The exhibit consists of 32 technical papers and introductory addresses by two General Motors execu- tives. Because of its length and specialized nature, only the following excerpts are being included. The complete exhibit is retained in the committee's files. 131 PREFACE The papers which were presented at the General Motors Safety Seminar and are published in this volume are intended primarily to describe some of the work being done by General Motors as part of its continuing effort to acquire more knowledge of the broad and complex field of automotive safety. While we are proud of what has already been accomplished, emphasis must be placed on progress to be made in the future. In the interest of motor vehicle safety, it is hoped that this contribution to the literature will be of some assistance to other researchers in this field. Some of the papers present particular vehicle characteristics in terms of goals which are ideals. It is realized that some of these goals may never be reached. Many papers discuss laboratory testing. These tests are important to improvement of motor vehicle safety, yet have significant restrictions. Correlation between laboratory tests and actual road conditions is elusive, taking considerable time to develop and sometimes never fully attainable. Similarly, the functioning of prototype systems under laboratory conditions does not assure that such a system can immediately be incorporated into production vehicles. There almost always are problems of proving reli- ability of design and of materials, developing mass production machinery, and accomplishing integration with other components of the vehicle. In addition, after production feasibility is satisfactorily established, there is the normal lead time for tooling and tool tryout. To have set forth in individual papers the various practical limitations indicated above, already well known to automotive engineers, would have unduly lengthened these papers and detracted from the interest of their subject matter. But to avoid misunderstanding the significance of these papers, each must be read in the context of all such applicable practical limitations. 32-493 O— 69— pt. 1 10 132 Highway safety has been the subject of continuing research and development by General Motors since its founding almost 60 years ago. Our studies have been primarily directed tow/ard improvements in the vehicle itself, but also have included important work in highway design and human factors related to high- way safety. Through thesestudies.GM has continuously broadened its knowledge in this complex field, knowledge which has been translated into substantial year-after-year improvements in the built-in safety characteristics of our cars and trucks. Among the more important recent GM safety innovations have been the energy- absorbing steering column and a new development incorporating steel beam guardrails inside of door panels for added occupant protection in side collisions. Further improvements can and will be made in the safety of motor vehicles. Progress toward this ob- jective can be enhanced by a continuing exchange of meaningful research and engineering information in the safety field. This was the purpose of the GM Automotive Safety Seminar. We tjelieve it is most appropriate that this Seminar was held in conjunction with the dedication of the industry's most extensive new automotive safety facilities — the Safety Research and Develop- ment Laboratory and the Vehicle Dynamics Test Area at the General Motors Proving Ground at Milford, Michigan. We hope the GM Automotive Safety Seminar will provide useful information which will contribute to continuing progress in highway and motor vehicle safety improvements on all fronts. Vice President In charge of Engineering Staff frrmmi 133 CONTENTS MANAGEMENT OF THE GENERAL MOTORS SAFETY PROGRAM" H. F. Barr, Vice President in charge of Engineering Staff GENERAL MOTORS AUTOMOTIVE SAFETY POLICIES" H. G. Warner, Executive Vice President 1. "A SECOND GENERATION IMPACT SLED FACILITY" by Robert L. LeFevre, Thomas R. Kolhoff, and William G. Cichowski I. "COLLECTING IMPACT TEST DATA" by David T. Siems and Richard A. Wilson }. "A TECHNIQUE FOR MEASURING LOCAL IMPACT PRESSURES" by William K. Miller and Seymour Katz 1. "PROCESSING IMPACT TEST DATA" by Robert A. Rogers and John A. VanHaaften 5. "RELIABILITY TESTING - DYNAMIC SAFETY" by William S. Freas, Alonzo H. Kelly, Jr., and Charles J. Elder 3. "THE APPLICATION OF ANTHROPOMETRY TO AUTOMOTIVE DESIGN" by Ronald W. Roe and Peter Kyropoulos 1. "A THIRD GENERATION TEST DUMMY -- SOPHISTICATED SAM" by William G. Cichowski 3. "TRAMASAF" - "THE DEVELOPMENT OF A LABORATORY INSTRUMENT FOR TRAUMA INDICATION - A PROGRESS REPORT" by Harry G. Holcombe and Donald M. Herod }. "A STUDY OF HEAD AND FACL\L BONE IMPACT TOLERANCES" "* by Charles W. Gadd, Alan M. Nahum, M.D., James Gatts, M.D., and John P. Danforth 3. "EVALUATION OF DRIVER VISION" by Anthony J. Gioia and Clarence E. Morphew 1. "FIELD ACCIDENT RESEARCH" by Wilton D. Nelson and Richard A. Wilson 2. "STATUS OF ENERGY ABSORPTION IN STEERING COLUMNS" by Donald P. Marquis and Thomas Rasmussen 3. "SIDE IMPACT STRUCTURES" by Carl E. Hedeen and David D. Campbell 4. "ROOF AND WINDSHIELD HEADER CONSTRUCTION" by Edwin H. Klove, Jr. and Gerald W. Ropers 5. "PROVIDING INCREASED SURVIVABILITY IN PASSENGER CAR INSTRUMENT PANELS" by Vernon D. Halliday, Harry G. Holcombe, Ben C. Parr, and Donald R. Hoover 6. "RESTRAINT SYSTEMS - DESIGN AND PERFORMANCE PARAMETERS" by James C. Louton, Jr. and Thomas Ruster 7. "FRONT STRUCTURAL STRENGTH AS IT AFFECTS OCCUPANT INJURY- REDUCTION AND SURVIVAL" by Paul R. Johnson and William E. Wiltse "A 67-ACRE VEHICLE HANDLING LABORATORY" by Richard G. Hoffman and Donald L. Nordeen 134 19. "MEASUREMENT OF VEHICLE DIRECTIONAL CONTROL PROPERTIES" by R. Thomas Bundorf and Richard C. Moore 20. "GENERAL MOTORS PROVING GROUND TIRE TEST FACIUTIES AND EQUIPMENT" by David D. Anderson, Alonzo H. Kelly, Jr., Eraser D. Smithson, and Jack J. Krauss 21. "ANTI-LOCK BRAKES" by John L. Harned and Laird E. Johnston 22. "TIRE PROPERTIES AFFECTING VEfflCLE RIDE AND HANDLING" by Donald L. Nordeen, Joseph B. Bidwell, and Richard E. Rasmussen 23. "THE DRINKING DRIVER PROBLEM" by David R. McLellan and Charles J. Brady 24. "DRIVING SIMULATOR" by Randall E. Beinke and Jerry K. Williams 25. "TRAINING DRIVERS FOR EMERGENCIES" by Richard G. Hoffman, David R. McLellan, and Alonzo H. Kelly, Jr. 26. "TRAFFIC CONFLICT CHARACTERISTICS" by Joseph I. Harris and Stuart R. Perkins 27. "THE DETROIT CITIZENS BAND RADIO DRIVER AID NETWORK" by Herbert J. Bauer and Clark E. Quinn 28. "VEHICLE LIGHTING" by Rex W. Oyler, Harry C. Dumville, and Joe W. Murphy 29. "THE NEED FOR UNIFORM INTERNATIONAL SAFETY STANDARDS" by Robert E. Woolcott and Timothy A. Hunter 30. "GM MEETS THE CHALLENGE OF WORLD WIDE MOTOR VEHICLE SAFETY" by Donald G. Hedeen, Eberhard Heyne, Manfred L. Wolf, and Jack A. Waller 31. "TRUCK AND BUS SAFETY" by Wallace E. Whitmer and William E. vonKampen 32. "A STUDY OF AUTOMOBILE FUEL TANKS" by Jack B. Ridenour, Robert C. Stempel, R. James Benner, and C. Alan Crawford List of "Safety Seminar" participants 135. MANAGEMENT OF THE GENERAL MOTORS SAFETY PROGRAM by H. F. Barr — Vice President in Charge, Engineering St ff is indeed a pleasure for me to participate this program today. The dedication of these / safety facilities represents another im- tant step in the advancement of vehicle ety programs at General Motors. The new ilities which you will see and hear about morning are like the tip of an iceberg - re is a lot more beneath the surface in past elopment that you cannot see. fact, virtually every facility or piece of ipment added through the years at the Prov- Ground has contributed to a safer, more able General Motors product. Our con- ling vehicle safety efforts over the rs have involved three major objectives. !se are reliability, controllability and shworthiness. Figure 2 Cars of today are designed to help drivers see where they are going; to communicate their intentions to each other; and to let them react naturally and easily to changing traffic situations. Figure 1 )duct reliability is based on years of ex- ience in engineering, testing and production, in terms of the safety, performance and vice of these cars in the hands of owners, linst the background of proven performance endeavor to increase the safety of the com- e vehicle system year after year. itrollability of motor vehicles, our second 3ctive, is fundamental to safety. Avoiding accident in the first place is the most ctive way we know of reducing the level raffic deaths and injuries. le of our most important achievements in past have been directed toward making the an extension of the driver's own reflexes. Figure 3 Virtually all the roads you will see here are designed to develop and evaluate the con- trollability built into our vehicles. As a matter of fact, the original concept for this Proving Ground grew out of a need to decide whether General Motors should equip its cars with four-wheel brakes, a question directly related to controllability and safety. This was in the early twenties. In addition to the work done at the Prov- ing Ground, controllability is under continuous evaluation by the Engineering Staff, as shown in this laboratory roll- rate test, the car and 136 Figure 4 truck divisions and many of our automotive component divisions. Controllability is a basic engineering assignment and continues to have a top priority. Figure 5 This brings us to our third major objective -- crashworthiness, which is not a new field of endeavor for General Motors. The term crash- worthiness includes the means to protect the occupant in the car as well as the structural integrity of the vehicle itself. We can't stop drivers from having some accidents, but we Figure 6 do want to make our vehicles as safe technology will permit in the event an acci does occur. The four occupants of this Oldsmobile F-85, for example, did survi rollover accident, with the worst injury t a minor concussion. The car went throu guardrail and down an embankment at a 60 MPH. You will see it among other; display during the laboratory tour. a?**^* Figure 7 Rollover tests and barrier crash tests conducted here at the Proving Groimd as ' as 1934. One rollover test of that time sisted of tipping a car on its side and all( it to roll over down a hill. While roUove) procedures have been greatly improved that time, current test practices lean toward imposing a force on the structu the body by dynamic procedures and test devices. Barrier tests also have progressed thro' i number of stages. In 1934 a test driver • r bring the car up to the designated speei i jump out just before the car reached a. n t' shift barrier. Then, for a number of y f we would direct unmanned cars down Figure 9 ard a barrier made up of portable concrete cks. Later, remote driving systems were eloped. Today we use a cable tow system a permanent, fully instrumented barrier t side. Figure II safety test facilities, equipment and programs indicates the pioneer role played by GM in vehicle safety. The new facilities you will visit today represent further tangible evidence of GM's continuing leadership in seeking to extend the parameters of knowledge in this important field. NEW PROVING GROUNDS SAFETY FACILITIES SAFETY RESEARCH & DEVELOPMENT LABORATORY TIRE TEST LABORATORY VEHICLE DYNAMICS EVALUATION PAD Figure 10 ectly related to our efforts to improve rior occupant protection was the develop- it of a hydraulic snubber device in 1955. Uowed us to stop a car with a force equal that achieved in a barrier crash without troying the vehicle. With this snubber de- , we were able to study occupant motions the impact performance of various interior iponents. in turn led to the development of the first scale indoor impact sled in 1962. Today will see two improved versions of this 1 which are now installed in this new Safety earch and Development Laboratory. Data eloped through the constantly improving inology of crash testing have contributed stantially to the high level of crashworthi- s that GM cars have today. thumbnail history of Proving Ground Figure 12 There are limitations, however, imposed by the current level of technology and by certain physical laws of nature which restrict advances in automobile safety. Practical considerations also are a factor. For example, we like to take advantage of the front end crush distance in our vehicles to help dis- sipate impact forces. However, there is a point at which increased crush distance becomes impractical. If two feet of front end crush helps enable a restrained occupant to survive the forces of a 30 mile-per-hour impact, it would take 8 feet of front end crush to limit these forces to the same level in a 60 MPH impact, or 18 feet at 90 MPH. Eighteen feet is equivalent to the entire length of a Pontiac Grand Prix. Thus although added crush dis- tance in varying degrees presents a techni- cally feasible solution to increasing front-end 138 more capable of coping with such critical c ing situations? Figure 16 The tolerance of the human body to im of all sizes, directions and velocities n sents another factor. Consider the vasi ferences between the physiological mal of a plump, two-year old child, an adult i maturity, a woman in the latter stagf pregnancy, or a person made fragile by a all of whom ride in cars and must be prot from accidental injury. Figure 14 crashworthiness, it has practical limits of application. Therefore, we need to balance performance and look for alternative workable solutions. Our new facilities will accelerate the answers to this quest to solve the complex problems in vehicle safety design. t^S^*^ Figure 15 We also need to know more about the people who drive and ride in our cars. How do aver- age drivers respond to emergency situations such as a high-speed skid or sharp turn or bad weather? Would special training make them And our designs for occupant protectioi must take into account all tj-pes of autom^ involved in any form of impact whethei a front, rear, side or rollover coUisior secure necessary facts about the i phenomena, GM is demolishing 400 ve per year, and we are running over simulated crashes a year on our impact I hope this gives you a better understj of the magnitude and complexity of the ables in the task of improving vehicle s 139 leet this challenge, we have assembled at the Proving Ground and at the Tech- Center in Warren, shown here, a pool of inding scientists, engineers and other Leal experts. The new facilities being ded- today will provide them with more STAFF OPERATIONS Proving Grounds / ^ Safety R&D Lab. - Engineering Staff CONCEPTS AND Research Laboratories DATA Styling Staff Outside Consultants Figure 19 ive tools with which to develop an ex- d flow of information so vital to continu- •ogress. how do we use this information? The Proving Grounds, the new safety laboratory and all the safety work under way at staff level: Engineering, Styling and Research -- with out- side inputs as well -- must be coordinated and directed to the needs of our car and truck divisions. Only the car and truck divisions are equipped to convert these concepts into pro- duction realities. The process includes an exhaustive program of design, prototype build, testing and develop- ment within the divisional engineering de- partments, followed by the manufacturing operations of tooling, production and assembly. Figure 20 Figure 2) The new facilities you will see today are vital tools for the divisions throughout the various stages of hardware development. They also provide information which will help determine areas of greatest safety potential in future development programs. Now let me tell you a little about these new facilities. The Safety Research and Development Labora- tory has 120,000 square feet of floor space dedicated completely to safety work at the proving ground. This most modern facUity allows us to concentrate all of our indoor safety test equipment in a central area, and to improve our capabilities for collecting and analyzing test data. In a few moments we will begin a tour of the laboratory. One of the first stops will be a brief visit with our film analyzer. A typical impact is over within a half a second. This device allows us to study high-speed motion pictures of the test in stop action, frame-by- frame sequence. The analyzer can lock on a certain physical reference point in each frame, feed this information to a computer which, in 140 Figure 22 turn can then produce a chart referencing this point against milliseconds of time. We will visit the instrumentation laboratory where we develop specialized test equip- ment as well as repair, assemble and cali- brate such instruments as strain gauges and accelerometers. Figure 23 Then you will see three test devices set up on test beds. The most prominent of these is a torso impact of a steering control system. In this devic|«; propel a dummy torso down a mini- sled a steering wheel assembly. There will head impact test in which a headform, moi on a lever, is triggered down onto an in; ment panel. And we will also demonstr: knee impact test in which a simulated form is accelerated into an instrument p All three devices were specially develop General Motors. Figure 25 We will inspect the interior of a reco van which transports recording instrur to the site of any impact test. The eqmpment can give us read- outs on 20 different impact phenomena rec( simultaneously. Of great interest to most of you, I am will be the two impact sleds, one of whicl be fired in a demonstration. Figure 24 Figure 26 These sleds are improved versions c original model shown earlier. For exa they have 50% longer rails which enable conduct a complete test before applying br j 141 n; longer, movable light banks provide complete photographic coverage; and im- d sequencers check the "ready" status greater number of items before a sled iMrA Figure 27 /ill also demonstrate a drop test in our hree-story silo, and show you our dummy r shop and "head factory." Figure 28 ly, we will take a look at some results e accident investigation team. Thus far ave compiled records of about 600 real- raffic accidents involving the GM energy •bing steering column -- data indicating this system is saving lives and reducing ,es. dll then visit our Tire Performance Lab- ry, where we have assembled a wide of test equipment. We will inspect sev- dynamometers which test tires under high high load and other simulated severe ig conditions. The dynamometers can run snded around the clock. Their fully auto- 1 controls can change and record tire Figure 29 Figure 30 inflation pressure, load, speed, and other test factors. Also, you will see X-ray equipment that can look through a tire and check its construction. Our braking traction vehicle and drive traction vehicle used to measure the gripping ability of tires and road surfaces will be demonstrated. Figure 31 We will then return to the lobby and board buses to go to our Vehicle Dynamics Test Area, the second facility we are dedicating today. 142 Figure 32 On the way we will stop for a brief explanation of the outdoor impact test facility and a review of several hundred vehicles that have been crash tested. Figure 33 The major feature of the Vehicle Dynamics Test Area is an immense 67-acre blacktop surface which we use for high-speed vehicle control tests of extreme severity, and for driver training in emergency situations. The Area can be entered from either end from large paved loops that allow the test driver to build up his speed before testing. At the Vehicle Dynamics Test Area you will observe various demonstrations designed to safely test both vehicle and driver responses. The size and construction of this area allows us to run a wide variety of such tests and at higher speeds than has been possible in the past. Alongside the large, paved area to your right, is a narrow, straight, 3/4 mile stretch of blacktop used for vehicle evasive maneuvers. Here we test both vehicle and driver response Figure 35 Your visit today and tomorrow is a preli what we hope will be the first of many te cal seminars on safety, during which Ge Motors can distribute information that accelerate safety improvements on the b; est possible front. Before commencing the tour, I should adi we have other facilities here at the Pr Ground which, to a greater or lesser de are related to safety. They work in such ; as vision, shown here, brakes, lighting handling. The Test Engineering group thousands of specific evaluations on our and competitive products. An annual higl is the 40,000-mile accelerated durability which audits GM and other vehicles. W« here a display of disassembled cars after a test. 143 Figure 37 ■s safety our industry has another vital it area and that is the control of auto- air pollution. To aid the tremendous Figure 38 ' ering effort reqmred in this field, the ig Ground operates several emission 1 laboratories, and performs General 3 emission control certification and du- y evaluations for the car divisions. il Motors also has many other safety Figure 39 activities not located at the proving ground. These include facilities at the Research Laboratories, Engineering Staff, Fisher Body and Ternstedt Divisions -- all at the Technical Center. Many General Motors supplier divi- sions and each car and truck division also have their own specific safety- oriented product de- velopment test facilities. Figure 40 The General Motors Reserach Laboratories at the Technical Center in Warren, Mich., has conducted important research in biomechanics related activities, and works closely with out- side agencies such as Wayne State University in these studies. Their work influences the shape and construction of instrument panels, windshield glass, and other areas where vehi- cle design must be predicated on forces that can be sustained by the human body. Our Styling Staff at the Technical Center plays an important part in human engineering. It is responsible for developing package sizes and future packaging concepts, with active projects covering such areas as vision, reach of con- trols, and occupant space relationships. 144 Figure 41 ENGINEERING STAFF DEVELOPMENT ENGINEERJNG Engines Transmissions Chassis Figure 42 Engineering Staff has a Development Engineer- ing Group responsible for new products and components two-to-five years ahead of pro- duction. Some of its specific safety- related projects are vehicle handling, advanced vehicle braking, and occupant restraint concepts. AUTOMOTIVE SAFETY ENGINEERING Corporation Safety Activities • SAFETY RESEARCH & . DEVELOPMENT LABORATORY • SAFETY PROGRAM COORDINATION • STANDARDS DEVELOPMENT • COMPLIANCE & SERVICE • RESEARCH CONTRACT Figure 43 Also at Enginerring Staff, the Automotive Safety Engineering department, under Mr. Lundstrom's direction, coordinates all safety activities withing the corporation includi work of the Safety Research and Develo Laboratory as well as the safety proj throughout the corporation. This is the engineering group that repn General Motors to the National Highway Bureau in matters involving standards] velopment, compliance and service research contracts. Standards developmel quires extensive work with the Autorl Manufacturers Association, General M Legal Staff, and Public Relations Staff. Figure 44 In addition to the broad spectrum of tale technology represented by the staffs ai visions, we make use of consultants wh specialists in many areas. Examples art cialists in human tolerance to injury, accident investigation and medicine, wh( us their objective views of our developr Their findings are continually brought attention of our safety development engi and worked in their programs. We also i available data from many other r sources -- both inside and outside ourind Safety developments from any area are as of prompt attention and constant review th all levels of the corporation by a strear communications system. These proposed improvements first are : duced to the General Motors Automotive ; Subcommittee consisting of a safety r sentative of each vehicle and body div Recommendations are then forwarded t chief engineers of the automotive and divisions plus central office staff execu who form the General Technical Comm 145 ■NERAL MOTORS SAFETY IMPROVEMENTS GENERAL MOTORS SAFETY IMPROVEMENTS ENGINEERING POLICY GROUP GENERAL TECHNICAL COMMITTEE AUTOMOTIVE SAFETY SUBCOMMITTEE AUTOMOTIVE SAFETY SUBCOMMITTEE Figure 45 Figure 48 General Technical Committee. Final approvals are made by the Engineering Policy Group that includes our chairman, our president, and all the executive vice presidents. The many minds in this total organizational structure assure the corporation of a broad, vehicle safety program. GENERAL TECHNICAL COMMITTEE AUTOMOTIVE SAFETY SUBCOMMITTEE Figure 46 Figure 47 technical approval these proposals are rded to the Safety Review Board. This is a small committee of GM officers 'eview safety programs submitted by the Everyone within the corporation, from Mr. Roche to the man on the drawing board, is conscious of the responsible roles they play to improve the safety of our transportation system. The material you will see presented here during the next two days represents a total participation of all divisions and staffs, as well as Proving Ground personnel. They have worked hard, with the expectation that this may become the first of many future successful seminars on highway safety, during which General Motors can continue to share its acquired knowledge in this field. It is our hope that in doing so, safety improvements may be accelerated on the broadest possible front. If a seminar of this scope can stimulate the accumulation of new knowledge on accident avoidance and occupant protection, it will represent another contribution to the advauice- ment of highway safety. It is a goal that General Motors feels is worth pursuing vigorously. 146 General Motors Automotive Safety. Policies (By H. G. Warner, Executive Vice President, General Motors Corporation) It is a pleasure to be here and to see such a fine turnout for our first Aut motive Safety Seminar. We hope you enjoyed your tour of our facilities this morning. We are rathi proud of them. They indicate, I believe, the importance which General Moto attaches to the safety of its products. This is not a new concern of ours by ai means. Safety has been a prime objective in both the design and production our cars and trucks throughout the Corporation's 60-year history. These Proving Ground facilities and our new Safety Research and Develo ment Laboratory are the culmination of long-standing policies. Our basic safe policies are really quite simple. First, we try to improve the structural strength of our cars each year. \ design and build safety into our automobiles rather than add it on. Virtual every engineering advance has made our products safer to drive. We have, f example, continuously improved the durability and reliability of every maj component — body, engine, transmission, steering and electrical systems. Our second objective is to develop new safety features and incorporate the in our cars after exhaustive testing has proven them to be practical. Only wh a new product or component has been thoroughly proven do we over it to t public. This takes time. We call it "lead time.". Four major stages of developme are involved before a new product or component is ready for final producti( First comes the new design ; then the tests, then production engineering, f lowed by pilot production to be sure all the pieces fit together properly and fui tions as they should. There are a lot of pieces. Today's automobile is a highly complex mechanis It has more than 14,000 parts and comes in a wide variety of models. Genei Motors is currently offering 187 different passenger car models. When you a to this figure the many choices of engines, transmissions, trim options a equipment, it becomes apparent that the buyer has an almost infinite variety products from which to choose. It is the manufacturer's responsibility to see that each of these products me- the most rigid standards of quality, reliability, performance and, above ; safety. I am referring to self-imposed standards which the automobile indusi has developed through the years and upon which its greatness depends. Th< self-imposed standards allow for adequate lead time. Today, however, with new i-tandards imposed from outside the industry, th is some concern that lead time requirements will not always be given suffici* attention. We feel that a better understanding of our time problems is devel ing in Washington, and we are hopeful that new standards now under conside tion will take into account the fact that we are now working on 1{>71 cars fl have even later models in the planning stage. We must have sufiicient time test and prove these products. Here at the Proving Ground, the new ideas and concepts which our engine and researchers have been developing are put through their final paces. In ' past 44 years since this facility was established, we have driven almost 425 n lion test miles — the equivalent of about 17,000 trips around the world. T total includes test mileage here at Milford, at our other Proving Grounds Arizona and Colorado and some on the public highways. Here at Milford, more than 20 million miles of test driving is done each ye yet there has not l)een a fatality .s»ince 1942 and the accident/injury frequei is only one-twenty-fifth as high as on rural highways. Tliis safety record attributable in large measure to the impoved safety engineering of our vehicl but it also represents the advances we have made in highway design and i knowledge we have acquired here of driver capabilities. In other wortLs, we w< on all three major asi^ects of traflic safety — the ear, the highway and the driv In the field of highway design we have experimented with new types of guj rails, slip bases for sign posts, break-away light poles, and the elimination roadside hazards. We also have incorporated new traffic control concepts i improved commiuiications into our Proving Ground road sy.stem. We have m; these developments available to puldie road officials and are gratified that so have been put into use in various parts of the country. At our Vehicle Dynamics Test Area you saw some of the work we are dot to improve driver capabilities under various emergency situations, such as ski 147 blowouts and other surprise conditions that severely test a driver's skills. We have been active in driver training and education for more than 40 years and have been assisting our dealers financially in making cars available for high school driver training classes. Much, however, remains to be done in this field to improve training courses — to help the student in emergency driving situations and in night driving experience. The highway safety legislation passed by Congress in 1966 recognized the need for a balanced approach to the traflic problem, involving the road and the driver as well as the car. The National Highway Safety Act sets 13 standards dealing with roads and drivers as goals for state programs. However, the greatest atten- tion by far has been directed toward the automobile. There are now 23 Federal Motor Vehicle Safety Standards in effect. Five new standards and three revisions to existing standards have been issued for future models. More than 40 other proposed new standards or revisions to existing standards are now being considered by the National Highway Safety Bureau. The industry will submit comments on all these proposals this month. General Motors is meeting all of the existing safety standards. We also are pioneering new safety advances beyond the standard requirements. We are proud of the fact that some of our recent innovations demonstrate General Motors' solid leadership in the improvement of vehicle safety. The energy-absorbing steering column — a GM innovation made standard equip- ment on our 1967 models — has been called one of the most significant safety ad- vances in modern times. Our engineers have studied more than 600 accidents in which energy-absorbing columns saved lives and reduced injuries to an even greater degree than we had anticipated. Dr. William Haddon, Director of the National Highway Safety Bureau, who is with us today, has said that preliminary research indicates that this steering column plus a thicker laminated wundshield glass which the industry introduced on 1966 models "can reduce chances of death or serious injury by 70 or 80 percent in a crash". Development work on these two safety advancements was started more than four years before the enactment of Federal safety legislation, and they were introduced on GM automobiles well before they were required by Federal safety standards. On some of our 1969 models we will introduce another major safety improve- ment which will provide additional protection for car occupants in the event of a side impact collision. This new safety feature involves a steel beam which forms a guard rail inside the door panels. The door pillar sections and hinges also will be strengthened. As major body changes are made, these improvements will be incorporated in other GM models. Most of our 1969 models also will have a new antitheft locking system. The ignition key will lock the transmission shift lever and steering shaft. Since many stolen cars are involved in accidents, this device has safety as well as theft- prevention advantages. Other safety improvements will emerge from our continuing research into the causes of accidents and the protection of passengers. As I have indicated, we have long been deeply involved in analyzing the human as well as the mechanical factors involved. We have made intensive studies of the effects of alcohol on driving ability, since drinking appears to play an important part in more than half the fatal accidents. Based upon years of research, we have compiled critical data on human body tolerances. This information is of vital importance in design- ing car interiors to improve occupant impact protection. Our impact sleds, which you saw this morning, have greatly increased our knowledge of what happens to the occupants of an automobile during many tyi>es of accidents. More than 1,100 tests will be conducted on those sleds this year. In addition, we expect to complete 400 full-scale impact tests in 1968 by crashing vehicles into stationary barriers and into other automobiles. I hope your tour of our facilities here gave you some indication of the amount of money as well as time and effort which we are — and have been for many years — devoting to this extremely important and complex problem of highway safety. Last year. General Motors spent almost $270 million for engineering development, insi>ection, testing and reliaibility improvements in the interest of greater safety. In addition, capital expenditures and special tools relating to safety totaled more than .$100 million during 1967. Through the years General Motors has also been a strong supporter and active participant in working for more and safer highways through the Automobile 32-^93 O — 69— pt. 1—11 148 Manufacturers Association. Numerous excellent transportation studies hav been made under AMA sponsorship. An important AMA project was its $1 million contribution for the establishment of a Highway Research Institute a the University of Michigan. Urban transportation problems have been receiving special attention by Gei eral Motors for many years. Of particular interest have been studies seekin increased capacity and safety on urban freeways and more effective use of buset We recently completed a special study in collaboration with the Southeaster Wisconsin Regional Planning Commission. The project, entitled "Metro-Mode, covered seven counties, with Milwaukee as the center of the arc'a. It den onstrated that a well-planned system of bus transportation could provide man advantages including convenience, short trip time, route flexibility, high capacit and low cost Among its basic features are more door-to-door service con bined with exclusive, high-speed bus lanes on major expressways or throng streets. Numerous state and local transportation studies are receiving Federal ai through the Department of Housing and Urban Development and the Depar ment of Transportation. In fact, to qualify for Federal funds for urban highwa development, every city must demonstrate that it has a comprehensive plan t meet its future transportation needs. The National Highway Safety Bureau has launched a vast research prograi in many areas of safety relating to vehicle design, highway design, driver pe formance and law enforcement. Eventually, all these programs — supplementin the extensive research, development and testing activities of the automobil industry — will provide a greatly increased volume of useful information. There is complete agreement between our industry and the government on tt need for improved highway safety and for more expeditious movement of traff in our cities and throughout the country. We may differ at times on the moi effective means of achieving these results, but we are working hard toward tl same goals. We firmly believe that a cooperative, understanding relationship between tl Federal Government, the automobile and related industries and the universiti< and scientific organizations is e.ssential to our continued progress toward saf« and more eflScient transportation. This Automotive Safety Seminar is anotht step in that direction. With the increasingly sophisticated technology today, the task of the scienti and engineer is becoming much more complex. We in the auto industry have bet working \A'ith the problem of highway safety for many years, but we are st learning, and we welcome new ideas and suggestions from specialists in oth fields. We in General Motors are willing to share our accumulated knowledge an experience in the safety field with the rest of the industry and with the educ tional community. We also want to keep an open line of communication betwe*' our industry and the Federal Government. However, we do not intend to let Federal safety standards become our ma imum standards. We are exceeding government requirements substantially many areas and we plan to continue this policy. General Motors has establishi a leadernhip position in the safety field, and we are determined to niainta it. AVe will not be satisfied until our vehicles provide the greatest possible pi tection for occupants — up to the limits of our technology and the physical la\ of nature. We believe this seminar will help to demonstrate our capabilities in the safe field. We hope these sessions will improve our mutual understanding and th they will lead to future exchanges of information to our mutual benefit. I appreciate this opportunity to visit with you and hope you find the rest our program stimulating and informative. Thank you for coming. [Abstract] A Second Generation Impact Sled Facility (By R. L. LeFevre, T. R. Kolhoff, W. G. Cichowski) The new Impact Sled facility at the General Motors Proving Ground Resear< and Development Laboratory consists of two sled installations. The.se are ust 149 to simulate vehicle impacts under controlled and repeatable conditions using forces in excess of 250,000 lbs. The system is largely a highly refined version 5f the original facility installed at the Proving Ground in 1962. The paper includes discussions on the provisions for impact simulation, data icquisition, control systems, and personnel safety. The material is divided into two parts. The first considers the subject areas in terms of what capabil- ties have been provided and why they were specified. The second reviews the techniques and systems which have been provided to meet these goals. [Abstract] Collecting Impact Test Data (By D. T. Siems and R. A. Wilson) Instrumentation used in automotive impact testing has several unique require- nents. Often the test vehicle is a hand-built prototype that cannot be duplicated. The test is usually less than 200 milliseconds long, and may involve dozens of hannels of data. Because there is no second chance, the equipment must be reli- ible. Accuracy must be documentefl to comply with the Federal Motor Vehicle Safety Standards. Rapid analysis of many channels of high frequency data is ssential to satisfy engineering time schedules. This paper discusses the evolutionary changes in transducers, signal condition- ng, photographic, and processing techniques that have occurred in the Safety nstrumentation field to help satisfy these requirements. [Abstract] A Technique for Measuring Local Impact Pressures (By William K. Miller and Seymour Katz) The measurement of the magnitude and distribution of pressures occurring in in impact is increasingly becoming a concern to tho.se engaged in automotive afety testing and design. A method to obtain this information is presently under tevelopinent which employs a thin sheet of pressure sensitive, high porosity metal oam (MetNet) which is placed between the colliding objects. This material esponds to an impact by locally crushing to a depth that is related to the maxi- uum pressure exerted on it. This pressure measuring technique is being investi- gated as an aid in the analysis, design and testing of automotive components, ind it is also being used to obtain pressure-related human tolerance data. [Abstract] Processing Impact Test Data (By R. A. Rogers and J. A. VanHaaften) This paper describes the data reduction facilities and techniques presently in ise at the General Motors Proving Ground in the automotive safety impact ield. The increased complexity and sophistication of the impact test meas- irements being made and the continuing need to meet General Motors and Fed- >ral standards demand that the Proving Ground data processing capability be 'ast, accurate and reliable. Magnetic tape recorders, analog-to-digital conversion 'quipment and an on-site computer facility make it possible to quickly and ac- curately record and process electronic data on a system basis, without the time md accuracy penalties of manual intervention. In addition, reduction of high ;peed photographic data is presently being done on two semiautomated film eaders. These machines generate a punched card input to the central computer "acility which processes and graphically plots the data in finished form. 150 [Abstract] Reliabiuty Testing — Dynamic Safety (Prepared by A. H. Kelly, C. J. Elder and W. S. Freas) This paper describes some of the techniques, special equipment, and enviroi ments, used to evaluate the reliability and performance of General Motors vt hides and their components. Laboratory tests requiring use of photostrej technique, dynamometers, shakers, pressure cycling devices and controlled ei vironments to evaluate the durability and reliability of suspension, structun members, driveline components and windshield wipers and washers are sun marized. Brief descriptions of road tests and facilities which are used to evalual brake systems, differentials, transmissions, suspension assemblies, and body co rosion, are also provided. The Proving Ground annual car durability test is als described. [Abstract] The Application of Anthropometry to Automotive Design (by Peter Kyropoulos and Ronald W. Roe) Anthropometry, the Measure of Man, is an old and well established branch ■ Anthropology. The present report deals with the identification and applicatif of the pertinent dimension of the driving population and the use of these da in the design of the driver's workspace. The statistical nature of the informati( is emphasized. The devices used to gather data (anthropometers) and their statistical eval ation and analysis are discussed and illustrated. The concept and applicatic of the SAE manikins and the driver's eye ellipses are presented. [Abstract] A Third Genesiation Test Dummy — '"Sophisticated Sam" (by W. G. Cichowski) Various anthropomorphis dummies have been substituted for human beings help evaluate the safety results of motor vehicle crash testing. This paper def with the development of "Sophisticated Sam," the most advanced test dumi available today. During its creation, in depth studies evaluated what literature was availal in regard to biomechanics. Bone strengths, limb articulation, weight distril tion, and all other factors had to be considered. Test data from different ; searchers were analyzed to ascertain why discrepancies in information exist« Several original techniques were created to better duplicate portions of the 1 man body. Recognizing that the body could not be exactly duplicated with "i phisticated Sam." compromises in the design of the dummy had to be made. The planning and scheduling of this test device is presented to show how t complex system was developed. "Sophisticated Sam," created by Sierra En neering Co. under the sponsorship of General Motors, represents a signifies advance in the state of the art. This working simulator will lead to the deveh ment of even more realistic and sophisticated test devices which will further r vance motor vehicle safety. [Abstract] "Tramasaf" the Development of a Laboratory Instrument for Trauma Indication (By H. G. Holcombe and D. M. Herod) The development of a useful device to measure trauma to the human forehe and lacerative damage to the soft tissue during impact tests of automotive co: ponents has been guided by interim goals based upon the most current kno^ II 151 edge of the various types of trauma which can be experienced. As a result, we tiave developed an experimental instrument capable of making comparisons of lacerative damage and simulating frontal bone tolerance during small area im- pacts. All models of human tolerance are not necessarily reproduced due to in- omplete biomechanics data. The development goals, their present status of ichievement, the materials used, and some evaluation procedures for the device ire described. [Abstract] A Study of Head and Facial Bone Impact Tolerances ;By Charles W. Gadd, Alan M. Nahum, James Gatts, and John P. Danforth) This report outlines progress on a continuing study at the University of Cali- brnia-Los Angeles Center for the Health Sciences of fracture thresholds and lynamic response for a number of typical impact sites on the head. Particular 'eatures of the program include direct recording of force-time profiles at the dte of the blow, inclusion of the original soft tissues overlying the bone in the ests, and comparison of fresh with embalmed subjects. Special attention is ;iven to possible significance of waveform and duration of the applied impulse, xtent of the fracture, and variation between test subjects. Tests have thus far itilized an impractor with a contact area of one square inch, fitted with a load ■ell and with provision for use of a progressively dilating tube to obtain the onger pulse durations. In addition to studies in the frontal, zygomatic, and other facial areas, the )rogram has included impact to the side of the head over the ear (at the parietal- emporal suture) where very little previous work has been done. The frontal por- ion of the cranium, that part usually struck in the (more common) frontal iccidents, has been found to have higher fracture tolerance than the side of the lead. Time dependency of fracture thresholds in this study has been found to e small in comparison with that for elosed-skuU cerebral injury. A distinction is made between localized fracture hazard as treated in this •aper, which is not normally dangerous to life, and closed-skull or concussive train injury which results from sudden head acceleration and for which criteria ire now in use. [Abstract] Evaluation of Driver Vision (By Anthony J. Gioia and Clarence E. Morphew) Vision accounts for more than 90% of the information a driver receives. Driver ision is influenced by the driver himself — physiological and psychological limita- ions ; the design of the vehicle — what it allows the driver to see or not see ; the esign of the roadway — differences imposed by Interstate, rural and urban roads : nd the environment — nighttime, dusk, dawn, or daylight, rain, snow, fog, haze, to. The wide variability of these factors and their comnlex interactions have lade the study of driver vision requirements extremely diflBcult and subject to ndless debate. This paper describes vehicle design factors and tests affecting driver vision, forward and rear vision design con.siderations are discussed along with test acilities and techniques used in determining how much the design of the vehicle ids or hinders driver vision. Design examples and future rear vision considera- ions are given ; and test procedures for determining rearview systems' fields of iew, obstruction to vision caused by body architecture, and seeing distances are escribed. Instrumentation, commercial and Proving Ground developed, used to valuate glare producing properties of materials are also described. 152 [Abstract] Field Accident Reselmich (By W. D. Nelson and R. A. Wilson) General Motors has a need to know how its products perform in the hands o owners; this includes crashworthiness. Existing information sources on vehich impact performance were lacking in the quantity of in-depth data, representee only some local areas of the U.S., and included primarily rural and injury pro ducing accidents. Consequently, GM began a program of accident research au( analysis which gathered information from many sources. This introduced an other area of concern — the lack of common language and reporting uniformit; of accident data. A bi-level reporting form structure was developed for interna use and has been released to the public in an effort to consolidate the rapidl: expanding accident data collection field. Also presented are some of the findings of the GM nationwide study base( on 2500 1968 model vehicles damaged in collisions. In these new data the pre viously recognized information deficiencies have been corrected and a more repre seutative injury exposure has resulted. [Abstract] Status of Energy Absorption in Steering Columns (By D. P. Marquis and T. Rasmussen) This presentation updates the knowledge and describes the hardware of th General Motors energy absorbing steering column. Following a brief distroy, it discusses the inter-relationship of driver restraini and energy absorbing columns. It introduces a new energy absorbing column jacket called the "ball energ absorber" for the 1969 automobiles and describes the reasons for its use. Tt energy is absorbed by rows of balls which form grooves in the surface of th column jacket tube during absorption. It dissects the elements of dynamic energy curves based on accelerator test; Finally, the authors project the direction the pattern of change may folio when certain biomechanical indications are confirmed. [Abstract] Side Impact Structures (By C. E. Hedeen and D. D. Campbell) New side safety structural changes have been developed for some 1969 mod General Motors cars. The research covered two years during which time eras situations were simulated and analyzed, field data were studied, and various a proaches to side protection were investigated. A low-weight, high-strength steel beam was developed and positioned hoi zontally in the door. In addition, the supporting body structures were reinforce The resultant structure reduced penetration into the passenger compartmei during side collision tests by causing a deflecting action between the two cai and by preventing ride-over of the striking vehicle into the struck car. Fisher Body has recently developed the basis for a static laboratory techniqi of testing that measures the strength of side impact structure in such a way ,■ to allow tryouts of designs early in the program. Because of the number of G^ cars designed each year, this will curtail the extensive time and cost facto previously involved in dynamic testing. [Abstract] Rook and Windshield Header Construction (By E. H. Klove and G. W. Ropers) It has been difficult in the past to evaluate roof structures and to define the performance level because of the lack of an adequate test method. This pap 153 >riefly discusses the history and the problems of dynamic testing procedures elative to roof structure. A new Static Laboratory testing technique and its dvantages are discussed. The second part of this presentation outlines the subject of the windshield leader design, the development of testing procedures, and the evolution of a I'indshield header design which provides a skidding action. Tests conducted on the -new design windshield header indicate that there is a efinite reduction in iK)tential header injury as a result of impact as compared D the conventional header construction. The new header surface minimizes he rearward head rotation and the abrupt change in head movement which ccurs when contact is made with the rear wall of the header surface. [Abstract] Providing Increased Survivability in Passenger Car Instrument Panels By Vernon D. Halliday, Harry G. Holcombe, Donald R. Hoover, Ben C. Parr) The authors discuss the problem of instrument panel ride down and examine he engineering requirements of a passenger car instrument panel having im- roved ability to reduce occupant injury. In the development of materials and heir geometric configuration, the pad and its underlying structure receive rimary coiisideration. A prototype instrument panel is described, and data are presented on approxi- lately 40 different materials and combinations of materials evaluating their bility to absorb occupant energy. [Abstract] Restraint Systems, Design and Performanck Parameters (By J. C. Louton and T. W. Ruster) For many years General Motors has recognized and attempted to reduce auto- lotive accident injury potential through continuing efforts in accident reduction rograms. These programs are aimed at improvement of the driver, the road nd the automobile itself. This paper deals with the research and development f occupant restraint systems. Primary objective of an automotive restraint system is to reduce injury poten- ial of car occupants. This is partially accomplished by attaching the occupant 3 the vehicle passenger compartment. Test results have shown that performance t the lap belt, one of the most common components of a restraining sy.stem, is ffected by the angle and belt loop length. In addition, belt performance, as meas- red experimentally, is significantly affected by the crash test dummy or test evice used to evaluate restraint systems. Information from evaluating current ystenis has intlueni'ed design of future systems. Using this information, in addi- on to available human tolerance information, restraint system development ill contribute toward further reduction of vehicle accident injury potential. [Abstract] Ro.vT Structural Strength as it Affects Occupant Injury-Reduction and Survival (By P. R. Johnson and W. E. Wiltse) This paper examines analytically the effect of front structural strength in elation to occupant survival or injury reduction during frontal impact. The ynamics of impact are explained mathematically. Variation in vehicle decelera- on level and vehicle deceleration-time cbariacteristics (pulse shape) are analyzed •om an occupant benefit standpoint. 154 [Abstract] A 67-AcRE Vehicle Handling Labobatoby (By Richard G. Hoffman and Donald L. Nordeen) This paper contains a summary of historical facts pertaining to the plannin and construction of the facility, including an outline of some proposed desig configurations. Some interesting problems had to be solved during the coi struction stages and later during operation of the facility ; these are reviewe( Operational procedures and a number of vehicle tests normally conducted o the facility are discussed. [Abstract] Measurement of Vehicle Directional Control Properties (By R. Thomas Bundorf and Richard C. Moore) The directional control properties of the automobile are an essential elemei in the driver-vehicle-highway system. They have been investigated since tl inception of the automobile and, at present, advanced vehicle dynamics theor is under study in many areas. The measurement of such properties as understeer/oversteer, gain, and r sponse time is an important part of both the research aspects of vehicle dire tional control and the design and development technology. Instrumentation systems and test techniques for quantitative measuremei of directional control properties are presented in this paper. Typical test dai for a passenger car are presented. These data eliminate much subjectivity in the description of vehicle dynam behavior, aid in the identification of desirable directional control properties ai assist in the development of production vehicles. [Abstract] General Motors Proving Ground Tire Test Facilities and Equipment (By D. D. Anderson, A. H. Kelly, J. J. Krauss, F. D. Smithson) General Motors recently completed construction of a 22,000 square foot cox prehensive Tire Performance Evaluation Facility at its Milford, Michiga Proving Ground. The laboratory, located in a new Safety Research and Develo ment Laboratory, provides indoor facilities and equii>ment to complement tl extensive road testing of tires at GM's Desert Proving Ground at Mesa, Arizon on public highways, and on the Milford installation's road system. This pap describes the major facilities and equipment employed by the Proving Groui for the laboratory and road testing of tires. [Abstract] Anti-Lock Brakes (By John L. Harned and Laird E. Johnston) Objectives of anti-lock systems are defined. The external control principle explained and four prototype anti-lock systems, based on this principle, th; are currently being developed are described. Panic stopping distance performam of 4-wheel and rear anti-lock systems on dry, wet and icy roads is compare Data significance is defined in terms of variabilities of the experimental measur ments. Effects of water cover depth, road construction and tire design and we; on anti-lock performance are shown. Difficulties of obtaining satisfactory contr on gravel and snow covered roads are examined. The ability of anti-lock systen to improve vehicle directional control is discussed. Directional control tests th; measure 4-wheel and rear anti-lock systems capabilities are described. A te program to be used in determining system performance acceptability is presente 165 [Abstract] Tire Properties Affecting Vehicle Ride and Handling (By D. L. Nordeen, R. E. Rasmussen, J. B. Bidwell) Vehicle dynamic performance is dependent upon botli the vehicle properties nd the tire characteristics. Interactions between the tire and the vehicle are lumerous. Vehicle dynamics problems are sufficiently complex that it is difficult o attribute good or poor performance of the vehicle to particular vehicle iroperties or tire characteristics without measuring component performance, 'urther, a validated theory is frequently required to explain the vehicle results ven when component properties are known. This paper discusses many of the tire factors which affect vehicle ride and landling. The significance of certain tire properties to vehicle behavior is escribed. The paper also discusses other tire properties which influence vehicle ynamic performance, but for which a quantitative .relationship between com- onent characteristics and vehicle performance has not been established. The tate of the art with respect to the capability and utility of laboratory measure- lents of the tire properties is indicated. A quantitative understanding of the relationship between the force and lonient properties and vehicle handling exists. A degree of correlation between ire vertical rolling spring rate and subjective ride performance has been estab- ished. Vehicle shake response, due to tire non-unifoxmities, has been correlated ;ith the amplitude of the fundamental harmonic of the tire force variation, 'orce, moment, and spring rate data for a typical tire are presented. [Abstract] The Drinking Driver Problem (By D. R. McLellan and C. J. Brady) Highway accident research data indicates that the drinking driver accounts for lore than half of the nation's 50,000 annual traffic deaths. General Motors' )ng-standing interest in traffic safety, coupled with this growing documenta- on of the toll exacted by the drinking driver, prompted this study of the effect f alcoholic on driving ability. General Motors engineers designed two driving tests to evaluate some of the ffects alcohol has on driving skills. These were an evasive maneuver which Lmulated an emergency situation which could be encountered on the highway nd a cone course which forced drivers to following a winding path through dree turns and one straightaway. By conducting these tests on a driving ourse using real cars, many of the cues of normal driving were retained rhile the hazards of normal driving were considerably reduced. Many of the 7 volunteer drivers at their highest blood alcohol levels (to 0.18%) ere still willing to continue the test, but appeared dazed and uncertain of beir assignment. Their driving became erratic and uncoordinated where it had nee been smoothly controlled. The GM test was conducted in the hope that it will make a small contribution Dward putting the drinking driver problem in perspective. By showing what appened to a group of drivers trying their best to succeed in a driving experi- lent, it is hoped that people will be made more aware that they are not as apable or as safe drivers after they have been drinking. [Abstract] Driving Simulator (By Randall E. Beinke and Jerry K. Williams) A good understanding of driver behavior and reactions in emergency and panic tuations is needed to help in optimization of the Car-Driver-Road system. A 'rogram of testing average drivers in emergency situations pointed up the need >r a driving simulator in which studies of driver behavior in realistic identical 156 emergency or panic situations could be conducted without risk to ttie subjf The Driving Simulator program began as a feasibility study and has progress to the completion of a Phase I study simulator. The Phase I study simulator a prototype simulator, now in process of design, are discussed. [Abstract] Training Drivesis for Emergencies (By Richard G. Hoffman, David R. McLellan, and Alonzo H. Kelly, Jr.) The General Motors Proving Ground has developed and tested a driver-retra ing program to teach drivers defensive driving techniques for accident avo ance. Approximately 150 Proving Ground employes have successfully complei the 8-hour training course, consisting of classroom and behind-the-wheel instr tion. This paper includes a discussion of both the subject material and the tea ing methods used by PG driving instructors. The driver-retraining course referred to as the Proving Ground Advanced Driver Training Course. !e [Abstract] Teaffic Conflict Characteristics (By Joseph I. Harris and Stuart R. Perkins) TraflSc Conflict Characteristics are measures of traflSc accident potentials, traffic conflict is any potential accident situation. Over twenty objective crite for traffic conflicts (or impending accident situations) have been defined specific accident patterns at intersections ; essentially these traffic conflicts ; deflned by the occurrence of evasive actions, such as braking or weaving, wh are forced on a driver by an impending accident situation or a traffic violati A method of systematically observing an intersection for traffic conflicts 1 been devised. In two 12-hr observation sessions, it is possible to evaluate c( pletely an intersection ; the information obtained is much more comprehens than that normally available from accident histories. Further, the initial cau of the incidents, which accident records often fail to reveal, are uncover Traffic conflict studies use objective criteria to obtain significant quantities data in short observation periods. [Abstract] The Detroit Citizens Band Radio Driver Aid Network (By Herbert J. Bauer and Clark E. Quinn) This paper describes the Driver Aid Network operating under Citizens Ba radio license KUY 3173. The system is sponsored and was installed by the G eral Motors Research Laboratories for the Detroit Department of Streets a Traffic. Signals from vehicles on Detroit roadways are picked by ten receivers a relayed to a master control. Five transmitters are employed for answer: calls. All remote units are connected to a master control by Michigan Bell Te phone lines. An operator at the master control downtown Detroit receives the radi( reports. These pertain essentially to unsafe conditions on the city's roadwa Typical incidents are concerned with vehicular accidents, stalled cars, inope tive signal lights, etc. A Detroit police department telephone line provides direct contact with 1; enforcement and other city services. The activities of the base station— reports received, actions taken, etc. — t recorded on specially prepared computer cards. Many varieties of data analy may be undertaken for traffic engineering purposes, special events analysis a research in order to facilitate safe and efficient vehicle flow. 157 [Abstract] Vehiole Lighting (By Rex W. Oyler, Harry C. Dumville, J. W. Murphy) Examination is made of lighting devices and principles which have potential nefit to automotive safety. A brief description is given of the current state the art and mention made of work yet to be done. Included are (1) alternate >thod of headlamp aiming, (2) headlighting for Interstate Route driving, ) high mounted auxiliary stop and turn signals, (4) the dual intensity princi- 3, (5) use of colors other than red for rear end lighting, (6) side turn signals, d (7) controls for all-condition lighting. [Abstract] The Need fob Unifokm International Safety Standards (By R. E. Woolcott, T. A. Hunter) The growing concern for highway safety is not limited to one country or one ntinent, but is as world wide as the use of vehicles. This paper discusses some the activity taking place throughout the world today, the effects of prolifera- »n and the confusion created for the driver. The needs for uniform standards e specified and some considerations for construction of international standards e defined. [Abstract] GM Meets the Challenge of Worldwide Motor Vehicle Safety ly Donald G. Hedeen, Eberhard Heyne, Jack A. Waller, Manfred L. Wolf) This report describes the program which General Motors Corporation has tablished to provide to its customers around the world safety features which e consistent with local regulations and market conditions. Particular emphasis placed on testing facilities and equipment available and planned for installa- •n overseas, as well as, the communication network established to provide a ordinated GM approach to automotive safety. [Abstract] Tbuck and Bus Safety (By Wallace E. Whitmer and William E. vonKampen) This paper discusses some of the broad aspects of truck and bus safety as lated to various sizes and types of these vehicles. Special problems posed by e many configurations of vehicles are presented. The results of certain barrier Uision tests are related and their similarities to and differences from pas- nger cars are discussed. Additionally, studies on the concept of a vehicle under- ie protection device are included. [Abstract] A Study of Automobile Fuel Tanks (By J. B. Ridenour, R. C. Stempel, R. J. Benner, C. A. Crawford) The authors find that foam filling has little effect on the static leak rate of el through different size and shape holes. A "squash" test is used to compare e burst resistance of various fuel tank materials and combinations of materials, •eduction terne plate tanks, foam filled tanks, bladder tanks, urethane coated nks and increased gauge steel tanks are evaluated. 158 Pabticepants Anderson, D. D., Section Engr. Test Eng., GM Proving Ground. Barr, H. F., Vice President in charge of Eng. Staff, GM Corporation. Bauer H J Sr Res. Psychologist, Transportation Res., GM Research Lab Beink4, R. E., Staff Proj. Engr., Dev. Eng., GM Engineering Staff. Benner, R. J., Motor Dev. Engr., Oldsmobile Division, GMC. *Bidwell, J. B., Eng. in Charge, Chassis Dev., GM Engineering Staff. Brady, C. J., Director, GM Proving Ground. . c,^ «. Bundorf, T. R., Staff Proj. Engr., Chassis Dev., GM Engineering Staff Campbell, D. D., Asst. Director, Res. & Dev., Fisher Body Division, GMC. Cichowski, W. G., Staff Engr., Safety Res. & Dev. Lab., GM Proving Ground. Crawford C A., Sr. Proj. Engr., Motor Group, Oldsmobile Division, GMC. Danforth,' J. P., Sr. Res. Engr., Electro-Mechanics, GM Research Lab. Dumville, H. C, Exec. Engr., Automotive Safety Eng., GM Engineering Staff. Elder, C. J., Staff Engr, Test Eng, GM Proving Ground. *Fisher, T. M., Administrative Assistant, Automotive Safety Engineering, ( Engineering Staff. Freas, W. S., Section Engr., Test Eng., GM Proving Ground. Gadd, C. W., Supv. Res. Engr., Electro-Mechanics, GM Research Lab. Gatts, J., M.D., Vehicle Trauma Res. Group, School of Medicine, U.C.L.A. Gioia, A. J., Section Engr., Test Eng., GM Proving Ground. Halliday, V. D., Body Design Engr., Buick Division, GMC. Harned, J. L., Staff Proj. Engr., Chassis Dev., GM Engineering Staff. Harris, J. I., Sr. Res. Physicist, Electro-Mechanics, GM Research Lab. Hedeen, C. E., General Director, Prod. Eng., Fisher Body Division, GMC. Hedeen, D. G., Vehicle Safety Engr., GM Overseas Operations Division. Herod, D. M., Proj. Engr., Instr. Cluster Eng., AC Spark Plug Division, GMC. Heyne, E., Body Dev. Engr., Opel, GM Overseas Operations Division. Hoffman, R. G., Proj. Engr., Eng. Mechanics, GM Proving Ground. Holcombe, H. G., Sr. Proj. Engr., Seats & Soft Trim, Inland Manufacturing D; sion, GMC. _ . , ^,,^ Hoover, D. R., Staff Engr., Body Desien & Dev., Buick Division, GMC. Hunter, T. A., Vehicle Safety Coordinator, GM of Canada. Johnson, P. R., Asst. Staff Engr., Vehicle Safety, Chevrolet Division, GMC. Johnston, L. E., Sr. Proj. Engr., Chassis Dev., GM Engineering Staff. Katz, S., Sr. Res. Chemist, Metallurgical Eng.. GM Research Lab. Kelly, A. H., Engr. in Charge, Test Eng., GM Proving Ground. Klove, E. H., Jr., Engr. in Charge, Safety Analysis, Fisher Body Division, GJ Kolhoff, T. R., Sr. Proj. Engr., Test Eng., GM Proving Ground. Krauss, J. J.. Sr. Proj. Engr., Test Eng., GM Proving Ground. Kvropoulos, P., Technical Director, GM Styling Staff. LeFevre, R. L., Engr. Supvr., Safety Res. & Dev. Lab., GM Proving Ground. Louton, J. C, Engr. in Charge, Mechanical Trim & Dev.. Fisher Body Divis; GMC. Lundstrom, L. C, Director, Automotive Safety Eng., GM Engineering Staf Marquis, D. P., Asst. Chief Engr., Chassis Group, Saginaw Steering Gear D sion, GMC. *Martin, D. E., Asst. Head, Electro Mechanics, GM Research Lab. McLellan. D. R.. Staff Proj. Bnsr.. Eng. Me<->ianic«. Gat Proving Ground. Miller, W. K., Res. Engr., Metallurgical Eng., GM Research Lab. Moore, R. C Sr. Proi. Engr.. Ene Merhanirs. GM Provinar Ground. Morphew, C. E.. Director. Styling Coordination. Cadillac Division, GMC. Murphy, J. W., Staff Proj. Engr., Optics, Guide Lamp Division, GMC. Nahum, A. M., M.D., Asst. Prof, of Surgery. School of Medicine, U.C.L.A. Nelson, W. D., Sr. Proj. Engr., Safety Res. & Dev. Lab., GM Proving Ground. Nordeen, D. L., Staff Engr., Eng. Mechanics, GM Proving Ground. Oyler. R. W., Chief Engr.. Guide Lamp Division. GMC. *Parr. B. C, Staff Engr., Automotive Safety Eng., GM Engineering Staff. Perkins. S. R.. Sr. Res. Engr., Electro-Mechanics, GM Research Lab. Quinn, C. E.. Sr. Res. Engr., Electronics & Instrumentation. GM Research L Rasmussen, T., Steering Systems Engr.. Oldsmobile Division, GMC. Rasmussen. R. B., Staff Proj. EnPT.. Ens: Mecbanic«. GAT Provins: Ground. Ridenour. J. B., Automotive Safety Encr., Oldsmobile Division. GMC. Roe, R. W., Staff Proj. Engr., Safety & Human Perf. Group, GM Styling St ♦Session Chairman. lis: fal 159 ogers, R. A., Section Engr., Safety Res. & Dev. Lab., GM Proving Ground, opers, G. W., Sr. Design Engr., Safety Analysis, Fislier Body Division, GMG. uster, T., Proj. Engr., Safety Res. & Dev. Lab., GM Proving Ground. iems, D. T., Sr. Proj. Engr., Safety Res. & Dev. Lab., GM Proving Ground. 3keels, P. €., Engr. in Cliarge, Safety Res. & Dev. I^b., GM Proving Ground, iiiithson, F. D., Sr. Proj. Engr.. Test Eng., GM Proving Ground, enipel, R. C., Asst. Motor Engr., Oldsmobile Division, GMC. 3tonex, K. A., Exec. Engr., Automotive Safety Eng., GM Engineering Staff, an Haaften, J. A., Supvr., Data Processing, Safety Res. & Rev. Lab., GM Proving Ground. onKampen, W. E., Asst. Staff Engr., Vehicle Safety, Chevrolet Division, GMC. 'aller, J. A., Vehicle Safety Engr., Vauxhall, GM Overseas Operations, GMC. 'arner. H. G., Exec. Vice President, GM Corporation, hitnier, W. E., Vehicle Safety Engr., GMC Truck & Coach Division, 'illiams. J. K., Proj. Engr., Dev. Eng., GM Engineering Staff, 'ilson, R. A., Staff Engr., Safety Res. & Dev. Lab., GM Proving Ground, ^iltse, W. E., Sr. Res. Engr., Vehicle Safety, Chevrolet Division, GINIC. "olf, M. L., Vehicle Safety Engr., Opel, GM Overseas Operations Division, 'oolcott, R. E., Sr. Exp. Engr., GM of Canada. Senator Nelsox. Who is the sponsor of the safety report ? Mr. Mann. That happens to be by General Motors : Proceedings, General Motors Corp., Automotive Safety Seminar, Safety Re- arch and Development Lab, General Motors Proving Grounds, Milford, Mich., ily 11-12, 1968. It is very technical but nevertheless very interesting and deals with lany of the problems you are talking about, Senator. Other examples of safety research by individual companies include le "sure-track" braking system, to prevent brake lock-up which is a lajor cause of skidding; and "automatic headway control," an elec- onic system to eliminate "tailgating" through speed control devices ith computer backing. There happens to be — again it is illustrative — this happens to be two f Ford's most recent innovations in safety and both of them are based I the use of the most advanced technology in computers and I think ])rosent a forward step. Papers describing these in more detail are available for inclusion 1 the record if the committee wishes. Senator Nelson. They will be received and inserted at this point. (The papers referred to follow :) ♦Session Chairman. 160 Exhibit 18 (Automobile Manufacturers Association's exhibit No. 8: article, "A Braki System That Thinks for Itself: Sure-Track," Ford Science Front, Nov. 196 SCIENCE FRON Volume 5, Number 4, November coNinoi tax ^^^^^ ^--c--. ©ACTUATOR jL,^Sd[W^ ^¥;, '^"-'^S^l ^-<--^\^^^ ^^.^ Wav^^^ ^^K ^ SENSOIS v,^^.-' Suie-Track's components are shown in this cutaway drawing of a Continental Mark III Wheel sensors (1) transmit wheel velocity information to the control module (2) which gives operating instruc- tions to the brake actuator (3). A braking system that thinks for itself: Sure-Track In October, the elegant Con- tinental Mark III introduced to the .American automotive scene an optional braking system that takes some of the panic out of panic stops. Trade-named "Sure -Track." it's a system of sensors, valves, actuator and a liny computer working togetherto help keep the rear end tracking the front by controlling rear-wheel brake locking. After initial research by Engineering Staff, skid control became a team effort at Ford. The system was developed by Car Systems Research with as- sistance from the Car Chassis Design and Chassis Systems Engineering offices. Bob Madison, supervisor of the Brakes. WheeU and Tires Section of the Advance Chassis Research and Engineering De- partment, recalls a Ford engi- neering study of skid control devices as far back as 1954. They were known to Americans then, if at all. only on heavy aircraft. "We tried various approaches over a period of several years." he says. "But neither the tech- nology nor the hardware was there until a couple of years ago. Thai's when we went to work in earnest to build a production system. The fact that it's elec- tronic indicates that it's a recent achievement." The situation facing the world's first "thinking" brake system is this: The rate of deceleration of a rotating wheel is measured in terms of "slip" relative to the vehicle speed. If the car is going 50 miles per hour and the wheel, with brakes applied, is going 40. there is a 20 per cent slip, which is near the ideal for braking- For it is in the IO-to-20 per cent slip range that maximum brak- ing is accomplished - — just short of skidding. Ideally, the 10-20 per cent relationship of wheel slip to vehicle velocity should be main- tained throughout the descending scale of values as the car slows down. But this relationship can he difficuli to hold. In panic situa- tions or on extremely slick sur- faces the frictional force avail- able between the tire and the road surface is not sufficient to sustain traction, and the wheels skid, i.e.. stop rotating. The role of "Sure - Track." then, is to maintain the desired slip average electronically. It does this by ranging above and below the optimum setting, which means the brakes "pump" themselves in cycles which can be as rapid as four per second on dry concrete. This pumping IS much faster than the driver could manage. The hardware which accom- plishes this consists of sensors attached to the rear axle shafts and housing. They detect the velocity of the rear wheels and transmit it to the control module. a computer the size of a paper- back book that's hidden under the car's glove compartment- The computer determines the optimum braking cycle and signals the vacuum - powered brake actuator in the engine compartment. The actuator's valves regulate the pressure of brake fluid to the rear wheels. The rapid pumping takes place only when the driver's foot ap- plies full pressure to the pedal. Differences in driving sur- faces produce coefficients of friction ranging from almost 1.0 on dry concrete down to about .05 on wet ice. The computer is sophisticated enough to control the braking action for optimum results on this wide range of road conditions. "Sure-Track." Madison points out. was not necessarily designed to make a car stop shorter but rather straighter. However, in extensive tests, stopping has averaged somewhat shorter than with a four-wheel lockup. "We think it's significant loo." he continues, "that the skid control unit won't degrade the effectiveness of any other ve- hicle system. "Our Car Chassis Research engineers ran an extensive failure mode analysis on all parts, piece by piece, to see what would happen if a bolt came loose, a plunger ^tuck and so on. We introduced features to r that even if the syst' working, the regular bi function as always, brake warning light wi driver that there's trout system." One reason braking is not being o all car lines is the tre demand on available required to tailor and the system for each dist Another reason is cost, lem is expensive at thr its development, more i than purchasers of lo\ cars would be likely to "We decided when selected a supplier t' ago that the system ■ offered only in relati volume, higher-priced first." Madison says. " Mark III now and will Thunderbird after the t year. Both are built ai tl (Mich.) assembly plant On high friction roai "Sure-Track " is for pan only, A stop that wouK enough to throw loo off the seat would be ( to a deceleration of o 10 feet per second pt The skid control sysd even be activated. The deceleration panic slop, with alt locked and skidding mately 26 to 2R feet p per second. This a I "g" of retarding forci Madison believes next step will be a f system which, althougl have some disadvanta ably would be an addi vance. I( would shortei distance even more, a steering during a p: since the front wheels be locked. "But this represent phase in the developnii control." he says. "R it would mean dou number of compon adding to the cost and C' of the system. We be keeping those reai rolling marks a big ste in the technology of bi 161 Exhibit 19 '(Automotive Manufacturers Association's exhibit No. 9: article by Jim Dunne, 'I lew Electronic System to Eliminate Tailgating," Popular Science, Dec. 1968.) New Electronic System to ELIMINATE TAILGATING Automatic Headway Control, an ingenious radar computer system now being tested by Ford engineers, could be the answer to clogged highways and rear-end collisions By JIM AUNNE / PS Detroit Editor Freeway driving without pedals is com- ing your way. And you'll love it! Inside a guarded test track just outside Detroit, a small clique of electronic wiz- ards is brazing the final circuits on a spanking-new control system that will make your driving job much less demand- ing, and measurably more safe. 64 I POPULAR SCIENCE Put yourself behind the wheel of the car they are working on for a moment: You are driving along the highway, your automatic speed set for, say, 70 m.p.h. You steer the car to stay in your lane or to change lanes when you want to pass. That's all. You have nothing else to do. Your pedals are now controlled by Auto- 162 MUlfl HOW IT WORKS: 1. IR beam from following car radiates forward, illuminates rear of lead car. 2. Reflector in lead-car tail lamp reflects some of intercepted IR energy to re- ceiver in rear car. 3. Receiver interprets phase of returned beam to determine distance between cars and sends to computer. 4. Computer uses data to determine relative velocity and computes safe tieadway. 5. If headway is greater than necessary, the throttle is actuated and car accel- erates either to preset maximum or until headway is proper for speed. 6. If headway is less than safe distance, car is decelerated, either by coasting or braking, to achieve safe distance. ^ matic Headway Control, an electronic system both simple and sophisticated that may be the long-awaited first step toward completely automatic highway driving. Okay, so you've heard of the automatic highway for a long time. What makes AHC so special? Two things. Unlike most proposed au- tomatic highway devices, AHC is already working in a test car— I drove a modi- fied T-bird on a public road in Dearborn back in October. Even more important, one car carries all parts needed to make the system work— no highway or other- car components are necessary. Contiiuied DECEMBER 1968 65 Infrared broadcaster (darklensed headlight) and re- ceiver are lab versions of radar sender-receiver set. The AHC system takes 100 watts of electricity. Small size of brake and throttle controls makes them easy to install. Operation of the throttle is similar to that of a standard speed-control system. You get the urge to touch the brakes . . . but the AHC car slows Basically, AH(; is a driver aid. It takes over all direction of the car except steering while the car is in light or mod- erate traffic. Key components in AHC are a minia- ture radar sending-and-receiving unit, plus a computer. These provide sjjeed- of-Iight reactions to changing highway conditions, capable of snubbing the brakes or depre.s.sing the accelerator split sec- ond.s faster than the human brain can signal leg muscles to react. Two cars were used in the evaluation run, the AHC-equipped 1968 Thunder- bird and a 1969 Ford control car. The new Ford happens to be well suited for this test since it has a car-wide strip of light reflectors just below the trunk. Driving with AHC. With the Ford run- ning at a steady 30 m.p.h. far ahead on the roadway, I set the T-bird to nm at 40 m.p.h., took my feet awaj' from the pedals, and waited. AHC took over at this point and worked just as predicted. The T-bird came up behind the Ford to a preset distance. Then the engine backed off and the brakes were momentarily ap- plied to slow the car down. As the distimce between the cars widened, the T-bird engine speeded up imtil the ideal interval was reached. Then the T-bird followed the Ford with little apparent change in speed, keeping a safe distance at all times. Except for some surge in acceleration, and one hard braking maneuver, the sys- tem worked exactly as planned. When the Ford speeded up, the AHC T-bird followed. When the lead car pulled off the road, the T-bird speeded up to its preset maximum speed as I steered it down the roadway. While driving, you get the urge to touch the brakes when AHC first brings Ford Engineer Gerald Scott shows relative position of AHC out- side components. Reflector poses as tail-light reflector of lead car with sender-receiver in relative position of AHC car. Sender and receiver, seen ahead of radi ator in Thunderbird test car, will tie hid- den behind grille in production version. 32-493 O— 69— pt. 1- -12 Testing components shown above include computer box, extra battery, and transformer fitted into trunk of Tbird equipped for Automatic Headway Control system. With microelectronics, the computer and the transformer will shrink to the size of a jewelry box. The extra battery will not be used in this version. down a split second before you feel you must slam them on your car up behind another. But the AHC car slows down automatically a split second before you feel you must slam on the brakes. Other than thc.t, AHC takes no more getting used to than a standard speed-control system. Only four major parts. R. H. Lesser, Ford Motor Co. electronics researcher who developed the system, says there are four major components in AHC: two new, and two modifications of existing parts. The new parts are an infrared ra- dar set and a computer. The modulation scheme within the radar uses sending and receiving information to measure the dis- tance between two vehicles. This infor- mation is sent to a computer where it is combined with the data on the speed of the AHC vehicle. The computer determines whether the AHC car is closing on the car in front, whether it is dropping behind, or whether it is maintaining a fixed distance. The computer then calculates a safe distance that should be maintained between the cars. If the actual distance differs, it signals the accelerator or brake to estab- lish the proper distance. If the car in front moves off the road, the AHC car will accelerate to its preset maximum speed. Then it will act like a car with a standard speed-control system, until an- other car in front activates the radar. The two modified parts are a standard brake and throttle hooked up for electri- cal control. AHC is a noncooperative system. This term means that only the parts on the system-equipped car are needed to make the device work. The maximum speed of AHC can be set by the driver, usually the speed limit of the roadway. However, an over-ride is provided on both the accelerator and brake so the driver can take control of the car at any time. Coming soon. Out at Ford's labora- tories. Lesser explains that all parts nec- essary to build an AHC system are available now, but not as a unit. The computer in an accompanying photo- graph is many times larger than a final design would be. Other parts can be combined and miniaturized, too. A pro- duction version of an AHC system would weigh about 20 pounds, and cost a new- car buyer between $200 and $300. Lesser says that a high-production ver- sion of AHC can be ready for public use by the middle '70s, and probably be sold as optional equipment. Other controls, such as "slippery-pavement" and "dry- pavement" settings, and antiskid braking systems, could be built in. Summing up, AHC promises three de- sirable benefits: • It adds driving pleasure, relieving the driver of much of the nuisance of pedals. • It increases driving safety, practical- ly eliminating rear-end collisions. • It aids traffic flow by keeping cars moving at a uniform speed and distance. As a first step to completely automatic highway driving, it promises to be an easy one. * IE DECEMBER 1968 I 67 165 Mr. Mann. The manufacturers have also long supported vehicle safety research programs in various universities and independent re- search organizations, I want to mention to the Senator, maybe you don't know this, but since I have been with the association we have for example, contributed $10 million, tlie industry has, to the Uni- versity of Michigan to set up a new traffic safety institute. This insti- tute is now functioning. I think the new buildings are going to be inaugurated very soon. They have recruited a fine staff, But long before that we were working with Cornell, UCLA, Wayne State, and a number of other universities and independent research organiza- tions in this field that you are talking about. Senator Nelson. Is this research on driver training, driver habits, liighways, or does it also involve research on devices? Mr. Mann. It involves everything. Are you talking about the Uni- versity of Michigan program ? Senator Nelson. Yes. Mr. Mann. It involves everything. It involves traffiic safety in all of its features. Senator Nelson. Does it involve research on devices for safety ? Mr. Mann. Well, Senator, this is something the university would have to tell you about. They liave a large staff and they are working on all phases of traffic safety. I have talked to them about many phases of it. I don't know what you mean by "devices." Senator Nelson. Well, I mean energy-absorbing instruments for the front end of the car, seatbelts, I am talking about devices. Most of the programs I have seen Mr. Mann. What we call in the trade hardware you are talking about. Senator Nelson. Yes. Mr. Mann. Yes. I don't know that the university is particularly trying to redesign the energy-absorbing steering column. That is now in its second generation. I don't know that anybody has suggested that there is a great deal of room for improvement in that. Senator Nelson. I just wonder if the research is in the field of hardware or just in the field of ^ Mr. Mann. Certainly they get into tires, inflation, the things you were talking about that effect the vehicle, swerving, control, brak- ing, what happens to the car when you have locked wheels and things of this kind. Senator Nelson. OK. I understand. Mr. Mann. The manufacturers were among the first to support other organizations having as their principal purpose the development of effective programs to cope with the nonvehicular aspects of traffic safety. vehicle emissions The next section is on vehicle emissions which was included in your questions. Today's new cars emit, on the average, about 63 percent less hydro- carbons than earlier models ; under more stringent standards proposed for California in 1970 and nationwide in 1971 the decrease will exceed 80 percent. Similarly, carbon monoxide emissions have been reduced about 63 percent. In no other area, and I want to underscore this, of 166 the total clean air program has there been a comparable record of achievement. In this area, too, member companies are engaged in intensive in- house research oriented toward finding ways to bring automotive emissions still lower. In addition, the industry has joined with HEW and the oil industry in financing a $13 million program in basic re- search, including the effect of certain pollutants on health. This again is through my association and I am very familiar with it for that reason. An example of expanded basic research effort on the vehicle emis- sion problem is the "Inter-Industry Emission Control Program," initiated by Ford in 1967; participants include, besides Ford, six oil companies and four foreign automotive manufacturers. The research efforts of this group, funded entirely by the participants, are designed to test several basic approaches toward improved emission perform- ance through such techniques as thermo-reactors, catalytic converters, new fuel properties and systems. A copy of the most recent report of the IIECP is available, also, for the record. This is this book here. Another example is the emissions research program of Chrysler and Esso in the areas of cleaner air systems, reductions of evaporative losses, catalytic reactor systems and other fields. A copy of a report briefly describing this program is also available. Other material de- scribing cleaner air system for exhaust emissions control developed by Chrysler is available for inspection and, if the committee desires, for inclusion in the record. Senator, I have all of this here and I cite them only because they describe — it would take me a long time to do it in a very brief fash- ion — what the companies have done in this field of emissions, in con- trol, in terms of research. Senator Nelson. They will be accepted for the record. (The pamphlets referred to follow :) 167 Exhibit 20 (Automobile Manufacturers Association's exhibit No. 10: paper by the Inter- Industry Emission Control Program, "Clean Air Research.") i J 168 Clean Air Research and NEC Air pollution is recognized as a serious problem both in the United States and abroad. It is caused by smoke, dust, fumes and gases produced from many sources. A particular type of pollution occurs with variable frequency in the Los Angeles Basin, where hydro- carbons and oxides of nitrogen react in sunlight to form photochemical smog. The automobile is the principal contributor to hydrocarbon emissions and, to a much lesser extent, to emissions of oxides of nitrogen. As a result, the automobile and petroleum industries have been actively engaged for years in research aimed at reducing undesir- able emissions. Convinced that a virtually smog-free automobile powered by an internal combustion engine could be developed. Ford Motor Company and Mobil Oil Corporation combined forces in April, 1967, to form the Inter-Industry Emission Control program. These two companies were quickly joined by five other U.S. firms-American Oil Company, Atlantic Richfield Company, Marathon Oil Company, the Standard Oil Company (Ohio) and Sun Oil Company. In July of 1968 three Japanese car and truck manufacturers-Mitsubishi Heavy Industries, Ltd.; Nissan Motor Company, Ltd., and Toyo Kogyo Company, Ltd.- and the Italian company. Fiat S.p.A., joined IIEC. These companies are conducting an all-out research program to eliminate objectionable levels of automotive emissions. Oil company members utilize their fuel and lubricant know-how, while Ford and other vehicle manufacturers concentrate on development of new "hardware." This coordinated attack on a problem common to both industries is in addition to the extensive in-house programs that each of the participating companies continues to maintain. The Problem Every automobile emits relatively small amounts of contaminants. The principal contami- nant by weight is carbon monoxide; two others, emitted in substantially smaller quantities, are hydrocarbons and oxides of nitrogen. The amount of emissions from a single car is small. But there are more than 96 million motor vehicles currently in use in the United States alone— many of them concentrated in urban areas. In combination, they contribute to the pollution problems experienced in crowded cities. Most automotive emissions— about 85 per cent— come from the combustion process (vapors from evaporating fuel account for the other 15 per cent). Carbon monoxide and small amounts of unburned hydrocarbons are given off because combustion of the air-fuel mix in the engine is not complete. If all our driving were at steady speeds on open highways, exhaust emissions would be no problem. The difficulty is that the mixture of air and fuel most conducive to complete combustion is not rich enough to prevent a car from stalling when an engine is idling or to produce maximum power for acceleration. So, for smooth engine performance, the mixture must change to meet the needs of different driving conditions. As it changes, pollutants are emitted from the tailpipe in varying quantities. Obviously, overall emission quantity increases in crowded city traffic. 172 The Goal One source of hydrocarbon emissions— crankcase blowby— already has been brought under complete control by the automobile industry. Gases from gasoline combustion which escape from the cylinders and pass through the crankcase were once vented through a road draft tube. Since 1963, new American automobiles have been equipped with positive crankcase ventilation systems that recycle these escaping gases back through the combus- tion chamber, where they are burned. This accomplishment resulted in a 15 to 20 per cent reduction in hydrocarbon emissions. All 1968 models were equipped with additional, more sophisticated systems which further reduced exhaust hydrocarbons by about two-thirds and carbon monoxide by more than one-half of the levels of cars with no controls. This level was established by surveys in California in 1963 and applied to most of the 1966-model passenger cars sold in California. Federal emission standards calling for still further reductions have been promulgated for 1970. Although, by any objective standard, the accomplishments of the automobile industry have been outstanding, the participants in the IIEC program seek to improve upon them. The goal of the IIEC program is to fmd a way to achieve even lower levels than those called for by the 1970 standards— thus hastening the realization of a virtually smog-free car 173 iti 1963 Levels 1968 Stnds. 1970 Stnds. NEC (U.S.) (U.S.) Goals Hydrocarbons— Parts per million 900 275 180 65 Carbon monoxide— Percentage by volume 3.5 1.5 1.0 0.3 For oxides of nitrogen, the goal of the IIEC is a reduction of 85 to 90 per cent, with a target of 175 parts per million. Achieving these goals, even in the laboratory, will not be easy. Changing one part of a well-engineered fuel-engine system could easily reduce the efficiency of other parts of the same system. (And if carbon monoxide emissions alone were controlled, nitrogen- oxide emissions actually would go up above the present levels.) The task is further complicated by the fact that a smog-free automobile is not enough. The car of the future also must meet customer criteria for performance, cost, comfort and convenience. This is the goal of the Inter-Industry Emission Control program. When this goal is achieved, it will remain for the automotive industry to overcome the formidable but, it is believed, not insurmountable task of adapting the concepts developed by the IIEC group to the practical realities of mass production. The Program To meet this formidable challenge, the NEC group has launched a three-year, multi-million- dollar program— one of the largest private research ventures ever undertaken. It is using a systems-engineering approach in which the solution to each part of the problem will be evaluated on the basis of interaction with all the other parts. Final judgment as to the most effective solution— or combination of solutions— will be based on an evaluation of all the factors mentioned above. One suggestion for reducing emissions of hydrocarbons and carbon monoxide has been to pass engine exhaust through a "catalyst" or "reagent" that will convert the pollutants into harmless materials. The difficulty is that effective catalysts are quickly "deactivated" by the lead in gasoline and are expensive to replace. Two NEC projects may provide answers. One is aimed at development of a disposable cat- alyst for use with leaded gasoline. (The catalyst would be a low-cost item which could be replaced in service stations when motor oil is changed.) The second involves the study of low-cost catalysts with a much longer life for use with unleaded gasolines. In addition, NEC researchers are using a mathematical model on a computer to try to improve the efficiency of catalytic converter systems for both leaded and unleaded gasolines. Thermal afterburners also offer strong promise. These non-catalytic devices would burn the hydrocarbons and the carbon monoxide (without affecting nitrogen-oxide levels) as they pass through the exhaust system. If afterburners could be made to function efficiently over long periods of time without unduly increasing fuel consumption, they could prove effective even with fuels containing tetraethyl lead, which is used in almost all gasolines to meet the high octane requirements of modern automobiles. Whether catalysts or afterburners or both prove to be the best answer remains to be seen. The NEC group is testing such systems with equal thoroughness to provide motorists with the most efficient devices for controlling exhaust emissions of hydrocarbons and carbon monoxide. Nitrogen oxides are not being neglected, either. Catalysts might solve this problem also, and are being tested with rich and lean carburetion in engines burning both leaded and unleaded gasolines. Another possible approach is to recirculate a portion of the exhaust gas back through the intake manifold so that temperature is reduced in the combustion chamber and fewer nitrogen oxides are produced. The NEC group also is working to perfect this method. Participants in the IIEC program have not neglected the possibility that changes in the design of autonnotive systems or the composition of fuels might prove beneficial. The car- buretor, induction system and combustion chamber all are being studied to see whether they can be made to use leaner fuel mixtures without producing more pollutants. Methods of reducing evaporation losses in the fuel system also are being studied. Similarly, the NEC group is investigating fuel volatility and additives in the hope that certain char- acteristics of gasoline might be altered sufficiently to reduce evaporation and improve carburetion and combustion. Ten test cars will be used to evaluate equipment and fuels developed in the program. Altogether, the IIEC program consists of 15 separate projects scheduled to be completed by the spring of 1970 (although it may be several years after completion of the program before the full benefits of IIEC achievements can be fully realized in vehicles and fuels). Its doors still are open to other companies eager to participate and able to contribute research efforts. A portion of the IIEC program already has moved out of the research phase into the develop- mental and test-work phase. Early activities were to organize and staff the program, set out basic objectives, delegate project assignments and conduct extensive research and development work. Now, more and more, the test track is replacing the test tube. Hardware is being evaluated, data compiled and projects added or de-emphasized. Research- developed hardware is being installed into specially built test vehicles. Separate research efforts on fuels and emission-control hardware, such as catalytic converters, high-efficiency reactors and exhaust recirculating systems, are being brought together in a number of concept emission-test vehicles for systems evaluation. Eleven major companies have pooled their resources— money, modern facilities and brainpower— to help solve a major problem. Whatever the ultimate solutions may prove to be, motorists can be certain that automobiles of the future will be virtually pollu- tion-free, and will perform as well as or better than current models at a reasonable cost. American Oil Company Atlantic Richfield Company Fiat S.p.A. Ford Motor Company Marathon Oil Company Mitsubishi Heavy Industries, Ltd. Mobil Oil Corporation Nissan Motor Company, Ltd. (Datsun) Standard Oil Company (Ohio) Sun Oil Company Toyo Kogyo Company, Ltd. 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E gi T3 c CO n to (11 u c CO ^ ^ Cl> CO c ^ £ a> r Q. E c/1 u. CO c CO F c CD h CO CO 5 CO CD CO 3 •5 £ o E ^ ^ ^ 2 a «i "O c C o CO o a u. E ' •|« Q> t^ i2 5 E ra o <" O Q. O CO II .« CO < CO ° CO CO 03 CO •I E ■■6 ^ -g o (0 0^ c c gj cj 3 8 c o _ CO Q) cj '- o X; "' J^ 3 ^ CO ■^ CO Q) _ CO .E gj __ o CO Q. x: T3 ii ™ Q. _ ° o CO CO o CO CO C o Q. CO c Q. 3 Q) o CO CO Cj CO C 5 O C Ct3 >, O Q) fe u "co o ^ Q. "O .0) CO O O OJ C c o i CTJ CD CO 5 o CO O s CO o Q) « <0 o t c ^ E E ~ (0 ^3 '^ _ E - x: ■J- QJ O ^ - ^ r ^ - o o 5 ™ o - 2? >' Q? t to E _ X3 Q) QL ^ O q3 4" CO J3 • 2 ■- e S Q> 5 <« ^ 8 Q. Q CO g _ § ^ i ^f - s^ c > i D) 0) — — ■E - 2r c ^ CO CO to CO CO (/) CO (0 to 0)0)0) < m ^ f/i O > ^ >- c 194 195 Exhibit 22 (Automobile Manufacturers Association's exhibit No. 12: paper by the Engi- eering Office, Chrysler Corporation, "Chrysler's 'Cleaner Air System' for xhaust Emission Control.") CHRYSLER'S "CLEANER AIR SYSTEM " FOR EXHAUST EMISSION CONTROL ENGINEERING OFFICE C.© PJHBY^i^^ CORPORATION W 32-493 O— 69— pt. 1 14 196 CHRYSLER'S "CLEANER AIR SYSTEM' FOR EXHAUST EMISSION CONTROL CONTENTS Page Introduction 1 The Cleaner Air System- -A Glance At Its Background 1 How Does The Cleaner Air System Work? 2 To Limit Exhaust Emissions at Idle and Acceleration 2 To Limit Exhaust Emissions During Deceleration 4 Operation of the Distributor Vacuum Control Valve 6 Other Cleaner Air System Modifications 6 The Cleaner Air System Includes Closed Crankcase Ventilation 8 The Cleaner Air System- -A System, Not a Device 8 Prepared by Technical Information ENGINEERING OFFICE CHRYSLER CORPORATION July, 1967 197 CHRYSLER'S "CLEANER AIR SYSTEM" FOR EXHAUST EMISSION CONTROL itroduction Ihrysler's Cleaner Air System for exhaust emission control consists of a number of ngine modifications that lead to more complete burning of the fuel/air mixture in the ngine. As a result, concentrations of unburned hydrocarbons (HC) and carbon mon- xide (CO) that contribute to air pollution are considerably reduced. "he Cleaner Air System is made up primarily of the following: leaner fuel/air mix- ares at all engine speeds, adjusted ignition timing, higher idle speed and air flow, pecial choke calibration, and other more-subtle modifications that are peculiar to ach engine. These include revised combustion chambers, improved manifold heat alves, and new design carburetor metering systems for better carburetion and ylinder distribution. It is this combination that provides cleaner exhaust gasses. )riginally developed to help reduce photochemical smog in California, the Cleaner Lir System (formerly called Cleaner Air Package or CAP) now enables all Chrysler- uilt engines to meet nation-wide Federal requirements that limit hydrocarbon missions to 275 parts per million and carbon monoxide to 1.5%. And it will continue 3 do so as long as it is properly maintained. Tie Cleaner Air System- -A Glance At Its Background Tie Cleaner Air System stems from long investigation at Chrysler laboratories into tie problems of undesirable exhaust emissions. This research revealed that the con- entional automobile engine gave relatively low emissions of hydrocarbons and carbon nonoxide when accelerating or cruising, but very high emissions when decelerating, r operating at low and idle speeds. It further was found that more complete combus- ion of the fuel/air mixture during periods of high exhaust emissions would lower such missions, not only while decelerating and idling, but also during acceleration and ruise. CAP thus came into being--as a system of engine modifications for burning uel more completely under all operating conditions. The present Cleaner Air System as evolved from CAP. 198 How Does The Cleaner Air System Work? The Cleaner Air System utilizes changes to the conventional carburetor, choke, and distributor, plus other internal modifications determined by specific engine needs, t implement exhaust emission control. Most of these are directed toward certain part of the engine operating cycle --idle, acceleration, and deceleration. These ranges contribute the bulk of air pollution from the gasoline engine, and it is upon them that the Cleaner Air System concentrates. The following pages describe how the Cleaner Air System operates during idle, acceleration, and deceleration ... to provide the optimum combination of fuel/air mixture and timing for all driving conditions. SPECIAL CHOKE CALIBRATION SENSING VALVE (Manual Transmission Only) VACUUM LINES NEW CARBURETOR METERING SYSTEM CLOSED OIL FILLER CAP CLOSED CRANKCAS VENTILATION SYSTE CRANKCASE VENTILATOR VALVE IMPROVED MANIFOLD HEAT VALVE VACUUM ADVANCE UNI MODIFIED COMBUSTION CHAMBERS ALTERED DISTRIBUTOR CHRYSLER'S CLEANER AIR SYSTEM (V-8 With Manual Transmission Shown) To Limit Exhaust Emissions at Idle and Acceleration: In order that the engine reduce its exhaust emissions at idle, it must, in a sense, simulate the more-efficient com- bustion conditions that exist when it would be cruising. In the Cleaner Air System thi is done by increasing idle speed (and the air flow necessary to maintain it), providing 199 - 3 - I leaner fuel/air mixture, and retarding spark timing. The result is that the engine eceives the type of charge it would get if it were cruising, and burns it much more ;ompletely. arburetor changes play a key role. The carburetor is set to deliver as lean a mixture IS the engine will tolerate without affecting performance. It is assisted by a new feature ailed the idle mixture limiter that makes certain the idle mixture will stay within ac- :eptable emission limits no matter how the idle mixture screw is adjusted; the maximum -ange of lean-to-rich adjustment is less than half that of the conventional engine. 3ne of the most important of the Cleaner Air System factors at idle is retarded spark iming; that is, the spark plugs are timed to fire later than normal in the compression stroke. Retarded timing provides two favorable conditions leading to a more complete ombustion: first, to compensate for the power reduction resulting from retarded spark, ilr and fuel flows become higher, creating a charge density (how close the molecules of uel are packed together) that more closely resembles that existing at cruise; second, he retarded spark also increases exhaust gas temperatures, thereby causing additional )urning of hydrocarbons and carbon monoxide in the exhaust manifold. THROTTLE OPEN WIDER RETARDED SPARK (^ HIGHER EXHAUST TEMPERATURE HOW CLEANER AIR SYSTEM LIMITS EMISSIONS AT IDLE 200 - 4 - During acceleration, with lean Cleaner Air System mixtures, combustion also is satisfactory and emissions are correspondingly low. Another modification applies to cold starting and warm-up operations, when a rich fuel mixture is necessary for the engine to fire and reach a smooth operating con- dition. The choke valve is closed when the engine starts, but opens gradually as the engine warms up. In an engine equipped with the Cleaner Air System, improved manifold heat valves, carburetor metering, and cylinder distribution permit the choke to be calibrated to open sooner than in previous engines. This, of course, reduces the total fuel con- sumed at warm-up. As a result of these modifications--high idle speed, leaner mixtures, and retarded spark timing- -there is a very substantial decrease, well over 50%, in hydrocarbon and carbon monoxide emissions at idle and acceleration. To Limit Exhaust Emissions During Deceleration: Deceleration or coasting formerly was a third potential contributor of relatively high exhaust emissions in the engine operating cycle. Emissions in this speed range consist primarily of hydrocarbons; that is, of partially burned or unburned fuel vapors. Two combustion factors--low air/fuel flow and a relatively high dilution of the fuel mixture by exhaust gasses-- contribute primarily to this emission problem. Low air /fuel flow occurs as soon as the driver eases up on the accelerator. Ordinari the throttle blade inside the carburetor is nearly closed just as it would be during idl^ severely restricting air flow from the carburetor to the combustion chambers. Engine speed at this time is high, depending on how fast the car was cruising at the time deceleration began. The low air flow and high engine speed previously would combine to create strong vacu: in the intake manifold so that as the intake valve opened, exhaust gasses from the pre^ charge, which were still escaping through the closing exhaust valves, were pulled bac toward the intake side. They mixed with the incoming charge, weakening it further. The end result was a charge that burned very poorly, and often left pockets of unburne fuel to escape out of the exhaust, raising hydrocarbon emission. 201 engines equipped with the Cleaner Air System, modifications that are made for idle )ntribute in great part to the reduction of emissions during deceleration. The main ctor is the position of the throttle blade, which at idle is opened wider tiian normal, icreasing air flow. Under deceleration, this greater air flow lowers the intake mani- ild vacuum. Consequently there is much less of a tendency for ttie exhaust gasses to lix with the incoming fuel mixture. nother factor improving combustion during deceleration is advanced timing, which rovides more complete combustion under conditions of very high manifold vacuum, hese very high manifold vacuum conditions occur only during deceleration, and pri- larily in vehicles with manual transmissions. THROTTLE OPEN LESS MIXTURE DILUTION BY EXHAUST GAS INCREASED FLOW IN MANIFOLD HOW CLEANER AIR SYSTEM LIMITS 'EMISSIONS ON DECELERATION n a car with an automatic transmission, the slip characteristics of the torque con- verter in the automatic transmission allow its engine to slow down much more rapidly IS the vehicle is decelerating, thereby quickly reducing the high manifold vacuum. 202 6 - On vehicles equipped with manual transmissions, engine slow-down is not as rapid during deceleration, high manifold vacuum exists longer; therefore, spark is advanced at this time. This is accomplished by a special distributor vacuum contro valve. It reacts to manifold pressure during deceleration to advance timing until th' engine reaches the low-speed range. (The control valve is used on the Hemi-426 engine regardless of the type of transmission.) Operation of the Distributor Vacuum Control Valve FROM MANIFOLD VAC FROM CARBURET TO DISTRIBUTOR CLEANER AIR SYSTEM SENSING VALVE The distributor vacuum control valve is nothing more than a switching de- vice placed in the vacuum hose circuit between the carburetor and the dis- tributor vacuum spark advance unit, thus dividing the circuit in two. It also adds a third vacuum hose leading to the intake manifold. When the engine is accelerating at part throttle or cruising, vacuum is present at the spark port in the carburetor throttle body. The control valve shuts off the opening to the manifold, and routes carburetor vacuum directly to the vacuum spark advance unit for early sparking. W the engine is decelerating, carburetor vacuum is low, but intake manifold vacuum if very high. The control valve then shuts off the circuit leading to the carburetor, an relays manifold vacuum to the spark advance unit. Thus in all engine operating ranj the necessary spark advance is provided automatically. Other Cleaner Air System Modifications A number of additional internal refinements aid in lowering emissions. These re- finements stem from a close laboratory scrutiny of the design and performance of each engine in order to determine just what specific additional measures should be taken for better fuel metering and more complete fuel combustion. Among the more noticeable of such improvements are: A New Heat Valve and Gasket- -Both lead to a better distribution of hot exhaust gasses against the underside of the intake manifold so that engine warm-up is quicker, allowing earlier leaning out of the fuel mixture (six-cylinder engines). 203 jicrease d Quench Height --The quench space in the combustion chamber is raised o a point where any gradual build-up of carbon deposits in this area will not un- luly restrict complete combustion (most V-8 engines). This increase also prevents he metal walls of the combustion chamber from dampening the flame as it travels ejutward from the spark plug. increased ''quench height PREVIOUS QUENCH HEIGHT INCREASED QUENCH HEIGHT Single Idle M ixture Screw - -It is no longer necessary to balance the fuel mixture between barrels of the MU, 383, 4-bbl, and 440 CID V-8's when adjusting idle. Balance is preset and sealed by the manufacturer. A single idle mixture screw raises or lowers the level of mixture simultaneously in both barrels without affecting balance. This feature was developed by Chrysler engineers to eliminate maladjustment of mixture balance. Adjustable Idle Air Bleed- -Some carburetors (340, 383, 4-bbl, 440 V-8's) incorpo- rate a secondary air bleed that can be adjusted to smooth out engine operation in the transfer range, between idle and acceleration. By-Pass Air Slot --Some carburetors (340 and 383, 4-bbl V-8's) have an air passage built into the carburetor side wall adjacent to the tiirottle valve. During closed throttle at idle, it carries air to a key spot below the dirottle valve best suited to break up concentrations of raw fuel . 204 The Cleaner Air System Includes Closed Crankcase Ventilation The Cleaner Air System is designed to control crankcase emissions as well as exha emissions. In this sense it serves as an extension of the positive crankcase ventila system introduced on Chrysler Corporation engines in 1963. Positive crankcase ventilation on engines not equipped for the Cleaner Air System h a ventilated oil filler cap. Manifold vacuum pulled fresh air through the cap into th crankcase where it was used to sweep blow -by (unburned and partially burned fuel) vapors out of the crankcase into the carburetor via a special ventilator valve. Froi 1)( the carburetor the vapors were carried into the combustion chambers for burning. '^ With the Cleaner Air System, the filler cap is not vented. Instead, it is connected a hose directly to the carburetor air cleaner so that if an extensive amount of blow- vapors are coming from the crankcase, or the vent valve should become stuck, the extra blow -by gasses will be routed right back through the engine (via the air cleane rather than being allowed to escape. The Cleaner Air System- -A System, Not a Device Obviously the Cleaner Air System is not any single device or group of devices that c be bought at an automotive supply store. It is a highly developed, sophisticated, an sometimes complex system of engine modifications that has one purpose- -to reduce emissions to an acceptable level. The Cleaner Air System does just that, and it dof it very economically. It requires practically no additional maintenance beyond the normal recommendations made for engine care. This, in itself, is an achievement. ,11 205 !^r. Mann. As in the case of traffic safety, and I think I can say this :h some objectivity, there is no basis for assuming that innovation reducing emissions would be promoted merely by mcreasmg the mber of firms in the industry. DEVELOPING ALTERNATE KINDS OF PRIVATE TRANSPORTATION An agrument can be made that the ability of large companies to in- 5t in extensive research and development staff and facilities enhances i likelihood of innovation. Certainly much of our technological prog- ;s in recent years is the product of large-scale, organized research ograms On the other hand, many important innovations m the past ve been the product of the ideas developed in small companies, me of the most significant advances have been made m one-man ooratories operating on a shoestring. Probably the only conclusion e can draw from this is that no individual or firm or industry has a mopoly on the capability of finding new and better ways of doing ings— and that all should be encouraged to contribute to the total ^nd of knowledge. 'The automobile manufacturers have often said they are m the trans- rtation business. If an economically feasible machine can be devel- ed which can do everything that the internal combustion engine is, there is no reason to believe that people would not want to buy And in our open, competitive economic society there are none who ve a greater incentive to develop, produce, and market such a product an the automobile manufacturers. The firm which did so first would ve an advantage over his competitiors. Only those firms oblivious to eir own self-interest would want to stand pat with an obsolete plant oducing an obsolete product while more competitive companies jSsed them bv. This explains why the automobile manufacturers have spent a great al of time and money in developing and testing diesel engines, tur- ne engines, electric powerplants, steam engines, and hybrid engines. 3cently one of the manufacturers showed to the public some 15 or 20 )w powerplants on which it is currently working. Senator Nelson. Is that the General Motors display? Mr. Mann. Yes, sir. I have that now, and my statement says a Ider which is all we had then, but we now have this in printed form. Senator Nelson. That was their showing here about 2 months ago? Mr. Mann. Yes, sir; and it is complete with the drawings, technical awings, the kind of steam engines and electric cars they are working I, and simply demonstrates that they probably have done more work a greater variety of fields in this area than any other company I 10^ of— except, of course, some of the other member companies who e also working very hard at this. Chrysler, for example, is, I think, the fifth generation of the turbine engine. They have been working it for many years. Ford has done a great deal of work in this area, I also have here a short history of Chrysler's development of gas irbine engines which the committee may wish to look at. I understand is one thing to perfect a single engine to desirable design character- tics but an entirely different matter to perfect an engine which meets )nsumer demand and can be mass produced. iWr 206 What the automobile manufacturers have individually said is, essence, that despite their best efforts none has as yet been able to velop a powerplant which they believe would be competitive with iW day's gasoline engine in price, performance, reliability and durabili ' This raises the question: What social or other legitimate purp( would be served if a manufacturer were to design, develop, and mi produce a different kind of powerplant, if consumers would not b it in large quantities ? Governments may be able to invest great sui of money in research on a program and then abandon it. And I do: think I need mention the program, Senator, that I had in mind bui think we are all familiar with it. But in the private sector, cost a the ability to market products are important considerations. The co pany which makes too many costly errors would probably not cc tinue to exist. Certainly the shareholders would quite properly be^ to think about whether management should not be changed. I see no basis at all for the insinuation that automobile manuff turers could, if only they tried harder, quickly make a dramatic tec nological breakthrough in developing a steam or an electric or soi other kind of automobile which the consumer will consider superi to the products currently available to him. I say this because I kn( of no way to command scientists to invent. Most technological pro ress comes gradually as the result of trial and error and the expenc ture of time and effort. While the automobile manufacturers seem likely, because of th( knowledge, experience, and because of their self-interest, to contin to lead the way in automotive innovations, they are by no means — a I want to underscore this — the only industry with knowledge in t areas which present the greatest technological problems. The pub is not wholly dependent on them. There are efficient industries, bo at home and abroad, whose business it is to make batteries and fi cells. There are other industries whose business it is to make stea Eowerplants. There are individual inventors and entrepreneurs w" elieve they have found solutions to technological problems which present are barriers to new kinds of automobiles. I do not suggest th any good purpose would be served by commanding these groups to i vent a better powerplant, but I do suggest that all of them have : automatic incentive to invent. And I have no doubt that even someone else is the inventor, the automobile manufacturers will 1 eager to adopt it and to compete in finding ways to improve on it. Senator Nelson. We will accept your three exhibits for inclusi( in the record at this point. (The exhibits referred to follow :) 207 Exhibit 23 Automobile Manufacturers Association's exhibit No. 13: paper by General tors Corporation, "GM Progress of Power Background Information" (1969).) BACKGROUND INFORMATION 208 GM rogress 5)of ower BACKGROUND INFORMATION GENERAL MOTORS scientists and engineers are engaged in a continuing investigation of various possible power sources for vehicles of the future. On May 7 and 8, 1969, the nation's press and rep- resentatives from government and colleges were invited to see the latest results of this work at the GM Technical Center. This "state of the art" report --called "Progress of Power" --featured some 44 exhibits and 26 spe- cial vehicles, many shown for the first time. Pow- ering the vehicles were a wide array of uncon- ventional systems --turbine, steam, electric, Stir- ling, and hybrid systems, as well as experimental piston engines that sharply reduce emissions of air pollutants. The following pages contain background information on the experimental power systems and vehicles displayed and demonstrated at the GM "Progress of Power" show. We hope you find this informa- tion of interest. 209 BACKGROUND INFORMATION SHEETS OWci The Air Pollution Problem and Its Control .(Green) The Air Pollution Problem Fundamentals of Emission Control; A Decade of Progress Catalytic Converter Plus AIR Low Emission Engine Design Experimental Exhaust Manifold Reactors Exhaust Manifold Reactor with CCS (Controlled Combustion System) Experimental Nitric Oxide Control System — NOC Unconventional Engines and Fuels • (Tan) The CM SE-101 Steam Car The GM SE-124 Steam Car with Besler Engine GM Progress in Gas Turbines for Vehicles Liquefied Petroleum Gas (LPG) Engine Quiet Engines — Stirling Cycle, Vapor Cycle Energy Storage Systems Complement the Stirling Engine Intake Valve Throttled Engine RamAire Supercharger System Free Piston Engine Direct-Cylinder Air-Injection Supercharged Engine Ammonia-Fueled Automotive Engine Toric Transmission ©(Tan) Special Purpose Urban Cars •(Blue) The 511 Gasoline Commuter Car The 512 Series Urban Cars XP-883 Gasoline-Electric Hybrid Car Batteries and Electrically Powered Vehicles • (veiiow) Electric Vehicle Powerplant Technology Electrochemical Energy Converters GM Stir-Lee II: A Stirling-Electric Hybrid Car GM High Performance Electric Drive Systems Delco-Remy Electric-Wheel Vehicle Propulsion Electrovair II Electrovan Other Direct Conversion and Nuclear Power Systems • (Gray) Thermoelectric Power Thermionic Power Electrogasdynamics Radioisotope Heat Sources and Nuclear Reactor Systems 210 General Motors THE AIR POLLUTION PROBLEM How serious is the air pollution problem? What are the specific effects of individual pol- lutants, and which ones are most significant in the quest for cleaner air? Such vital questions, often charged with emotion, are being discussed at virtually all levels of government and industry. But one point remains clear among much controversy: air pollution is becoming more serious with increasing ur- banization and population. Concentrations of pollutants are heaviest in highly urbanized and industrialized centers. About 120 million Americans -- nearly two-thirds of the nation -- live in such areas. The Automobile and Other Sources. The pol- lutants released into the atmosphere come from many sources -- automobiles, industry, homes, even nature itself (e.g., marsh gas --a hydro- carbon -- is formed at the rate of 1.6 billion tons per year). Principal automotive air pol- lutants are carbon monoxide (CO), hydrocarbons (HO. and oxides of nitrogen (NO ). The auto exhaust is a minor source of particulates. Sulfur dioxide (SO2) in the automobile exhaust is insignificant. In fact, more than 95% of the exhaust is composed of innocuous substances -- nitrogen, carbon dioxide, and water vapor. Non-automotive sources of air pollution ini pulp and lumber mills, iron and steel indu petroleum refineries, chemical manufactur' and powerplants using fossil fuels to prodv electricity. The same fuels also heat hom plants, and offices. Pollutants emitted in : nificant amounts from non -automotive sour include SOo; NO ; particulates, such as du and soot; and to a lesser extent, CO. Figure 1, based on data from the U.S. Put Health Service, shows specific pollutants fj the automobile and other sources. Two Forms of Air Pollution. General air lution results directly from excessive emi of undesirable substances to the atmospher These include smoke, dust, mists, various such as SOn, and other industrial and man made pollutants. Photochemical smog, on the other hand, is erated in the atmosphere by a complex sei of chemical reactions. The raw materials HC, NOjj, and sunlight. Hydrocarbons by t selves are not noxious at atmospheric cone trations. But in the presence of bright sur and trace amounts of NO , atmospheric HC concentrations react to form smog. oih., [7^ JZL n m Sulfur Oioilde Carbon Mor\o«lde Parlicula SO, CO H,d,o.o.boni 0.,d = . »f N,, HC NO, Source: U. S. Public Heolth Servic Figure 1 - Air pollution sources in the United States. 211 air pollution problems vary widely with late, weather, topography, and emission -ces (see Figure 2). Chicago, for example, considerable general air pollution but very e photochemical smog. Los Angeles has e general air pollution -- but due to the graphy of the Los Angeles basin, photo- mical smog appears about one day in three. ;cts of Today's Concentrations. Both in the iratory and in the field, scientists in the Research Fuels and Lubricants Department studied air pollution problems for many rs. They cite these areas of concern for iting urban concentrations of specific poi- nts: Sulfur Dioxide -- Present levels in some in areas may be of concern with regard to iiological effects and plant damage. Most rly established health effects, however, ; resulted from concentrations considerably ler than those normally found in urban at- pheres. I Carbon Monoxide -- Present levels in le urban areas may occasionally be of con- 1 with respect to physiological effects. • Particulates -- May cause physiological effects. Particulates contribute to reduced visibility and atmospheric discoloration, and soiling and corrosion of exposed objects. • Hydrocarbons -- Major contributor to Los Angeles photochemical smog. Symptoms of smog are plant damage and reduced visibility; eye irritation is a physiological effect. • Oxides of Nitrogen -- Present urban levels are well below those injurious to health. Oxides of nitrogen are the other major photochemical smog reactant. Steps short of complete elim- ination in the atmosphere, however, will not reduce smog formation -- and may cause in- creases. NO may also contribute to atmo- spheric discoloration independent of smog. Controlling Automotive Emissions. Today's control technology has already reduced auto- motive HC emissions by about two thirds. Total exhaust pollution control will become increasingly effective each year as new model cars enter the market. LOS ANGELES PHILADELPHIA ST. LOUIS ^VASHINGTON CHICAGO 34.1% 0.0% ^1.0% 1.5% ]0.6% PHOTOCHEMICAL SMOG Percent of days oxidant exceeds 0.15 ppm for 1 fiour {general air POLLUTION Percent of days sulfur dioxide exceeds 0.30 ppm for 1 hour 34.4% Figure 2 - Air pollution problem different in various cities (1965-1966). Prepored by TECHNICAL INFORMATION DEPARTMENT GM Research Lafaorotoriej, Worren, Michigan 48090 82-493 O— 69— pt. 1 15 212 M General Motors FUNDAMENTALS OF EMISSION CONTROL A DECADE OF PROGRESS GM's 1970 automobiles in California will emit 81% fewer hydrocarbons than their 1960 counter- parts, representing a decade of significant prog- ress in automotive air pollution research. Greatly reduced crankcase, exhaust, and evap- orative emissions (see bar graph) are the re- sult of more than 15 years of intensive air pol- lution studies. This three -pronged program at General Motors is aimed at • First, understanding the nature of atmo- spheric effects. Researchers are measuring the levels and distribution of automotive pol- lutants in urban atmospheres and trying to understand the interactions of different pol- lutants . • Second, understanding the nature of ve- hicle emissions. Sophisticated measurements of emissions under all possible conditions are revealing the effects of different operating, ambient, and design factors. • Third, developing new control concepts. This includes determining the ultimate control levels attainable and developing suitable com- mercial designs. Significant progress began in the early 1950's when instruments for measuring total hydro- carbons were developed. In the mid-1960's it first became possible to separate and analyze exhaust gas components at the parts-per-mil- lion level. The various types of automotive emissions could now be measured quantita- tively -- and engineers could determine which control devices would be most effective. Positive Crankcase Ventilation Gases which leak past the piston rings during compression (blowby gases) are largely un- burned fuel and air. Until this major source of hydrocarbon emissions was discovered by GM researchers in 1959, blowby gases were vented through the crankcase breather tube to the atmosphere. Positive crankcase ventilation, which General Motors and other manufacturers voluntarily installed on cars beginning with the 1961 models in California, eliminated crank- case emissions by routing the blowby gases along with the crankcase ventilation air into the engine intake. "" ■ ' " ' Exhaust Control Engine Modification. This successful approach is currently used for controlling exhaust emis sions. Carburetion changes greatly affect hy- drocarbon (HC), carbon monoxide (CO), and oxides of nitrogen (NOjj) emissions. Retarded spark timing reduces HC and NO. Designing the combustion chamber with a low surface- to-volume ratio reduces HC because there is less wall area to quench the flame. Careful attention to combustion chamber design and adjustment of air-fuel ratio and spark timing at specific driving conditions -- along with extremely tight production tolerances -- has resulted in the Controlled Combustion System (CCS) which brings today's General Motors vehicles within the federal emission require- ments. However, this approach may have lim- ited potential for further reductions -- since pressing beyond present levels involves seri- ous compromises in vehicle performance. Air Injection Reactor (AIR). AIR is another production system successfully used to reduce exhaust emissions on today's General Motors cars. An engine driven pump injects air into the exhaust stream near the exhaust valves, where gas temperatures are still very high. HC and CO are thermally oxidized to CO2 anc H2O. EFFECT OF CONTROLS ON AVG. HYDROCARBON EMISSIONS FROM CALIFORNIA CARS 213 perimental Exhaust Reactors. Experimental •sions of the AIR system use enlarged, in- ated exhaust manifolds which increase both temperature and residence time of the ex- ist oxidation process. Very low HC levels 1 be achieved with these experimental sys- is. However, most reactor materials de- iorate rapidly at the high operating temper - res. haust Gas Recirculation. It appears that ontrol regulations are in the offing. Re- culation is one method currently being tested reducing NO^ in exhaust gas. In some ex- imental systems designed by the GM Re- irch Fuels and Lubricants Department, ex- ist gas is withdrawn from the exhaust cross- r passage, passed through tubes, and re- culated through the carburetor base to the ine intake. This lowers the peak combus- n temperatures responsible for NOj^ forma- n. iveability with current experimental recir- ation systems probably would not be accept- e to the motoring public. In addition, con- 1 effectiveness decreases rapidly due to Idup of exhaust gas deposits in the recycle es. alytic Converters. Testing of catalytic con- fers has been conducted throughout GM's issions program, and these devices are still ng studied. HC and CO can be oxidized by alysts in the exhaust system if additional air is furnished. NO^ also may be destroyed catalytically, but the absence of oxygen is nor- mally required. Lack of durability, among other factors, has limited use of catalysts to experimental ve- hicles. Most currently available catalysts lose their effectiveness rapidly when used with leaded fuels. Evaporative Control Evaporative HC emissions can be controlled effectively by activated carbon storage. Evap- orative losses from the carburetor and fuel tank are vented into a canister and adsorbed on carbon. Later, during engine operation, the fuel vapors are desorbed and burned in the engine. This system requires precise tailor- ing to avoid upsetting carburetion and increas- ing exhaust emissions when the vapors are purged from the canister. Evaporative losses also can be vented to the crankcase, stored, and recovered later for burning in the engine. Problems with this system involve increased exhaust emissions, oil dilution, and starting and driveability. Fuel composition is a third method of con- trolling evaporative emissions. Less volatile fuels would reduce evaporative losses from both new and used cars. Local area control would be entirely feasible and could be limited to the warm months when fuel evaporation is highest. EFFECT OF CONTROLS ON MOTOR VEHICLE HYDROCARBON EMISSIONS LOS ANGELES BASIN 4000 No Co ^ >C!^— .. ^ \ \ \y Wilh Controls "■■ — SO 60 70 Year End Prepared by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratories, Worren, Michigan 48090 214 General Motors Engineering Staff CATALYTIC CONVERTER PLUS AIR In this Engineering Staff vehicle the overall system is designed around a 1969 Chevrolet 427 -cubic -inch V-8 engine equipped with the Air Injection Reactor (AIR) system. The ex- haust pipe is insulated to maintain higher ex- haust temperatures and hence improve cata- lytic converter effectiveness. The catalytic converter is placed in the normal muffler location on this car. The converter is an Arvin model, similar to an experimental catalytic converter developed in 1961 by Engineering Staff. The approximate dimensions are 23 inches long. 10 inches wide and 5-5/8 inches high. The catalyst is made by Universal Oil Products and contains the noble metal platinum. Both unburned hydrocarbons and carbon mon- oxide are oxidized in the catalytic converter. Oxides of nitrogen are not reduced by this Air Pump system although other known means of NOjj control are compatible with the converter. Fuel economy and vehicle performance are not affected by the converter. Using non-leaded gasoline, two cars equipped with this catalytic converter system have bee run 50,000 and 68.000 miles with good low emission performance on Proving Ground durability evaluations. A major drawback of such a system is the restricted use of the catalyst due to the lim- ited supply of platinum, plus its intolerance of leaded fuels. Such a system, however, is very effective with non-leaded fuels. The in- centive is to develop a catalyst that does not require a rare metal and tolerates leaded fuels. Another problem is likely to be dura- bility, because of the higher exhaust temper- atures. Catalyst This particular converter contains a precious metal catal/st and has been run on nonleaded fuel. 215 General Motors Engineering Staff LOW EMISSION ENGINE DESIGN engine design approach to low emissions lemplified in a specially designed 354- -inch powerplant in a 1969 Pontiac. It res a low surface-to-volume ratio which, reduces the quench area that produces icted hydrocarbons in the combustion pro- The four-barrel Q-Jet carburetor oper- at its lean limit and carburetor intake air eheated. - design subtleties are exploited to reduce sions to levels as low as possible, includ- reduced compression ratio (8.5-to-l), in- creased stroke -bore ratio and reduced valve overlap, reduced crevice volume (thin piston rings closer to top of piston), a temperature modulated choke, and a high velocity -smaller intake manifold. All of these design features are being incor- porated in present production engines as they become developed. This engine illustrates that these approaches can be used to reduce ex- haust emissions to fairly low levels, but not as low as can be achieved with catalytic con- verters or exhaust manifold reactors. LOW EMISSION 354 ENGINE (LE 354) Modified Carburetor Inlet Air Preheat spark advonco b. Dual diaphragm d Surlao.lo.Volu 216 General Motors Research Laboratories EXPERIMENTAL EXHAUST MANIFOLD REACTORS One approach to emission control for the inter- nal combustion engine being investigated at the General Motors Research Laboratories is the use of high temperature exhaust manifold re- actors. This approach is the outgrowth of basic engi- neering research begun a number of years ago. In 1962, for example, GM engineers described to the Society of Automotive Engineers a tech- nique for injecting air into an engine's exhaust manifold and "afterburning" exhaust hydrocar- bons (HO and carbon monoxide (CO). Three years later, GM researchers published results of studies showing that air injection reaction in enlarged and insulated manifolds further re- duced HC and CO emissions. These techniques are incorporated in GMR's present experimental reactor systems, which are being evaluated in two GM cars chosen for their weight. One is a 1969 Chevrolet Im- pala equipped with a 327 -cubic -inch V-8 engine. The other is a heavier 1969 Cadillac with a 47 2 -cubic -Inch V-8. To date, the experimental reactor systems Indicate this approach appreciably reduces HC. CO, and nitrogen oxide (NO^^) emissions in comparison with uncontrolled engines. But reactor effectiveness is offset by a number of Major features of GMR's experimental manifold reoctor system shown here on '69 Cadillac. problems that make the systems not commer cially feasible at the present time--such prol lems as poor durability, increased fuel con- sumption, materials cost, and engine service ability. How Reactors Work The GMR manifold reactor systems reduce e haust emissions through three principal mod ifications to the engine: # Enriched carburetor mixture; 9 Retarded spark timing; # Extra large insulated exhaust manifolds into which air is injected and in which exhaust gases burn. To reduce NO formation in the engine, the carburetor air-fuel mixture is adjusted to a richer (more fuel) setting. This adjustment does two things: first, it lowers peak com- bustion temperatures in the engine, and secoi it lowers the oxygen concentration in the en- gine's combustion chamber. Both effects low NOx concentrations, but the richer carbureti. increases HC and CO production as well as fuel consumption. To reduce HC and CO, exhaust gases leavinj the engine cylinders are burned at high tem- peratures in large stainless steel exhaust ma ifolds that have about four times the volume conventional manifolds. The effectiveness of these manifolds depends on heat generated ai retained by increasing "residence" time of e haust gases in the enlarged reactor volume. In the experimental Cadillac system, two en- gine-driven air injector pumps supply air to the manifolds for combustion. In the Chevro one high-capacity air injection pump is used. Other Modifications Necessary High temperatures -- 1000°F and over -- art necessary to insure complete burning of the HC and CO. At these temperatures the oxida tion is luminous. Several modifications have been required to shorten warm-up time and 217 maintain these high temperatures in the re- ars. Both are prerequisites for effective ration of the reactors. ; change was to retard spark timing. This sts exhaust gas temperature (as distinguished m peak combustion temperature) during en- e warm-up, idling, low speed conditions and eleration. Another change was to use en- e water (rather than exhaust heat, as in a ventional engine) to transfer heat to the -fuel mixture in the intake manifold. Also, exhaust manifold is well insulated with amies to prevent heat loss. ; two experimental cars also carry special ipment to reduce fuel evaporation loss, an- ?r source of automotive emissions. A char- 1 canister traps fuel vapors from the fuel < and the carburetor bowl. Another char- 1 element in the air cleaner prevents evap- tion losses at that point. ;olved Problems manifold reactor systems illustrate an en- ter's difficulty in having his cake and eat- it, too. The high temperatures essential he systems' success in burning exhaust es also pose major problems. Operating at peratures that could go as high as 2300°F, ch is above the melting point of most met- als, the reactors require high alloy stainless steels, ceramic, and other expensive high tem- perature materials. Running the system hot enough to minimize emissions may shorten the manifold's useful life to only hours; cooling the system to prolong its life increases the unwanted emissions. The rich carburetion and retarded spark tim- ing increase fuel consumption as well as caus- ing such problems as delayed restart and "stumble" of the engine after it has operated long enough to reach high temperatures. On the experimental Cadillac, fuel consumption is 23% higher than today's standard Cadillac en- gine. The experimental reactor system on the Chevrolet increases fuel consumption about 16%. In addition, the exhaust manifold reactors gen- erally raise tailpipe temperatures from 500° to 1300°F as well as raising temperatures in the engine compartment enough to require pre- cautions regarding overheating surrounding automotive equipment. Engineers at the Research Laboratories are working to improve the performance and dura- bility--and to lower the cost--of the manifold reactor approach so that the roadblocks that now stand in the way of this emission control development will be overcome in the future. h temperature manifold reactor approach to emis- control is being tested at GM Research Labora- es on '69 Chevrolet, foreground, and '69 Cadillac- Experimental exhaust manifold reactor system on '69 Chevrolet showing three principal components. Prepared by TECHNICAL INFORMATION DEPARTMENT GM Research Laborotories, Worren, Michigan 48090 218 PI General Motors Engineering Staff EXHAUST MANIFOLD REACTOR WITH CCS (CONTROLLED COMBUSTION SYSTEM) This Engineering Staff low emission experi- mental vehicle is a 1969 Oldsmobile with a 455-cubic-inch engine. It features lean carbu- retion, an insulated large volume exhaust man- ifold and pipe, insulated exhaust ports in the cylinder head, and an external exhaust cross- over. It has transmission controlled spark advance and a dual diaphragm distributor. The theory of this low-emissions approach is based on the leanness of the fuel-air mixture. No secondary air is pumped to the exhaust ports, since oxygen is present in the exhaust when lean fuel-air mixtures are used. There- fore, no air pump is required. Heat from the combustion process is retained as much as possible through the use of the large insulated exhaust manifolds. Hydrocarbons in the exhaust are burned as a result of high exhaust temperature and the presence of oxygen. Spark advance control further reduces hydrocarbon emissions. Car- bon monoxide concentrations in the exhaust are low whenever lean fuel -air mixtures are used. Oxides of nitrogen are reduced by retarded ignition timing and operating with very lean fuel-air mixtures. Fuel economy is reduced basically as a result of retarded spark timing. The challenge with this system is to operate with very lean fuel- air mixtures and still maintain normal vehicle driveability functions. Lack of throttle re- sponse, stalls, and unsteady vehicle forward progress can result from very lean operation. New fuel metering systems are required to make this system useable. Lean Carburetion Retarded Ignition Timing Air Preheater External Exhaust Crossover for Carburetor Heat Enlarged Insulated Exhaust Manifold Enlarged Insulated Exhaust Pipes 219 General Motors Research Laboratories EXPERIMENTAL NITRIC OXIDE CONTROL SYSTEM NOC iratory studies at GM Research and else- e indicate that reasonable reductions in (oxides of nitrogen) will not decrease Dchemical smog in Los Angeles. In fact, 3 short of complete elimination of NO^^ isions could actually increase smog for- Nevertheless, California recently ed a law to require reduction of automo- NOv emissions in 1971. NOC System . NO is formed by the chem- reaction of nitrogen and oxygen at high leratures during combustion processes, rally, reducing the oxygen or nitrogen entrations in an engine cylinder during Dustion --or lowering the peak cycle lerature -- will lower the NO^^ concentra- in exhaust gas. engineers are investigating exhaust gas rculation for NO control -- an approach that appears to offer promise, although with some sacrifices in vehicle performance. An experimental nitric oxide control (NOC) system based on recirculation has been in- stalled on a 1969 Buick by the GM Research Fuels and Lubricants Department. This NOC system consists primarily of modifications to the carburetor and intake manifold (see illus- tration). Exhaust gas is withdrawn from the cross -over passage of the exhaust manifold, passed through tubes, and recirculated through the carburetor base to the engine intake. This lowers the peak combustion temperature as- sociated with NO formation by diluting the air-fuel mixture. The quantity of exhaust re- circulated is determined by the tube size and varies with throttle position, depending on the pressure differential between intake vacuum and exhaust back pressure. Recirculation av- erages about 2.0% on the NOC experimental car. Recycle Tube Elbow Engine' Exhaust Cross-Over Two-Barrel Carburetor With the NOC system, about 2.0% of the exhaust gas is withdrawn from the cross-over passage and recirculated through tfie carburetor base to the engine intake. This lowers the peak combustion temper- atures responsible for NO formation. 220 The car is also equipped with a controlled combustion system (CCS) which enables it to meet 1970 federal standards for hydro- carbon and carbon monoxide emissions. Unsolved Problems . Driveability with the present experimental system probably would be unacceptable to the motoring public. Prob- lems include: 9 Surge during cold operation (cyclic fluctuations in power). W Stumble during acceleration after cold start (short, sharp reductions in acceleration rate). • Poor part-throttle response. In addition, system effectiveness deteriorates rapidly with use, due to buildup of deposits which reduce the inside diameter of the re- cycle tubes. Carburetor deposits also are formed. The NOC system represents only a prelim- inary look at NO^ control, and a number of open questions remain. These include per- formance on different car models, effective- ness at still lower hydrocarbon and carbon monoxide control levels, operation in extreme weather, and effects on engine durability. Praporad by TECHNICAL INFOItMATION DEPARTMENT GM Research Loboratoriet, Warren, Michigan 48090 221 3 General Motors Research Laboratories THE GM SE-101 STEAM CAR St is high in low emission automotive plants, and steam power is being re- ned in the light of today's advanced ering materials and technology. M SE-101 steam car, developed by GM rch Laboratories, was designed to eval- vapor cycle engine in an automobile reasonable degree of passenger com- ■eliability, performance, and economy, he world's first steam car with com- power accessories, including air condi- ntire steam powerplant -- including the ier, combustion chamber, steam genera- nd condenser -- is housed under the >f a 1969 Pontiac Grand Prix. Starting 3ns are automatic. The operator turns the key, waits 30 to 45 seconds for a light signaling adequate steam pressure, and drives away. Starting Sequence Several automatic operations are underway while the driver waits for a full head of steam. First, an electric pump fills the steam gener- ator (boiler) with water. When the proper level is reached, a sensor energizes an electric mo- tor which powers the combustion blower and fuel pump during startup. Fuel is sprayed in- to the combustion chamber, where it is ignited by a spark plug. When the steam generator reaches operating temperature and pressure a conventional automobile starter engages the expander; steam is introduced and the expander accelerates to idle. Further acceleration is AUXILIARY STARTER FEEDWATER PUMP OMBUSTION AIR BLOWER TRANSMISSION ilGHT-HAND BURNER AIR CONDITIONING COMPRESSOR ONDENSER FANS STEAM CYLINDER LUBRICATOR AIR CONDITIONING- CONDENSER AND FAN 222 accomplished by the foot pedal in the usual way; the pedal operates a throttle valve which controls the amount of steam admitted to the expander. Basically, here's what happens during steam engine operation. Heat from the burner converts the boiler water to a high pressure vapor. The expansion of this high pressure vapor, or steam, drives the pistons in the expander. Steam exhausted from the expand- er is piped to a condenser for water recov- ery. Components Expander . The four-cylinder expander is similar to an in-line internal combustion engine. It has a 101-cubic-inch displace- ment and develops about 160 maximum horsepower. Steam enters through poppet valves at the top of each cylinder, forces the piston downward, then exits through cyl- inder ports at the bottom and is piped to the condenser. Steam Generator . The steam generator con- sists of several sets of small carbon steel and stainless steel tubes (total tube length is about 430 feet) arranged in a staggered array. This increases the turbulence of the combustion gases flowing over the tubes. Wherever possible, the tubes are finned to increase the heat transfer from the gases. These factors, plus the low water inventory (a few pints), facilitate rapid start-up from a cold boiler to a full head of steam -- 800 psi and 700°F. Combustion System . A continuous spray of atomized fuel (diesel fuel, kerosine, gasoline, etc.) is supplied to two turbine-type combus- tion chambers. In the chambers, fuel is mixed with air from an engine-driven blower and ig- nited by a spark plug. Blower and fuel pump output vary directly with expander speed. Preliminary tests with the combustion system indicate very low exhaust concentrations of hydrocarbons, carbon monoxide, and oxides of nitrogen. Condenser . The condenser uses a plate- fin arrangement and is externally similar to a standard car radiator. However, it is about three times as large (22 x 40 x 5 inches) and its special brazed aluminum construction, with extended heat transfer surfaces on both the inside and outside of the tubes, will with- stand both vacuum and pressure. The con- denser will handle all of the steam required for normal highway operation. Extended op- eration at higher loads will result in some water loss in the form of steam vented from the system. Controls . Operation is controlled automati- cally by sensors for steam temperature and pressure, boiler water level, expander speed, and blower airflow. These sensors send electrical pulses to a logic circuit which operates the appropriate solenoids. The ac- celerator pedal and the throttle valve which controls expander speed are linked mechan- ically. Transmission . An experimental toric trans- mission developed at GM Research, the 250- TT, is used with the SE-101. Its advantages include automatic transmission performance without step shifts and operation of all ac- cessories, including air conditioning, when the vehicle is stationary. The 250-TT provides a wide torque range to cover all operating conditions. Without the transmission, an additional expander would be needed to drive the accessories. Problem Areas Problems with the experimental SE-101 are much the same as for any steam powered automobile at today's state of the art. They include: Powerplant Size and Weight . Added com- ponents (combustion system, steam genera- tor, larger condenser) make a steam power- plant bigger and heavier than a comparable internal combustion engine. The SE-101 system is 450 pounds heavier than the power- plant it replaced in the Grand Prix -- at less than half the horsepower. Installation re- quired a seven- inch extension of the engine compartment. Cost . No cost data is yet available for steam powerplants. Water Consumption . The engine compart- ment poses severe restrictions on condens- er size. In the SE-101, full water recov- ery cannot be achieved under adverse oper- ating conditions, such as full- load operation or hot weather. Freezing . Water has the best overall com- bination of properties of any vapor engine working fluid known. However, freezing is a serious problem. An automatic startup control, designed to prevent freezing when the car is parked, is being investigated for the SE-101. It would activate the combus- Researchers lower the expander and transmission (top photo) into the engine compartment of GM's SE-101 Steam Car. The next step is installing the combustion system - steam generator, which fits snugly over the expander and transmission. 224 SE-101 Expander wifh accessory components. Duol fans ore needed for adequate condenser cooling. tion system whenever temperatures approach the freezing point. Lubrication . Adequate steam engine lubri- cation is difficult, since the lubricant must be mixed with steam at high temperatures and pressures. In addition, the oil must be removed before the condensed water is re- turned to the boiler; otherwise, carbon de- posits would reduce boiler efficiency. Acknowledgement In addition to GM Research, several GM di- visions £Lnd staffs cooperated on the SE-101 project. Included were: 9 Harrison Radiator Division - steam gener- ator, condenser and air conditioning systems. Delco-Remy Division - special electric system components. 9 Engineering Staff - vehicle modifications. Pontiac Motor Division - test vehicle. 9 Diesel Equipment Division - fuel system components. Packard Electric Division - wiring har- nesses and fiber optics. Future Uncertain Whether a practical steam engine vehicle is in the motorist's future is still a widely de- bated and unanswered question. The experi- mental SE-101 points to some of the prob- lems which must be solved and is serving as a test bed for further steam power re- search. Prepared by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratories, Worren, Michigan 48090 225 General Motors THE GM SE-124 STEAM CAR WITH BESLER ENGINE ooks like a standard 1969 four- door Chev- - until you raise the hood. The engine npartment is packed with an expander, nbustion chamber, steam generator, con- iser, and a number of other non-standard nponents. • powerplant was designed and installed Besler Developments, Inc., a California [ineering firm with more than four de- les of steam engine experience. Besler built steam engines for road, rail, and [er transportation -- in addition to the rld's first and only steam- drive airplane, cessfully flown in 1933. ; engine for the SE-124 was developed ier contract to General Motors Research ooratories. The car, one of several low- ission vehicles under study by GM, can easily driven by a layman after a brief octrination. iving Away en the driver turns the key, an electric -np charges the boiler with water. The Tibustion blower and the burner are en- ized. When the boiler reaches operating nperature and pressure (about half a min- ), steam is valved to the expander and it Jins to idle. The next step is driving ay, the amount of steam introduced to the sander is controlled by the accelerator ped- sically, here's what happens during steam gine operation. Heat from the burner erts the boiler water to a high pressure por. The expansion of this high pressure por, or steam, drives the pistons in the pander. Steam exhausted from the expand- is piped to a condenser for water recov- mponents pander . The reciprocating V-2 expander further expansion. The expander is "double acting" -- steam is valved alternately to the top and bottom of each cylinder. Steam Generator . A continuous steel and stainless steel tube (total length is about 275 feet) is arranged in spiral pancake pat- terns stacked atop one another. Hot gas from the combustion chamber flows over the coils. Low water inventory (a few pints) and high tube surface area contribute to rapid pressure buildup. Maximum steam temperature is 700°F and maximum pressure is 600 psig. Steam is piped directly from the boiler to the throttle valve which controls expander ■ I CM SE-124 Steam Car with Besler engine. s a displacement of 124 cubic inches and velops about 50 horsepower. Steam from ! boiler is expanded twice to increase ef- iency, it is first valved to a smaller high essure cylinder (2.5-inch bore), then to a N pressure cylinder (4.25- inch bore) for Researcher G. J. Schimelfening checks out the Besler powerplant in the GM SE-124 Steom Car. The large cylindrical object is the combustion chamber orxJ steam generator, with the combustion air blower attached to its side. The feedwoter tank is mounted on the fire wall. 226 Combustion System. Fuel (diesel fuel, kerosine, gasoline, etc.) is sprayed into a vortex -type combustion chamber, where it is mixed with air supplied by an electrically powered blower. The mixture is initially ignited with a spark plug. Combustion is continuous but the over- all system operates on an "off-on" basis simi- lar to a home furnace, running only when the boiler needs heat. Combustion is virtually complete and exhaust emissions therefore are very low. Condenser . The plate-fin condenser is ex- ternally similar to a standard automobUe ra- diator. However, it is over twice as large as a conventional radiator and its special brazed aluminum construction is designed for either vacuum or pressure operation. It processes most of the steam exhausted from the expander for reuse. Controls . Solenoids for controlling steam temperature and pressure, along with the electric motors for the air blower and fuel pump, are activated automatically by tem- perature and pressure sensors in the boiler. Transmission . The Chevelle's standard three-speed transmission is retained. Use of a transmission permits operation of ac- cessories when the car is stationary and provides the wide range of torque required for acceleration, grade ability, and road- load operation. Accessories . The GM SE-124 is equipped with power steering. Problem Areas In general, limitations of the SE-124 typify the problems encountered with steam engine automobiles at today's state of the art. They include : Powerplant Size and Weight . Due to added components (combustion system, steam gen- erator, larger condenser), the Chevelle en- gine compartment is extremely crowded. The lower horsepower steam powerplant is about 125 pounds heavier than the internal combus- tion system it replaced. Cost . No cost data is yet available for steam power plants. Water Consumption . The condenser, although more than twice the size of the radiator it replaced, is not designed to handle the full steam capacity of the expander under all op- erating conditions. At full load or on a hot day, a portion of the steam is vented from the system and must be replaced from the re- serve tank. Freezing . Water has the best overall com- bination of properties of any vapor engine working fluid known. However, freezing is a serious problem. Lubrication . Lubricants deteriorate rapidly at the high steam temperatures needed for reasonable efficiency, and it is difficult to obtain adequate lubricant coverage. In ad- dition, if oil is not filtered from the recov- ery water, it causes carbon deposits which reduce boiler efficiency. The Future Whether a practical steam engine automobile can be realized in the future is still an un- answered question. However, new engineer- ing materials and technology, along with the possibility of new fluids replacing water as the working medium in the cycle, make the steam engine a contender among proposed low emission powerplants. The GM SE-124 is serving as a test bed for further develop- ment. 1 El< Ai ctnc Coir 1 pr«i - Exhou {Fu • ISy t.R.) S..L Gcnarolo PreporxJ by TECHNICAL INFORMATION DEPARTMENT GM Raworch Labaralori«>, Warren, Mlchigon 48090 227 3 General Motors ^ PROGRESS IN GAS TURBINES FOR VEHICLES ral Motors' Detroit Diesel Engine Division itly signified its intention to be the first on larket with a commercial turbine engine avy duty vehicles. Detroit Diesel's engine heduled for initial production in mid -1971. loping the heavy duty gas turbine engine an interesting but impractical concept in- commercial reality --a process spanning than 20 years -- is a joint accomplish- of the GM Research Laboratories and )it Diesel. The Laboratories brought the e to the point of technical feasibility and 64 turned it over to Detroit Diesel. In nsuing years, Detroit Diesel has met the enge of maJcing the turbine engine eco- cally practicable. Laboratories' experimental vehicle series 1 with Firebird I (vintage 1953), the United first gas turbine -powered automobile, n-regenerative 370-horsepower engine pro- d the sleek mobile laboratory -- which to- museum piece. ■ovements Followed in 1953 the Laboratories introduced Turbo- er I, a turbine -powered bus. The GM Ly of experimental turbine vehicles bur- ed with the arrival of Firebird II, a family with a regenerative engine, in 1955; Turbo- 1 I, a heavy-duty truck, in 1956; Firebird vith a more powerful GT-305 engine, in and Turbo -Titan II the following year. ment experiments and some in association with Allison Division involved gas turbine engines in military vehicles, industrial off-road equip- ment, generators and marine applications. The fifth generation GT-309 engine, boasting rugged and simple design, debuted at the New York World's Fair in 1964. It was field tested in several heavy-duty vehicles including Chev- rolet's Turbo-Titan III truck and GMC's Turbo- Cruiser II bus. The Turbine's Advantages The turbine engine has a number of inherent characteristics attractive to men who engineer trucks, buses and other large vehicles. Among them are: • Good torque characteristics . Compared to other engines, the gas turbine produces higher torque at low engine speeds. 9 Multi-fuel operation . Detroit Diesel's om- nivorous turbine engine will run well on any diesel fuel, jet engine fuels, kerosene and un- leaded gasoline. In a pinch it will accept lead- ed gasoline for short periods. In experiments, an early version of the GT-309 ran well on selected crude oils. • Light weight . The Detroit Diesel version of the GT-309 will be rated at 280 horsepower on an 80°F day and will weigh about half as much as a diesel of equal power. r GMR Engineer ng Development Depart- • Qu et. smooth operation. Rot iry. ins ead ..m. % ilQ^. .-?- ^ jr^ ^0f fUk "ms^ ^ m m 1 i - Firebirds I, II and III — experim at GM Arizona Proving Ground. nfol gas turbine cars -- cruise around test track 32-493 O— 69— pt. 1- -16 228 of reciprocating, engine motion minimizes vi- bration. • All weather operation . The engine starts and warms up quickly even in the most frigid winter temperatures. Low Exhaust Emissions Detroit Diesel's production prototype has a hydrocarbon emission of 3 parts per million (ppm); carbon monoxide concentration 0.05 per- cent, and nitrogen oxide emissions, 800 ppm. These values are weighted in accordance with the California nine-mode cycle for gasoline- powered trucks and buses. While indicative of the gas turbine's low emission potential, these numbers are not directly comparable to car emission data obtained using the standard fed- eral procedure. In one series of early GM Research Labora- tories tests, the hydrocarbon concentration in the turbine engine's exhaust actually was lower than the concentration in the air breathed in- to the engine! How GT-309 Is Different Two features in particular distinguish GM's latest gas turbine engine design: the regener ative system and Power Transfer. The regenerator recovers energy from hot e> haust gases. Instead of being exhausted direc ly to the atmosphere, the gases pass through the rotating regenerators, discs which recove more than 90 percent of the recoverable ex- haust heat. The discs, as they rotate, transf heat to the relatively cool air flowing to the burner. Regeneration pays three principal dividends. First, it cuts fuel usage. A regenerative en- gine will use only 50% of the fuel of a non- regenerative engine in a comparable applica- tion. Second, it cools the exhaust gases. The exhaust is in the 200° to 500°F range, depend ing on load -- far cooler than the exhaust ga of a typical automobile engine. Third, thanks to the regenerator, a muffler is unnecessary. Compressed Air Healed / Compressed Regenerator Cooled ExhousI Compress Impelle }»Load 280 HP TURBINE SPECIFICATIONS Rated Power Rated Torque Max. Torque Max. Speed Rated Turbine Inlet Temp. 260 hp 575 lb. ft at 2560 rpm 1150 lb. ft at rpm (stalled output) 2850 rpm 1700»F Rated Gasifier Speed Rated Airflow Rated Compressor Pressure Rotio Engine Weight Engine Dimensions (LxWxH) 36,000 rpm 3.9 lb/sec 3.8:1 1425 lb. (approx.) 45 X 26 X 40" Schematic diagram shows major components of Detroit Diesel prototype engine. Turbo-Cruiser 1 was powered by a simple cycle jrbine engine. 1956: A regenerative 200-horsepower turbine engine powered this experimental truck, Turbo-Titan I. ': This M-56 gun carrier was an experimentol tur- vehicle built for the U.S. Army. 1964: Turbo-Cruiser II used on improved regenerative turbine engine. 14: GMC highway tractor had tilting cab for oc- |.5 to fifth generation experimental gas turbine from ''A Research. 1965: Turbo-Titan III by Chevrolet continued trend of testing GT-309 turbine engines in heovy duty vehicles. CMC's RTX (for Rapid Tronsit Experimental) is latest The Astro 95 highway tractor by CMC is powered by turbine-powered bus. experimental Detroit Diesel turbine engine. Generator set applications take full advantage of GM's Power Transfer feature. Power Transfer While some earlier engines used regenerators, the GT-309's claim to uniqueness is Power Transfer, a GM-patented development of the Research Laboratories and Allison Division. Power Transfer transmits a scheduled amount of power from the gasifier turbine to the out- put shaft, thus stabilizing the turbine inlet temperature over much of the engine operating range, A direct result is improved fuel econ- omy at part -throttle, where the engine operates much of the time. When the vehicle decelerates. Power Transfer couples the driving wheels to the compressor, providing engine braking two to three times greater than that of a comparably powered Power Transfer system of 280-hp turbine engine in this crawler provides over 1000 lb. ft. of torque at stalled output rpm. piston engine. If the vehicle can climb a hill Power Transfer insures that it can descend safely. Another function of Power Transfer is to pre vent turbine overspeed if the load suddenly is disconnected from the engine. The turbine engine is not without some prob- lems -- its fuel economy still is not quite sc good as a diesel's, for example. However, th problems seem overshadowed by the turbine's growth potential. Detroit Diesel's plans for future off-the-road applications range from construction equipment to ships and generator Some other ideas mentioned seriously include using the turbine engine in alfalfa drying plan (capitalizing on exhaust gas heat) and bulk un- loading of truck trailers (using compressed ai bled from the turbine). Prepored by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratories, Warren, Michigan 48090 231 3 General Motors LIQUEFIED PETROLEUM GAS (LPG) ENGINE 8 Oldsmobile fueled with liquefied pe- rn gas (LPG) is one of several exper- al low emission vehicles being evalua- r General Motors. ar, a Delmont 88 with a 350-cubic-inch >, was converted to LPG by Oldsmobile .on. It has shown good driveability and O and HC exhaust emissions in tests IsmobUe and the GM Research Labora- operation does involve some special ;ms, such as the requirement for a i, high-pressure fuel system. However, iber of vehicular fleets throughout the ry now use LPG fuel. Some GM en- are offered with an LPG conversion , intended primarily for commercial lersion to LPG components of a sealed LPG fuel sys- ire a heavy, pressurized fuel tank, a ihutoff valve, a vaporizer-pressure reg- and an LPG carburetor (see diagram). Fuel tank pressure runs as high as 250 psi, depending on ambient temperature. This pressure serves the same function as a fuel pump, pushing the liquid fuel through the line to the fuel shutoff, which opens when the ignition key is on. Fuel then flows to the vaporizer-pressure regulator. Pressure is reduced to 5-8 psi as the liquid fuel ex- pands in the vaporizer. To counteract the temperature drop caused by this rapid ex- pansion, engine coolant is circulated through heat-exchange passages in the vaporizer. LPG vapor is maintained at a regulated low pressure and supplied to the carburetor on demand. In addition to the fuel system, several other modifications were required for operation of the Oldsmobile on LPG. These included: • Blocking the exhaust heat passages to eliminate intake manifold heating. • Revising the spark curve. • Changing the exhaust valves. LPG FUEL SYSTEM VaporlzcrPro Rtgulolor Fuel Shuloif |T>*d ta ignilion) -^ • Regulotor Volv LPG at pressures up to 250 psi is forced to vaporizer- pressure regulotor. LPG enters voporizer- pressure regulator, vaporizing OS it expands. Pressure reduced to 5-8 psi. Circulating engine coolant counteracts temperature drop caused by rapid expansion. Low pressure vapor supplied to LPG carburetor on demand. 232 LPG Advantages . . . Hydrocarbon and carbon monoxide emissions with this LPG fueled engine are lower than the emissions with a standard fuel system. Exhaust gas reactivity is slightly lower, and evaporative emissions are eliminated with the sealed system. Exhaust emissions of oxides of nitrogen, however, are about the same. The experimental LPG car gives good drive- abUity with lean carburetion, whether the en- gine is cold or hot. Since LPG contains no lead additives, combustion results in fewer combustion chamber deposits and reduced spark plug fouling. Exhaust emissions tend not to increase with increased mileage. . . . And Problems The pressurized LPG fuel system is heavier and costlier than a standard system and re- quires more careful maintenance. Fuel leakage can create safety hazards associated with both distribution and use. Current marketing facilities for LPG are limited -- and maintaining a stable and read- ily available supply for widespread use may not be feasible. It seems doubtful that LPG will be widely used for passenger cars. However, this fuel shows potential for well maintained ve- hicular fleets in areas where good quality LPG is available and low HC and CO ex- haust emissions are desired. f 233 General Motors Research Laboratories QUIET ENGINES - STIRLING CYCLE, VAPOR CYCLE le late 1940's, engineers at the General >rs Research Laboratories began a study mall quiet engines. Over the years this evolved into an extensive research and lopment program on Stirling external com- ion engines. Along the way, GM Research peers also have looked critically at organic r cycle engines. While the steam engine is a vapor engine, water was not an ap- riate working fluid for the applications r consideration in this program, and or- fluids -- fluorinated hydrocarbons, such •"reon, for example -- were investigated, ddition to avoiding freezing problems, some jiic fluids have the advantage of providing e engine lubrication. rnal Combustion Engines oth the Stirling and vapor cycle engines, from an external source is transmitted to working fluid sealed in the engine, expand- the fluid to drive the pistons and develop r. (In the Stirling engine, the working usually is hydrogen or helium.) no combustion in the cylinder, these en- s operate very quietly. Heat can be pro- d by solar energy, nuclear energy, or any r high-temperature heat source. For many he GM Research engines, an external burner g diesel fuel supplies the heat. Here the is burned so that there is virtually com- plete combustion and very little emission of hydrocarbons, carbon monoxide, or oxides of nitrogen. How It Began Invented in 1816, the Stirling engine served for a time as a safe substitute for steam engines in a variety of applications. But its true po- tential was not realized, and it became a vic- tim of competition. Then in the late 1930's the Philips Co. of The Netherlands (N. V. Philips' Gloeilampenfabrieken) revived the Stir- ling, with the help of modern technology, and continued independent development over the next 20 years. Meanwhile, GM Research had begun an exten- sive study of external combustion engines, in- cluding both vapor and gas cycles. In 1958 General Motors made a formal agreement with Philips for a cooperative Stirling engine re- search and development program, A "new" Stirling evolved - from the application of mod- ern thermodynamics and heat transfer prin- ciples and a new understanding of how the en- gine really works, along with improvements in materials, bearings, lubricants, and seals, to increase output, efficiency, and durability. Like any heat engine, the Stirling produces power by compressing the working gas when it is cold and letting it expand -- do work -- Stirling engine drives an alternator to charge the batteries of Stir-Lee experimental cars. 234 when it is hot. A metal mesh regenerator is the key to the modern engine's efficiency. The heat it recovers would otherwise be dumped into the cooling system and lost. Years of ex- perience in heat transfer and regenerator de- sign were behind this development. Efficien- cies now are equal to or better than those of the best internal combustion engines. The Stirling generally has about twice the thermo- dynamic efficiency of steam or organic vapor engines. Current Status The much lower efficiency and greater bulk of the vapor engine make the Stirling the more attractive powerplant. However, it is not yet practical for vehicle application. At the pres- ent time GMR is continuing basic Stirling en- gine and component research and investigating potential engine products. GM Research recently built a small Stir- ling engine (above) and a small vapor engine (right) for comparison of these sys- tems in the two-horsepower range. GM engineers have now accumulated more than 22,000 hours of operating time on experimental Stirling powerplants ranging from 2 hp to 400 hp. These tests have demonstrated that the Stirling engine has high efficiency and output, quiet operation, and clean exhaust. With heat I provided by a burner using diesel fuel, the Stirling engine has exhaust emissions well be- low the limits set by federal vehicle standards. Stored heat, radioisotope heat, or other non- burning sources can operate the engine with no exhaust emissions at all and keep it indepen- dent of conventional fuel supplies (for space or underwater application, for example). Small Engine Comparison Recently, GM Research engineers built a very small Stirling engine for special lightweight applications. This engine is a two-cylinder vee, with the power piston in one cylinder and the displacer piston in the other, to provide the compact lightweight package. It develops about two horsepower. For test purposes, a burner using diesel fuel supplies the heat. In some applications, solar or nuclear heat might also be used. For comparison, GMR also has built an organic vapor cycle engine of about the same horse- power. This is a two-cylinder in-line engine using a Freon gas as the working fluid. It also uses heat from a diesel-fueled burner. At rated power, Stirling engine systems are about three times as efficient as vapor sys- tems. Therefore the vapor engine must reject j considerably more heat, and thus it requires a much larger cooling system and radiator or condenser. Prepored by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratories, Warren, Mlchlgon 48090 235 General Motors Research Laboratories ENERGY STORAGE SYSTEMS COMPLEMENT THE STIRLING ENGINE :al energy storage systems such as le and air contain large amounts of -- especially if the air need not be d along with the fuel, but is available rer the energy is required. However, ent years, applications where air is not >le -- such as under the sea or in out- ,ce -- or where combustion of fuel may allowed for pollution reasons, have ted the investigation of other energy Electric, thermal, and mechanical, 11 as other chemical systems, have been i. r i|.tirling Engine . , . aEnergy Converter - number of years the GM Research Lab- t ies has studied heat or thermal energy re systems for possible propulsion appli- i . Since the stored energy must be con- verted into work, the conversion system is an important consideration in choosing an overall system. The Stirling engine, an external com- bustion engine, can run from any external heat source. It also has higher conversion efficien- cy than other external combustion engines (steam or organic vapor engines). Therefore the Stirling engine is a particularly attractive energy converter for stored heat or for stored chemical energy that can produce heat. The table below shows the energy storage capacity of various sources and the output available when a complete conversion system is considered. This comparison emphasizes that the chemical and thermal systems hold a distinct advantage over the mechanical and electric systems, even though the high con- version efficiency of the Stirling engine is still far below the assumed mechanical and electrical efficiencies. ENERGY STORAGE SYSTEMS Watt-Hou rs per Pound Woft-Hours pe r Cubic Inch Stored Energy Energy Output Stored Ertergy Energy Output - Cor version Efficiency 40% (using Stirling engine - Lirtiium + Freon lU chemical reaction 1345 540 46.5 18.6 Lithium Fluoride with phase change SOO-F - 1700«F 240 96 15.2 6.1 Aluminum Oxide sensible heat 800«F - 2100"'F 117 47 16.7 — Conversion Efficiency 90% ~ 6.7 Silver Zinc Battery 45 40.5 2.6 2.4 Leod Acid Battery 10 9 0.75 0.68 Flywheel 8.3 7.5 1.66 1.5 Compressed Gas 7.8 7.0 0.335 0.30 236 GM Research engineers have investigated several possible applications of Stirling en- gines using thermal or chemical energy storage. These have included "Heat Battery" systems, using a molten salt which slowly cools as it feeds heat to the engine, and sys- tems where heat is generated by a chemical reaction. Primarily, nonautomotive applica- tions have been investigated. Several years ago, a powerplant using molten lithium fluoride salt was proposed to the Navy by GMR; other sys- tems have also been considered for marine use. "Calvair" Car Heated alumina (aluminum oxide) is a reason- ably good storage medium that is easy to con- tain. In 1964, GMR modified a Corvair and installed an alumina- Stirling powerplant to demonstrate a "heat battery" system. In this "Calvair" installation, nitrogen was circulatec through a tank of hot alumina pellets and heated, then circulated on to the Stirling whei it heated the engine to about 1200°F. The tank was "recharged" by combustion of naturi gas to reheat the alumina. The "Calvair" ca was successfully tested, but the system is toi heavy and too expensive for a practical auto- motive vehicle installation. GMR's continuing research on energy storage systems centers on studies of lithium fluoridi systems and further investigations of heat- producing reactions between alkali metals and halogen gases. ! "CALVAIR" Car under test at the GM Technical Center. Prepored by TECHNICAL INFORMATION DEPARTMENT GM Rsuorch Labaratorlas, Worran, Michigan 48090 237 ^ General Motors Research Laboratories INTAKE VALVE THROTTLED ENGINE 'I, operation of a conventional spark ignition t,ae at very lean air-fuel (a/f) ratios usu- 1 results in cyclic variations of cylinder r sure or torque. I cyclic variations can cause an irregular 3 ard motion of the vehicle called surge. \ ;e often makes drivability unacceptable ri a customer's standpoint. I Tal years ago. Engineering Development I neers at GM's Research Laboratories be- I work on an engine concept for operating l3an a/f ratios without causing vehicle • IVT Works... concept called for controlling the amount uel-air mixture supplied to the cylinders ;ontrolling the lift of their intake valves. J intake valve throttling, researchers theo- d, would allow use of the full pressure ) across the smallest possible opening. And would result in a sonic velocity of gases the combustion chamber. y further theorized that the small valve nings associated with this throttling at part- load would reduce the scale of the turbulence of the combustion charge. At the same time, they would increase turbulence intensity. Liq- uid fuel passing through such small orifices would undergo almost explosive atomization due to the large shear forces acting on it. These conditions, they believed, would result in a "fast burn" immediately after ignition -- a fast burn essential to good, extremely lean part-load operation. Benefits. . . Development work included trying out the IVT concept -- first on a single cylinder engine and then on a multicylinder one. In testing covering many thousands of miles, the IVT engines demonstrated stable operation at air- fuel ratios as lean as 20:1. Conventional de- signs usually are not stable at ratios leaner than about 17:1. In multicylinder operation, exhaust emissions of hydrocarbons and nitric oxide were about equal to those of similarly operated conven- tional engines. However, operation at leaner than normal air-fuel ratios resulted in much lower emissions of carbon monoxide. At a/f the IVT engine, the conventional camshaft, ower and push rod articulate a special rocker and standard intake valve. A movable ful- m position determines the valve lift — and s the degree of throttling. Return Spring Pushrod Guide Valve Throttling Lever Hydraulic Lash Adjuster Movable Fulcrum Rocker Lever Intake Valve 238 ratios above 17:1, for example, carbon mon- oxide emissions totaled only about 0.2% of ex- haust. (Under 1969 federal regulations, carbon monoxide can't exceed 1.5% of total exhaust.) Despite the potential advantages, the experi- mental program also defined several areas needing improvement. Three Major Challenges. . . Before the IVT engine can be satisfactory from a customer standpoint, a better fuel metering system must be developed. To meet this need, a new concept in fuel injection control is cur- rently being implemented. Also desirable would be an improved valve opening control mechanism. The presently used mechanism requires use of servo poweil which takes away from IVT's potential in thel area of fuel economy. The goals in this are; are improved efficiency, greater simplicity and lower cost. Finally, researchers seek a means of achiev i ing reductions in nitric oxides and hydrocar- bons. Possible approaches include exhaust rii circulation, heat conservation (including a lea exhaust reactor), and optimizing valve timing events to match the unique characteristics of ^ intake valve throttling. Pressure Development IVT Conventional LAJUUUUUUUUUULJUUUUULAAiU The IVT engine's turbulent, fast burning mixture minimizes cyclic variotion in cylinder pressure and engine output power. Prepared by TECHNICAL INFORMATION DEPARTMENT GM Research Laborarories, Warren, Michigan 48090 239 General Motors Research Laboratories RAMAIRE SUPERCHARGER SYSTEM lelamAire supercharger is a product of g continuous search for methods to im- automotive engine performance and to iiise fuel economy. tjgh it has worked well in extended tests, u.ire appears unlikely to be developed in- Droduction car option because of its cost i ther problems. •I ally automobile engines are called on to c ce maximum power less than two per- il 3f the time. RamAire boosts an engine's 1 rmance during these short periods of top 1 rmance without sacrificing economy dur- garmal operation. In tests conducted by Ktesearch engineers in the 1950's, a Ram- I equipped six -cylinder engine performed I arably to an unmodified eight -cylinder en- a RamAire reduced the O-to-60 mph ac- 1 ation time of test cars about 30 percent. lAire Operation I Ure, on the driver's command, increases the engine's maximum power by supercharging --that is, increasing the pressure of--the air- fuel mixture flowing into the engine. The RamAire system consists of an air com- pressor, a storage tank, a valve, a pressure regulator and an ejector (a device to induce the flow of outside air into the system). Few engine modifications are required to install RamAire. With the vehicle engine running, a belt-driven compressor delivers high pressure air to the storage tank. When the driver floors the ac- celerator, the throttle linkage trips a switch which opens the valve. This allows air to flow from the tank, where it is stored at 1500 pounds per square inch (psi) pressure, to the regulator. Air pressure is reduced to about 150 psi by the regulator. Next, the air moves to the ejector where it draws in outside air and continues toward the carburetor. Then, mixed with gasoline, it is channeled into the intake manifold. Pressure gegulot or^ So lenoid Volve low Pr«siur« ' ' V-r High Pom Air Reservoir Air Compressor Schematic diagram shows route of air through RamAire supercharger system. 240 Because compressed air from the tanks "en- trains," or induces the flow of, cool outside air into the system, storage tanks can be con- siderably smaller than if the system used only stored air. The mixture ratio of stored air to outside air varies, but generally is about one to three. RamAire is quick reacting because the ejector has no moving parts. By comparison, an engine- driven supercharger moves relatively slowly as acceleration begins, and supercharger pressure is low just when it needs to be highest. No Harmful Effects After one RamAire -equipped test car had under- gone 600 supercharger cycles, the engine and transmission were disassembled and thoroughly examined for damage. None was found. Testing did reveal, however, that slightly highi octane fuel was required to prevent engine knoi ing during supercharged operation. On the oi hand, RamAire does offer some opportunity I better fuel economy. Because it operates on at full throttle and because it shortens accel ation time, RamAire permits the driver to rea( a desired speed and shift to a cruise throttli setting while an unmodified car would still b accelerating at full throttle. Although most GMR tests have focused on usiij RamAire on passenger cars, the system alsc| appears suitable for use on heavy off-the-roi equipment as well as on diesel-powered vehiclt In spite of this, the system's cost, and bulk- iness and weight of its components have con- tributed to low market interest in the concep . RomAire system's ejector, a hom-shaped device which Induces the flow of outside air into the system, is clearly visible in photo of test car installation. Ejector is attached to carburetor, ot right center of photo. Prepared by TECHNICAL INFORMATION DEPARTMENT GM Rasearch Laborotoriet, Warren, Michigan 48090 241 General Motors Research Laboratories FREE PISTON ENGINE iontinuing assignment of the General .8 Research Laboratories is to evaluate ising new concepts and developments that r anywhere in the power and energy con- on spectrum. such concept is the free piston engine -- npound engine with a crankless diesel gas- B and gas turbine expander. Being devel- li in Europe after World War n, this engine !i number of features which intrigued GM eers. Three of these features: The free piston engine's ability to run on iiie variety of low cost fuels, including re- :|1 and crude oU. This is due in part to lienerous supply of excess air for combus- I as well as its two- stage compression ra- if up to 28:1, compared to a typical diesel' s and an automobile's 10:1 or so. The engine's overall thermal efficiency, in i;2-36 percent range, making it competitive IS respect with conventional diesels. The powerplant's capacity to operate with ral gasifiers supplying one turbine, thus ijasing the overall reliability. : It Works !• piston engine design varies. In a typical rtruction (see Ulustration), the two opposed I synchronized pistons in each power cylin- ! compress air to as much as 50 times at- , pheric pressure. As the power pistons 1= toward the center of the cylinder, fuel is i;ted into the space between them. It ig- ii and burns, just as in a conventional diesel ne. Forced to move outward, the pistons •iver exhaust ports and intake ports in the iider wall. Exhaust ports allow burned gases p.ow to the turbine. Then fresh air enters I cylinder through the intake ports. 1 of the two pistons discussed so far is ictly attached to a larger air compressor i3n which also is fitted into a cylinder. The ; compressor pistons, traveling outward with 'power pistons, push against air trapped in ("bounce space" at the outer end of each ipipressor cylinder. This air arrests the :on8' travel and bounces them back toward the center to begin another compression stroke. Compressed air from the compressor cylinder is compressed even more when it is channeled into the power cylinder. Engine speed is varied by regulating the amount of air in the "bounce spaces." World's First Free Piston Car Although some experimental free piston engines had been installed in minesweepers of the French Navy and free piston air compressors were avail- able for sale in Europe, little was known in the U.S. about their performance, life, or desirabil- ity over more conventional diesel engines. En- gineers at the GM Research Laboratories set to work to find out. Throughout the 1950's, GM Research engineers developed, installed, and began evaluating free pistons of different configurations and sizes for vehicular, marine, rail, and power generating applications. In 1956, GM unveiled the low slung XP-500 ex- perimental automobile, which was powered by a free piston engine especially developed for auto- motive use. Called the Hyprex 4-4, the 250- horsepower engine built by GMR had two power cylinders instead of the usual one. The cylin- ders were out of phase so that one delivered Inlok* Pom ExSauil Po Ai, Inlok. Vol». \ f-l / Ai' in'ok. Volv_ Scavenging / \ i / \ . ScKematic diagram of free piston engine shows principal features. 242 gas to the turbine while the other was compres- sing. One of the engine's notable features was its insensitivity to fuel quality. But it had its liabilities as well as its assets. For example, the engine was much more complex and had a higher noise level than conventional automotive engines. Tests of the XP-500 indicated the free piston engine was more suitable for other applications than for automobile use. Other Test Applications One such successful test application was a free- piston powered ship, the William Patterson . Under contract with the U.S. Maritime Admin- istration, GM fitted six free piston gasifiers totaling 6000 shaft horsepower in the converted Liberty ship, which carried military cargo to overseas bases. The Patterson sailed several years, visiting ports around the world. Although its free piston propulsion proved to be efficient and economical, a significant commercial mar- ket did not develop and the ship was decommis- sioned. Other encouraging applications of the free pis- ton engine involve stationary powerplants. As of this date, two California oil companies sti operate free piston engines to supply some o: their power requirements for oil field opera- tions. The original two gasifiers came from General Motors over nine years ago. Their fuel is crude oil virtually as it comes from t ground. Ordinary diesels are not able to bur crude oil reliably and thus must depend on higher cost fuels. Some experiments focused on railroad uses o free piston engines. An evaluation program indicated the engine was not sufficiently supe- rior to conventional diesel propulsion to justi fy higher production costs. In fact, that was the general shortcoming of the free piston engine. While it was an engi- neering success, the engine did not appear to have enough competitive edge to make a real dent in the commercial market. The GM Re- search Laboratories has therefore elected to concentrate its research and development ef- forts on other advanced powerplants and ener, converters. The XP-500's powerplant pisfon engine. o 250-horsepower free The William Potterson was powered by six free piston gasifiers. Prepared by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratoriei, Warren, Michigan 48090 243 1 General Motors Research Laboratories DIRECT-CYLINDER AIR-INJECTION SUPERCHARGED ENGINE SMALL ENGINE ECONOMY — LARGE ENGINE PERFORMANCE Iways of interest to General Motors are prac- cal ways to combine the inherent fuel economy : small engines with the performance capa- lities of large engines. Supercharging a nail engine offers one way, at least in prin- ple, of achieving this end. ut conventional supercharging is not the an- ver. Its power-boosting capacity is limited f combustion knock, and its initial cost is Lgh. Pursuing an alternate approach, engi- sers in the GM Research Laboratories En- ineering Development Department designed a /stem that all but eliminated knock as a re- liction to the power increases attainable 'irough supercharging. he concept originated during an early study ' supercharging possibilities. At the time !mR engineers wondered. Could a system be !?signed to operate in a way that suppresses licck' To appreciate the problem they posed, le has to know what promotes knock in a super- larged engine. Three factors are of major inportance here: the density of the air-fuel 'lixture at the time of ignition, the tempera- ire of the mixture, and the turbulence in the ylinder. To put these factors into perspective. knock tendency increases as density and tem- perature go up and as turbulence goes down. Drawbacks of Old Systems Conventional supercharging does nothing to re- verse the direction of these knock -inducing trends. It increases the density of the air-fuel mixture (which, of course, is the purpose of supercharging). It raises the temperature by adding energy from the compressors. And it has no beneficial effect on cylinder turbulence. For a supercharging system to produce higher engine outputs without knock then, it must avoid warming the air -fuel mixture, and it must increase the swirling of this mixture in the cylinder. The system conceived by GM Research engineers does both. Main Features of New System GMR's system uses pre-pressurized air. The air is stored, initially at 3000 psi, in special tanks located in the trunk of the car. Small engine -driven compressors equipped with Inter- coolers and aftercoolers supply makeup air to Boost-Fuel ^Aonifold7 Boost-Air Pressure Regulator and -Boost-Fuel Proportioner Seporator Boost-Air Manifold ligh-Com press! on Six-Cylinder Engine 162 Cubic Inch Displacement Vehicle Installation (1959 Oldsmobile) 32-493 O— 69— pt. 1- -17 244 the tanks. Since tank air is only slightly above ambient temperature, it is much cooler than the air supplied to an engine by a conventional supercharger. Thus, one of the three knock- inducing trends is reversed. Also in the GMR system, the high pressure air is injected directly into the combustion cham- ber. The air enters the chamber during the compression stroke through a third, separately activated poppet valve. This arrangement creates a considerable increase in turbulence, reversing another unfavorable trend. The equipment required to operate the GMR supercharging system includes: • Two multicylinder compressors to recharge the air tanks in the trunk. • A control device to regulate the air and additional fuel injected into the combustion chamber when performance bursts are called for. Operation, Gains, Status Using information based on single -cylinder en- gine tests, GMR engineers modified a 162- cubic-inch six-cylinder engine to utilize direct- cylinder air-injection supercharging. They then installed this engine along with system acces- sories in a 4 100 -pound sedan normally housing a V-8 engine having over twice the displace- ment. For cruising and moderate accelerations, the engine operates in the usuad way (without supercharging). Meanwhile the compressors charge the air tanks, if necessary, until they are fully pressurized. For hill climbing and passing, performance demands are met by further depression of the "gas" pedal. This controls the opening of the third valves, the flow of compressed air from the tanks, and the amount of additional fuel injected into the intake manifold. Although dynamometer tests showed power in- creases of up to 250% and road tests demon- strated good vehicle acceleration, fuel savings were somewhat disappointing, being significant only when the compressors were not operated: • 15-257i> at steady 60 mph (compressors not operating). • 18% in simulated country driving (com- pressors not operating). • 9% in simulated city driving (compres- sors operating 7 5% of the time). As a result, these minimal savings were not considered sufficient to justify the initial cost of the supercharging system. Equally impor- tant, low system capacity limited the duration of supercharged operation, which could present ' safety problems. Comihoft For Third Vaivs Piaporcd by TECHNICAL INFORMATION DEPARTMENT GM RuMTch LaboraloriM, Worrm, Michigan 48090 245 General Motors Research Laboratories AMMONIA-FUELED AUTOMOTIVE ENGINE Ammonia a fuel? It isn't particularly outstand- ing in this respect. In fact if the conditions aren't right, it won't burn at all. TVhy, then, did General Motors engineers pick ammonia as a fuel for spark-ignition engines? The reason relates to a military proposal orig- inated several years ago by GM's Allison Di- vision. Known as the Energy Depot Concept, the Al- lison plan called for the field generation of ammonia from air and water via a mobile nu- 'clear power source. The objective was to en- able the convenient production of an alternate engine fuel from readily available materials iand thus free the armed forces from total re- liance on hydrocarbon fuels. Of the fuels that could be produced from air and water, anhydrous ammonia {NH3) seemed ito offer the most advantages for the type of :application envisaged. But even so, ammonia ■falls far short of gasoline in energy content. JAnd conventional, unmodified, gasoline engines performed poorly using this substitute fuel. Consequently, engineers at the CM Research 4-^ni Laboratories were asked to develop a system that would permit an automotive engine to op- erate acceptably on ammonia fuel. Single-Cylinder Engine An early evaluation of the problem suggested that sustaining the combustion of an ammonia- air mixture over a wide speed range might be difficult. Trials with a single-cylinder engine, however, eventually revealed that satisfactory operation was possible with certain engine modifications and the addition of a small amount of hydrogen to promote combustion at part-load conditions. The modifications included: • Boosting the ignition voltage and spark- plug gap. • Increasing compression ratio. • Supercharging the engine.. Basically, without supercharging, the single - cylinder ammonia engine operated like a com- Ai. ln.ckei^rag^/^> Set-up for single-cylinder ammonia engine tests. 246 1600 2400 3200 Engine Speed- RPM Effect of supercharging and ignition modifications on multlcylinder ommonia engine. mon LPG, or liquefied petroleum gas, engine (see schematic diagram). Liquefied ammonia stored under pressure is vaporized, blended with air in a mixing chamber, then admitted to the engine. Multicylinder Engine Having succeeded in operating a one -cylinder ammonia engine, GMR engineers now focused their attention on a 215-cubic-inch V-8 power- plant. They incorporated all the improvements devised for the smaller engine, made additional changes . . . and met with similar success. Engine power developed over the entire speed range when burning ammonia and using a tur- bosupercharger was comparable to that deliv- ered by the nonsupercharged V-8 burning gas- oline (SAE paper #650052, January 1965). Vehicle Application Drawbacks The successful demonstration of a multicylinde ammonia engine, of course, took place in a tes cell. No penalties were incurred for the size, weight, and complexity of accessory equipment An ammonia engine in a vehicle, however, pos problems that questioned the practicality of sut an application except for special military pur- poses. In a vehicle, for example, the pressurized am- monia fuel supply and elaborate control systen would be rather bulky and heavy. One of the reasons is that a vehicle would need three times as much ammonia as gasoline to travel the same distance. Also, since hydrogen must be used for adequal combustion at part-load operating conditions, an on-board catalytic dissociator would be re- quired to extract hydrogen from the ammonia. Other deterring considerations concerned am- monia's odor and toxicity. Even a relatively small amount of ammonia in the engine ex- haust produces an irritating odor. And at ' combustion efficiencies as high as 97.57o, enough ammonia remains in the exhaust to be lethal. ' In view of all these drawbacks, a vehicle in- stallation was deemed inadvisable, and further work on the project was suspended. Multicylinder engine prepared for operation on ammonia fuel. Prepored by TECHNICAL INFORMATION DEPARTMENT GM Research Laborotoriei, Warren, Michigan 48090 247 General Motors Research Laboratories TORIC TRANSMISSION ngineers at the General Motors Research aboratories are evaluating a new type of utomatic transmission in two experimental ehicles, the SE-101 steam car and the RTX irbine-powered bus. It is called a toric ransmission because of the geometry of its ■ey component, the toric section. se of the toric section produces several novel matures which distinguish the toric transmission rom conventional units. Among these features • Traction drive . The toric section trans - lits force from one rolling body to another y friction of the lubricated contact, rather lan by gearing or fluid. • Continuously variable ratio. Instead of hanging ratio in several distinct steps, as in conventional transmission, the toric trans - iiission varies the ratio in a smooth, contin- ous progression -- similar to a rheostat con- rolling an electrical current. <• Quiet operation. Transferring power with- ut interruption from one rolling contact to an- ther is inherently quieter than a conventional ransmission in which gear teeth mesh and reduce a definite sound pattern. • Servo control operation. The toric section s applicable to many uses requiring controlled ower systems because it responds quickly to a demand for a very small ratio change. Principle of Operation The toric transmission consists of a contin- uously variable toric section which controls the input speed and load of a fluid torque convert- er. This arrangement provides for a smooth, shift-free and efficient drive line that utilizes the full potential of an engine for best vehicle performance. In addition, a much higher en- gine-driven accessory load is possible without excessive vehicle creep at idle. A gear set and clutches provide for forward, neutral and reverse operation. The toric section itself consists of two discs, or "races," machined to form a toroidal space. Three rollers interposed between the races are movably mounted on carriers which are fixed to the case (see photo). The rollers can be tilted with respect to the axis of the races and thereby change the speed ratio -- that is, the speed of the output race compared to the speed of the input race. Power is transferred from one race to the other by traction at the roller- race contacts when the races are squeezed against the rollers. How Ratio Changes An automatic control system varies the speed ratio. This hydraulic system "senses" the driver's demand for an acceleration change Model of toric section, which changes speed rafio in toric transmission. 248 800-TT toric tronsmission was designed especially for RTX bus. REVERSE FORWARD CLUTCH CLUTCH FLUID TORQUE CONVERTER Cross secHon of 250-TT toric fronsmission used In SE-101 steam cor showing power flow. and adjusts the ratio by instantly repositioning the rollers in the toric section. Some of the earliest versions of the toric transmission, which GM research engineers developed and tested as far back as the '20's and '30's, were not considered competitive be- cause of their size, weight and durability. For this reason, GM elected to produce planetary gear type automatic transmissions, which are smaller than toric transmissions. Since the 1950's, however, GM engineers and scientists have made important advances in metallurgy, lubricating fluids and analytical techniques that have paid off in improved size-to-weight ratio and thus have encouraged the application of the toric transmission. GM production divisions and the Laboratories' Engineering Development Department are eval- uating the feasibility and experimental installa- tions of the toric transmission. Prepored by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratories, Warren, Michigar> 48090 249 General Motors Engineering Staff THE 511 GASOLINE COMMUTER CAR Dne of several experiments by General Motors o define the requirements of a special-purpose vehicle for limited transportation use is the '511 commuter. irhis car features a three -wheel suspension - 'he third wheel being up front - and a con- /entional four-cylinder gasoline engine. It was iesigned to transport two people efficiently rom suburbs to downtown and back at freeway speeds. Directing the project was GM's En- gineering Staff In collaboration with the Styling Staff. Vehicle Characteristics Because of its three -wheel design and low cen- er of gravity, only 13^ inches off the ground, he 511 has excellent stability, maneuverability, md cornering properties. This design also iiUows for an uncomplicated "backbone" type of I'rame, which makes possible the car's stream- line shape. In addition, the design keeps car jveight relatively low, 1300 pounds. Two steering systems were tested in the 511, one a simple handle bar with 2 to 1 ratio and the other a more conventional steering wheel system with 9 to 1 ratio. The rear-mounted engine is a 4 -cylinder, 66- cubic-inch Opel capable of 67 hp at 6000 rpm. The transmission is a three -speed automatic torque -converter type unit. The commuter can accelerate from to 60 mph in 16.5 seconds and has an 80 mph top speed. In city driving it averages about 30 miles per gallon. Body and Chassis The 511 consists of two major sub-assemblies: a fiberglass body and a steel chassis. It has a single -hinged, counterbalanced canopy for easy exit and entry. Its contoured bucket seats are semi -reclining and built into the body, to- gether with head restraints. Because the seats are fixed, control pedals are electrically ad- justable. 250 The chassis consists of a steel Y frame, three wheels, and power train. The engine, trans- mission, and rear wheels are mounted solidly to the frame so that the drive axles are simple one-piece shafts and the entire mass is essen- tially unsprung. The frame backbone passes through a tunnel in the body to support the single front wheel. Other 511 specifications: Overall length 149 inches, wheelbase 86 inches, overall width 63 inches, rear tread 54 inches, height 40 inches, ground clearance 4.5 inches. 511 COMMUTER 251 General Motors Engineering Staff THE 512 SERIES URBAN CARS le three experimental, two -passenger, 512 ries vehicles represent engineering studies basic transportation. Utilizing essentially ,e same four-wheel configuration, the 512 ries features a gasoline, an electric, and a ;brid gasoline-electric powered version of a jecial-purpose vehicle for limited urban ansportation use. esign and development was directed by Gen- -al Motors Engineering Staff in collaboration lith GM Styling Staff and Delco-Remy Divi- on. The three cars with their 30 to 40 mph ip speed and limited acceleration would op- i-ate either on a paved road system of their vn or in reserved lanes of existing roads, ?cause they could not mix safely with today's eeway or boulevard traffic. hey were intended for short trips in central ty areas, for errands, school transportation, run to the golf course or a nearby theater. ngineers and stylists on the 512 project were sked to create efficient vehicles to perform jDecific transportation jobs with minimum 'eight, low operating expense, and low emis- |.on levels. Body configurations were de- signed to provide adequate space and comfort for the type of travel intended. The same bodies could be used with different types of motive power. All three vehicles are front entry; and their ride, steering, and handling qualities are comfortable and responsive to their specialized type of service. 512 Hybrid Gasoline-Electric Vehicle This vehicle is a first- generation test bed for Engineering Staff's 512 series. It was initially built with an electric powerplant; now it is being used to evaluate a hybrid concept. It has a 50-inch wheelbase, 66-inch length, 56- inch height, and 52 -inch width. Curb weight is 1250 pounds. Construction is a combination of aluminum panels and tubular steel frame. For easy ac- cess it has a front canopy door and two-pas- senger bench seat. A small luggage compart- ment is accessible either by way of the fold- down right seat back or lift-up backlight. The hybrid's power system consists of a 12- cubic-inch gasoline engine coupled with a dc series electric motor through an electromag- The experimental 512 series urban cars by General Motors Engineer- ing Staff. From left to right: the 512 Hybrid, 512 Electric, and 512 Gasoline. Similorly: Engineering Staff's Dan Frank, Kent Kelly, Jim Gumbleton, Al Lucas, and Howard Earnest. 252 512 HYBRID BAHERIES ELECTRIC MOTOR GEAR REDUCTION & DIFFERENTIAL 512 ELECTRIC SOLID STATE MOTOR CONTROL BATTERIES PLANETARY GEAR & DIFFERENTIAL COAXIAL DC MOTOR 253 512 GASOLINE letic clutch. With the clutch energized, the jasoline engine and electric motor both oper- jite at the same speed and are coupled to the lifferential and axle through reduction gears, electrical energy is supplied by a 72 -volt bower battery pack with an additional 12-volt ■iccessory battery. The car operates in either an all-electric or [lybrid mode. In either mode it is accelerated rom standstill by the electric motor. In the jiybrid mode the gasoline engine is engaged at lO mph, and the gasoline engine alone drives fhe car at steady speeds. Acceleration power is provided automatically by the electric mo- or together with the gasoline engine. lAThen operating on gasoline power, a 90 -volt ^electron recharges the batteries. As a driv- 3r option, when the car is at a standstill, the jasoline unit may continue running to charge :he batteries. In addition, the hybrid has an jn-board charging unit that can be connected ;o a 11 5 -volt household outlet. The 12-volt accessory battery supplies power ;:"or the low -level electronic system, cooling blowers, and brake lights. In the hybrid mode, the peak horsepower is ,13,8, top speed is 35 mph, and the car accel- ENGINE TRANSMISSION CATALYTIC CONVERTER erates from to 30 mph in 16 seconds. Its range is 5.2 miles at 30 mph in the electric mode, and approximately 150 miles with three gallons of gasoline in the hybrid mode. 512 Electric Vehicle The fresh, attractive design that can be achieved with a two-passenger urban vehicle is dramatized in this electric version of the 512 series. The exterior body is fiberglass with a steel chassis floorpan and roUbar. The car can be driven in fair weather with the canopy front raised and backlight retracted, giving it a unique convertible appearance. Or it can be driven as a roadster with canopy removed. The side-pivoted single front door allows easy access to the bench type seat. Luggage or package space is accessible through the back- light or the fold-down right seat. Wheelbase is 52 inches, overall length 86.3 inches, and width 56 inches. Curb weight is 1250 pounds with an 84-volt power battery pack. The powerplant is a dc series Delco- Remy motor with solid state controls. It uti- lizes special Delco-Remy lightweight lead-acid batteries that represent a forward technological 254 step and contribute to the vehicle's range and performance. The coaxial drive motor, integrally mounted on the rear axle, makes possible a compact plan- etary gear drive that passes one axle shaft through the center of the drive motor. The car's accessories — heater-defroster, head and tail lamps, turn signals, windshield wiper, horn, and cooling blower - are powered by a separate 12 -volt battery, supplemented when necessary by the main power pack. Heating and defrosting are combined with motor and control cooling. If heat is not needed, the system circulates incoming fresh air for pas- senger compartment ventilation. A built-in battery charger simultaneously re- charges both the main powerplant and acces- sory battery. Complete recharge from a 115- volt household outlet requires seven hours. The car's range at 25 mph is 58 miles. At 30 mph, the range is 47 miles. As more ad- vanced batteries become available, these range mileages will increase. Acceleration from to 30 is 12 seconds. appearance. It is a roadster with integral pig tic construction, 52 -inch wheelbase, 86.3-inch overall length, 55-inch width, and 51.9-inch height. It weighs 950 pounds. It has a side -hinged front door, and the belt line sweeps up behind the passengers to pro- vide rollover protection. Because of its open styling, it contains a minimum of accessories The power source is a 19.6-cubic-inch, two- cylinder, 12-hp aluminum engine with an 11 t 1 compression ratio. It is adaptable to futurt emission controls and is equipped with an ex- perimental catalytic converter and air injectic system. A distinguishing feature of the power train is an automatic transmission operating on the variable ratio V-belt principle with a centri- fugal clutch. Top speed is 4 5 mph, and the car will accel- erate from to 30 mph in 18 seconds. With a four -gallon fuel tank, its range is approxi- i mately 280 miles. 512 Gasoline Vehicle Of the three-car experimental 512 series, the gasoline engine version emphasizes the sporty 255 General Motors XP-883 GASOLINE-ELECTRIC HYBRID CAR 'art of an overall General Motors study to letermine today's limited transportation needs, [he XP-883 is a special- purpose commuter ve- jiicle. It was designed to accommodate a hy- brid gasoline -electric powerplant with front ivheel drive. At its present stage of develop- nent, the car is in mockup condition. The XP-883 has a two-door fiberglass body ind will seat four occupants - the driver and me adult passenger in front and two children lacing the rear in a back seat. The backs of he passenger seats fold down to provide a ;:argo space 84 inches in length. Access to i:he rear seat area is provided by an upswing - ling backlight at the rear of the car. The Powerplant The basic concept for the XP-883 originated it the GM Styling Staff. Designers developed Ithe vehicle as a small commuter car capable iof receiving any of several kinds of power - Iplants. GM Engineering Staff conducted com- Iputer analyses of several powerplants - in- cluding internal combustion, electric, and hy- brid gasoline-electric - to evaluate their po- tential in meeting the car's design purpose. Although all these powerplants were found ac- ceptable, the first selected for further study was the hybrid. Engineers designed the two- cylinder-engine electric -motor combination specifically for the XP-883. The design ob- jectives for the car include a weight of ap- proximately 2100 pounds, maximum speed of 60 mph, and an acceleration of to 60 mph in 28 seconds and to 40 mph in 12 seconds. The hybrid powerplant — also in the mockup stage - consists of the following: • A two-cylinder, opposed, water- cooled engine of 3 5 -cubic -inch displacement. • A dc series-wound electric motor. • A flywheel alternator for recharging the batteries. 256 • Six 12 -volt batteries to provide a 7 2 -volt system. • An electronic control system. • An on-board charger that can be connected to an external 115-volt ac source. Propulsion The transmission system contains two gear- reduction units, both providing a 5 to 1 re- duction to axle speed. A planetary system transmits power directly from the co-axial electric motor to the drive shafts on the front wheels. Power from the gasoline engine is transmitted through the second gear -reduc- tion unit - a worm gear arrangement. The XP-883 operates in either an all-electric or hybrid mode. In either it is accelerated from to 10 mph by the electric motor. At that speed in the hybrid mode, the gasoline engine starts and provides the power function for steady speed operation as well as power to recharge the car's batteries. Both power- plants are automatically combined for acceler- ation. General Specifications XP-883 has a 68-inch wheelbase with an over- all length of 122.2 inches. It is 57.3 inches wide and 46.3 inches high. Both front and resuy tread are 49 inches; front overhang is 27.5 inches and rear overhang 26.7 inches. The vehicle has an independent rear suspen- sion, and the battery system is located in a box beneath the rear passenger seat and be- tween the rear wheels. A single heat-exchanger core provides pas- senger compartment heating and low -speed engine cooling. For high-speed engine cooling,^ this core is supplemented by a ram core lo- cated in the front of the engine compartment. XP-883 HYBRID -ELECTRONIC CONTROLLER GASOLINE ENGINE GEAR REDUCTION & DIFFERENTIAL ELKTRIC MOTOR 257 m General Motors ^^ Research Laboratories ELECTRIC VEHICLE POWERPLANT TECHNOLOGY Vithout reservation, a battery or fuel cell will lave to possess two capabilities to quality for icceptance as a powerplant in general-purpose vehicles: It must have a high power density, )r power-to-weight ratio, to meet vehicle ac- ;eleration and performance requirements. It nust have a high energy density, or energy- o-weight ratio, to give the vehicle a reason- ible traveling range. The only single battery or fuel cell powerplants ;hat appear to offer any hope of someday meet- ng these requirements are the silver -zinc and :he high-temperature alkali-metal batteries such IB lithium -chlorine and sodium-sulfur (see graph). Economics rules out the costly silver- zinc battery. The high-temperature alkali - metal batteries are presently in the research phase and are not expected to reach practical maturity for several years or a decade, if at 111. Through the use of modern electronic systems, however, it may be feasible in the interim to combine one powerplant having high power den- sity with another powerplant having high energy density. Such an arrangement permits many possible combinations that could be considered for special -purpose vehicles. The arrangement thus constitutes a logical evolutionary step, which current technology can now implement, toward the end goal of a general-purpose all- electric car. Electric Vehicle Systems Electric vehicle system concepts now being studied by the GM Research Laboratories fall into three basic categories (see block dia- grams). They include the • Single battery all-electric system (such as used in GM's battery- powered Electrovair and fuel-cell powered Electrovan vehicles). • Electrically coupled hybrid system (such as used in GM's Stirling-engine battery-powered Stir-Lee vehicles). 9 Mechanically coupled hybrid system (similar to that used in GM's 512 gasoline-electric vehicle). Because an adequate single battery does not "1 — r PROJECTED CAPABILITIES 258 exist, the hybrid systems have been receiving attention for possible use in vehicles within the next decade. Electric Coupling . In the electrically coupled hybrid system, two powerplants are used in parallel. One, the power battery, provides the intermittent pesJc power for acceleration. The other powerplant — which can be another bat- tery, a fuel cell, or a heat engine and gener- ator set — supplies the energy for extended road-load operation and for charging the power battery. With this theoretical approach, the lead-acid and nickel-zinc batteries (with their good power density auid limited energy density) might serve as the power battery; and the fuel cell, zinc- air, or organic electrolyte battery as the energy reservoir. Technically, the nickel-cadmium battery also qualifies as a power source. But, while less expensive than the silver-zinc bat- tery, its economics are unfavorable. Mechanical Coupling . In the mechanically cou- pled hybrid system, the power battery supplies an electric motor whose output is coupled through a differential with that of an internal or external combustion heat engine. Here, the battery — for example, lead -acid or nickel - zinc — provides both power and energy for all-electric operation under limited performance and range conditions. The heat engine aug- ments the performance when needed, extends the range, and drives a generator to charge the battery during operation of the engine at less than its full power. Powerplant Requirements High Performance Vehicles . Powerplant re- quirements for a general-purpose vehicle — that is, the family car — are the most dif- ' ficult to meet. This situation is somewhat discouraging since the family car accounts for the major portion of today's vehicle population. Although a mechanically coupled hybrid with a nickel-zinc power battery might begin to satis^ the family car requirements, only the high- temperature alkali-metal batteries appear to offer a much preferred solution. And the tech- nology needed to develop these batteries is stiU in the research stages. Special Purpose Vehicles . In this class of ve- hicles — which includes the commuter car, bus, and delivery van — the powerplant re- quirements are considerably less severe. The nickel-zinc and zinc -air batteries, especially the latter, make good candidates for propelling such vehicles. In fact, if successfully developed, the electrically rechargeable zinc -air battery (whose progress lags far behind the less-than- ideal mechanically rechargeable zinc -air bat- tery) would give tremendous impetus to the evolution of special-purpose electric vehicles. Low -Performance Vehicles . For the short- range, low-speed urban shopper or utility car, the lead-acid battery can be used as a power- plant, particularly as the power battery in a hybrid system. However, a practical nickel- zinc or zinc -air battery would provide a more attractive approach to a single -powerplant electric system. ELECTRIC VEHICIE SYSTEMS UNDER STUDY : BATTEBY - ELKTIIC Lil 1 1 1 rs En«W im.r FWI CII IWtEnsln. CvMrator ChoglfV Clreollry El.clrlc Po.« and Choag* Onltol h- - Motor - Gmt Pow,r 1 , Warren, Michigan 46090 259 General Motors Research Laboratories ELECTROCHEMICAL ENERGY CONVERTERS lany elements can be reacted electrochemically ;) produce electric power. Some element com- inations naturally result in a high power den- ity, or power-to-weight ratio; others a high nergy density, or energy-to-weight ratio. But one provide both at the same time ... at ;ast not in any practical electrochemical en- rgy converter that exists today. "o qualify for possible automotive application, n electrochemical energy converter — that is, battery — has to possess • High power density, to give the vehicle acceptable speed and ac- celeration. • High energy density, to give the vehicle an adequate use period be- tween recharges (or refueling as with the fuel cell). Also, such a battery must satisfy several other requirements covering volume, safety, opera- tional characteristics, cost, reliability, and durability. Working toward these goals. General Motors Research Laboratories and other GM groups have been investigating a variety of electro- chemical energy converters (see table). Two of these have indicated considerable promise: the zinc-air battery and the lithium-chlorine cell. SEVERAL ELECTROCHEMICAL ENERGY CONVERTERS UNDER INVESTIGATION Converter Major Interest Attractive Feotures Problem Areas Lead -Ac id Power characteristics Excellent power density Compoctness Economics and durability Poor energy density Rechorge time Poor power ot port charge Nickel-Zinc Excellent power density Good energy density Promises good rechorgeability Limited cycle life Rechargeable zinc electrode Nickel -Cadmium Excellent power density Fair energy density Good cycle life Good rechargeobility High cost materials Zinc-Air Energy charocteristics Good power density Good energy density Low cost materials Very limited cycle life Rechargeable zinc electrode Organic Electrolyte Excellent energy density Promising economics Poor power density Durability unknown Rechargeobility Fuel Cell Excellent energy density Rapid refueling Use of current fuels Poor power density High cost materials Size and complexity Sodium-Sulfur Power ond energy char- acteristics Excellent power density Good energy density Promises good rechargeobility High-temperature operotion Materials compatibility Durobility unknown Lithium-Chlorine Excellent power density Excellent energy density Promises excellent rechargeobility High-temperature operation Materials compatibility Durability unkrwwn 32-493 O— 69— pt. 1- -18 260 Zinc-Air Battery This battery has features that make it attrac- tive for use in intermediate -range vehicles: • It employs low-cost reactant materials. • It has good energy density and power density capabilities. • It operates at ambient temperatures. For several years GM Research scientists and engineers have been developing two ver- sions of the zinc-air battery. One is a sec - ondary battery, which means it can be elec- trically recharged; the other is a primary battery, which means it cannot. Mechanical Recharge Concept . Although not rechargeable in the usual sense, the primary zinc -air battery can be mechanically re- charged. In other words, it can be brought back to full power immediately upon replacing the zinc electrodes and electrolyte. Thus far, three 1-kw mechanically rechargeable zinc -air batteries have been designed and built. Each contains 20 cells in series, providing an open-circuit voltage of about 28 volts per bat- tery. In a demonstration of capability, two batteries (connected in series) along with a 25-hp elec- tric motor and solid state control system were installed in a golf cart In place of its regular 10 -hp gasoline engine. The cart attained a maximum speed of 12 mph and proved it could maintain this speed for almost three hours. For equivalent performance, the cart would require about 300 pounds of lead-acid batteries, compared with 110 pounds for the two-unit zinc -air pack. Electrical Recharge Concept . Clearly, the electrically rechargeable zinc -air battery would make a more desirable choice for powering a vehicle. However this battery has not pro- gressed as far as its primary counterpart. Its problems are more formidable, technical fall- out from the primary battery program being only partly applicable. To date, several experimental cells and bat- teries have been built including a 15-cell bat- tery of 180 watts. However, this particular design is good for only a few recharges. Operation . Both versions of the zinc -air bat- tery use aqueous potassium hydroxide (KOH) as an electrolyte. In a closed circuit, each generates electricity by combining zinc and hydroxyl ions from the electrolyte to form zinc hydroxide, which releases electrons. At the zinc electrode the reaction is: Zn + 2(OH) ► Zn(OH) + 2e" •— ZnO + HO Concurrently at the air electrode — which con sists of carbon. Teflon, and a catalyst suppor on a porous nickel matrix — incoming electror from the circuit combine with water and oxyg (from the air) to release hydroxyl ions from 1 electrolyte: + H„0 + 2e 2(OH) For the electrically rechargeable battery, the above equations reverse at recharge. A third electrode temporarily substitutes for the air electrode while the charging current is appliec Status . In the development of the three me- chanically rechargeable batteries, progressive gains have been made In power density, energ density, and cathode life. This system appears capable of going from the present power den- sity of 30 watts per pound to 80 watts per pound, and from the present energy density of 45 watt-hours per pound to about 70 watt-hour per pound. But before the mechanically re- chargeable zinc -air battery can be considered a practical contender for propelling inter- mediate-size electric vehicles, considerable improvements will have to be made in elec- trode economics and cathode life. For the electrically rechargeable battery, sim- U ilar improvements are necessary (to a much greater degree) along with better cathodes for ( recharging. Lithium-Chlorine Cell General Motors has long recognized the enor- mous improvements theoretically possible in batteries by combining highly energetic react- ants with a molten salt electrolyte. Such a system is capable of storing a large amount of electrical energy and operating at high pow- er. Transforming this technical promise into practical hardware has been a subject of re- search and development at GM for over a de- cade. Among molten salt batteries, the most attrac- tive comprises cells using lithium and chlorine reactants along with fused lithium chloride as the electrolyte. The lithium -chlorine (Li-Clj) cell operates at 1200°F and possesses outstand- ing energy density and power density capabil- ities. But although the performance potential of the lithium-chlorine system is great, much re- search and development remains to be done. Answers are still needed to such vitally im- portant questions as: Can the Li-Clj cell be 261 ICHANICALLY RECHARGEABLE ZINC-AIR CELL Discha rge^ Potassium Hydroxide '' porous structure that allows oir to enter the cell [iit prevents the electrolyte from seeping outt In this golf cart, the GM Research Laboratories zinc- air battery pack at 110 pounds performs as well as a lead-acid battery pack at 300 pounds. (Her name? Elsie Goetzinger.) FULLY CHARGED LITHIUM-CHLORINE CELL (Discharging) Insulating Seol Uthlun "Wick lithium Electrode ,Elecli 2k 'ilt in a thermally self-sufficient configura- )n? How long can a Li-Cl2 battery last? ')w reliable is it ? )eration. One Li-Cl2 cell concept being in- ,stigated by GM Research Laboratories sci- tists and engineers is illustrated above. In e center of the cell stands a cylindrical po- rous-graphite chlorine electrode. The lithium electrode surrounds it, and lithium chloride fills the void in between. With the cell ready to use, liquid lithium floats on molten lithium chloride suid saturates the wick leading to the lithium electrode. Chlorine gas from a storage tEink occupies the volume within the porous chlorine electrode. 262 Measuring fhe electrical output of a variety of experimental fuel cells on durability runs. Discharging: When the externEil circuit switch is closed, lithium enters the electrolyte as positive ions. The electron that each atom loses by ionizing is left at the lithium elec- trode: Li ■Li + e Simultaneously at the chlorine electrode, a bal- ancing reaction occurs in which two electrons combine with each chlorine molecule to form negative chloride ions: Cl„ + 2e The net result is that 2 CI • Electrons flow through the external circuit (driving an electric motor in this instance). • Lithium and chlorine have combined electrochemically to form lithium chloride: creases. Full power can be drawn from the cell until either the lithium or chlorine is depleted. Charging: Since the lithium -chlorine elec- trocheir.ical reaction is reversible, feeding electrons back into the cell in the opposite direction will decompose the lithium chloride. At the lithium electrode, lithium ions pick up electrons from the charging current and thus become atoms. This action replenishes the lithium supply. At the porous chlorine elec- trode, the negative chloride ions give up elec- trons to the charging current and thus become chlorine gas molecules. The gas can be made to penetrate the porous electrode and be re- turned to the storage tank. Meanwhile, the volume of lithium chloride elec- trolyte diminishes to its original mass. Status . Although the technology required to construct practical, usable cells has not yet been developed, significant progress has been made with laboratory cells. In the past two years the lifetime of these cells has been ex- tended to over 2000 hours. More importantly, a greater understanding has been gained of the effects of variables that determine performance and durability ... to the point where cell ef- ficiency and operating characteristics are quite predictable. Having demonstrated in the laboratory the per- formance and life potentials of the lithium - chlorine cell, the Research Laboratories is continuing its R&D program, with emphasis on cell and component development. The imme- diate goal is a thermally self-sufficient cell suitable for incorporation into battery modules. 2 Li + Cl„ 2 LiCl As the cell delivers power, the volumes of lithium and chlorine decrease while the vol- ume of lithium chloride, the electrolyte, in- If and when such a cell is developed and prac- tical lithium-chlorine batteries become a re- ality, engineers will still have major problems to resolve before a marketable Li-Cl, battery powered vehicle can be achieved. Prepared by TECHNICAL INFORMATION DEPARTMENT GM ReMorch Laboratories, Warren, Michigon 48090 263 m General Motors Research Laboratories GM STIR-LEC II A STIRLING-ELECTRIC HYBRID CAR itir-Lec II is a second-generation hybrid auto- lobile combining a Stirling external combustion ngine with an electric drive system. It was eveloped by General Motors Research Labora- jries as a test vehicle to explore the use of lew emission engine and an electric drive ystera in a small car. "he hybrid arrangement allows the use of a ery small engine (eight horsepower) to pro- ide electrical power for moderate constant- peed driving, with reserve power stored in a ank of batteries. lenerai Features irhe first experimental vehicle of this family, Itir-Lec I, was introduced to the public in Aay 1968. The second, Stir-Lee II, features i more efficient electric drive system which )rovides the same power with simpler, more :ompact electronics. It is the latest result of m extensive development program on high- oerformance electric drive systems, coupled vith over a decade of Stirling engine develop- nent, i iFeatures of the Stirling engine include low ex- 'naust emissions (considerably below both pres- snt and proposed government limits), quiet op- eration, and high efficiency. The electric sys- tem provides high peak power for rapid vehicle acceleration, the flexibility and performance characteristics of an electrical transmission, and zero exhaust emissions when the vehicle operates on batteries alone. In Stir-Lee II, the small Stirling engine drives an alternator to charge the batteries. The bat- tery output is electronically modulated to pro- vide the necessary power variations for motor speed control. A 20-hp dc motor drives the vehicle through a GMR-developed roller friction speed reducer and the standard differential. This differs from Stir-Lee I which used an ac motor and speed reduction gears. In this small vehicle (a modified Opel Kadett) the advantages of simpler, less bulky dc system electronics outweigh the advantages of a smaller, lighter ac motor. In larger vehicles -- where a pow- erplant of more than 30-40 hp is required -- the large size and weight of the dc motor make the ac system more desirable. The GMR Elec- tric Propulsion Department continues develop- ment of both systems for a variety of applica- tions. Low Emissions In the Stir-Lee installations, the eight horse- power single -cylinder Stirling engine runs at constant speed. Although its main function is aATTBIr CHARGINO CONtlOl HYDSOGCN RESEBV04S' STIRUNO RADIATOt' MOOULATOI STAKm MOTOt COMWtnON AM uown 264 charging the batteries, it also provides hot water for the car's heater. A diesel fuel burner supplies the required heat to the Stir- ling external combustion engine. Combustion characteristics are excellent. The engine package emits virtually no odor and very low amounts of carbon monoxide and smog-forming hydrocarbons. Carbon monoxide is typically about 0.3 grams per mile (gpm); proposed 1970 federal standards limit such emission to 23 gpm. Exhaust hydrocarbons are typically about 0.006 gpm; the proposed federal hydrocarbon limit is 2.3 gpm. The emission of oxides of nitrogen is about one gpm. The Stirling engine also is significantly quieter than conventional engines. This engine is a modified version of the Stirling developed by the GMR Mechanical Development Department for use in a silent portable Army generator (Ground Power Unit). R&D Test Results The Stir-Lee cars were designed to explore the characteristics of this type of powerplant Stir-Lee II features compact solid state chopper and logic controls for dc drive system. and drive system in a small standard car. The space required by the system (it uses all the engine compartment and trunk space), the added weight, and high cost all make this hy- brid design commercially impractical at this time. However, Stir-Lee n does serve as a valuable test bed for continuing research and development. Stir-Lee n has a top speed capability of about 60 mph, however the nominal operating speed is 30 mph. At 30, on a level road, the elec- tric drive system draws energy from the bat- i teries at about the same rate that the Stirlingi engine charges them. Thus the batteries es- sentially "float" on the system, and the Stir- ling supplies the required energy. At higher^ speeds, or for other temporary additional po er needs (such as acceleration or hill climb-^ ing), the motor draws some of the stored en- ergy from the batteries. The batteries can then be recharged during lighter -load opera- tion. The car also can operate with no emissions,! with the Stirling engine shut down and the vea hide running only on the batteries. The emif sion-free range is about 30 miles. Initial performance data for Stir-Lee 11 looks • like this: Acceleration to 30 mph, in 8.5 seconds. Top speed, 60 mph. Range, 25 miles at 30 mph on batteries alone. 150 miles at 30 mph with the charging system running (limited only by capacity of 5 gal. fuel tank). The weight of the vehicle, including two oc- cupants, is about 3250 pounds. STIR-LEC II SYSTEM BAIIERT CHABGING SYSTEM ELECTDIC DRIVE SYSTEM Prepared by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratoriei, Warren, Michigan 48090 265 General Motors '^ Research Laboratories GM HIGH PERFORMANCE ELECTRIC DRIVE SYSTEMS sw concepts of electric motor control are hind the modern electric drive systems being hveloped by the Electric Propulsion Depart- ent of the General Motors Research Labora- ries. In a variety of applications, the high ■rformance, lightweight drives offer high ef- riency and reliability. these systems the drive is usually provided ' a three-phase brushless induction motor -- 1 alternating-current machine. The system in be designed for either an alternating or rect-current (ac or dc) input. This is fed irough electronic circuitry and control sys- ■ms that can vary the motor speed and the iDwer, Semiconductor control devices provide ■; to ac conversion or ac frequency conver- ion, controlling large voltages and currents lith small lightweight components. |or their power, the motors and controls are lir lighter aind smaller than those available l)r dc systems in the same power range. An ic motor --an induction motor --is simpler, mailer, and lighter than a dc motor. It does ot require a commutator and brushes, heavy Tsulated rotor windings, or the heavier struc- jre of a dc machine. New designs have fur- her improved on the basic advantages of the c motor. In sizes under 30-40 horsepower, lowever, a dc motor system is more efficient n some applications. Jecause high power semiconductors are costly, •lectric drive systems are not presently com- >etitive for many applications. However, the )rice of semiconductors is decreasing. For lome industrial and heavy vehicle installations. Test vehicle with ac electric drive ot each wheel — built to evaluate this concept for an articulated lunar vehicle. the new systems appear attractive now. Though the automobile presents additional problems (weight and space, as well as cost), concern over air pollution has stimulated tremendous interest in electric vehicle development. Eledrovair, Electrovan, Stir-Lee I When the GM Electrovair-Electrovan electric vehicle program was initiated several years ago, an electric drive system that could use the direct-current output from either batteries or fuel cells was already under laboratory test in Santa Barbara. California, by the group that is now the GMR Electric Propulsion Depart- ment. This dc-ac system was further developed by the group and installed in Electrovair n (bat- tery powered) and Electrovan (fuel-cell pow- Eioctric Pow«r Source Solid-Stale Frequency Converter , / / AC \ Induction \ Motor ~r~ (Brushless) / \ -* y Control Electronics Speed Pickup GMR electric drive system. 266 ered). The ac drive motors were built espe- cially for these vehicles by Delco Products Division and were installed in the vehicles by the GM Engineering Staff for public demonstra- tion in October 1966. Since then, GM Research has considerably re- duced the weight and size of the control system -- from 250 pounds for Electrovair II to 170 pounds for a similar system now. This general type of system also was used in Stir -Lee I, demonstrated to the public in May 1968. (The Stir-Lee hybrid car uses a small Stirling ex- ternal combustion engine to charge the batteries that power an electric drive.) Other Applications This same dc-ac electric drive system was also used in a six -wheel articulated lunar ve- hicle, built by GM in 1966, and in the propul- sion units for a two-man research submarine. In another marine application, the same basic system was built experimentally, under Navy contract, to power a 190-horsepower torpedo. GM Research also has developed a high per- formance, variable speed ac drive that is being evaluated for industrial applications. It can use a dc input, rectified from the commercial 460- volt lines, and an inverter, to vary the speed of an induction motor continuously with good efficiency over the whole speed range. In large power applications an ac-ac system holds promise. Here the electrical source is a high-frequency alternator. In a large vehicle, the alternator may be driven by a diesel en- gine, gas turbine, Stirling engine, or other prime mover running at a speed giving mini- mum fuel consumption for the horsepower re- quired. The alternator output is fed through cycloconverters to provide the frequency vari- ation required for changing the speed of the induction motors — and the vehicle. Thus the electric drive system serve's as an electrical transmission, replacing the mechanical trans- mission. For small power applications, such as in small cars, a dc motor system offers advantages. Stir-Lee n, first shown in May 1969, is an ex- perimental test bed for a modern dc drive featuring solid state electronic control. Al- though the dc motor is larger and heavier than the ac motor used in Stir-Lee I, and the over- all system weight is about 25 pounds greater, the simpler, more compact electronic controls and higher overall efficiency of Stir-Lee II are attractive features. Solid State Switches The key component in the GMR electric drive systems is the silicon controlled rectifier (SCR) -- a solid state switch. A cousin to the transistor, the SCR is a semiconductor device that uses a small electrical impulse to switch on a large current. Commercially available from several manufacturers, SCR's make it feasible to break up ac or dc into pulses to control the speed and power of either ac or dc motors. However, SCR's are still expensivf For the past decade, three GM activities have been involved in the development of variable speed electric drive , systems. The group at the GM Research Laboratories has developed the high performance ac induction motor drive system. Delco Products Division has developed special motors for this system. Delco-Remy, taking a slightly different approach, developed a system using ac synchronous motors -- such a system was installed in an Army six-by-six truck in 1967 and is currently undergoing ex- tensive durability and performance tests. Two-man research submorine developed by General Motors for exploring the ocean floor. Electric pro- pulsion is provided by four outboard units. Prepored by TECHNICAL INFORMATION DEPARTMENT GM Research Laborotories, Worren, Michigan 46090 267 General Motors DELCO-REMY ELECTRIC-WHEEL VEHICLE PROPULSION I electric propulsion system for heavy duty viicles has been developed by Delco-Remy I'ision of General Motors. Using a synchro- ris (ac) motor to drive each wheel separate- ] this system offers improved mobility, ve- l le design flexibility, and the ability to op- (ite the engine at the most desirable speed ( the load -- without regard to vehicle i;ed. ; this system a gasoline engine, or other jime mover, drives a high-speed alternator, 'e alternator output is fed through control lictronics to the motors at the wheels. In a 'Oject funded by the Army Tank Automotive < mmand, a system of this type has been in- lUed in an M-35 six-by-six army truck for ,aluation of performance and durability. dividually Powered Wheels ice each of the six wheels in this truck is wered by a separate motor, the number of driving wheels can be changed with changing needs. On a level road the truck may need only one powered wheel. When more rugged terrain with steeper grades is encountered, or when greater loads are carried, more wheels may be powered. The 13,500-pound test ve- hicle has climbed a 60% grade with two tons of cargo. The electric drive system also has been dem- onstrated to have automatic wheel slip control and good dynamic braking. The vehicle has so far logged over 2500 miles in performance and durability tests. First designs for this electric propulsion con- cept were begun by Delco-Remy engineers in the early 1960's. Supporting developmental work on vehicle systems adaptation was pro- vided by the General Motors Research Lab- oratories, at Warren, Michigan, and the high- speed main power alternator was developed by Delco Products Division, at Dayton, Ohio. Test vehicle with electric drive at each wheel. 268 Heavy Vehicle Applications While the first vehicle testing has been done with a military truck, the system also has great potential for civilian applications, par- ticularly in the off-road equipment field. Delco-Remy engineers point out that cost factors preclude any possibility of the syst being competitive in the passenger car witt the forseeable future; however, it has signi icant advantages for other commercial appl cations and certain military vehicles. To Other Motors Propulsion Alternator Motor ■Electrical Pov/er Flow ■Electronic Commutation Signals Delco-Remy electric drive system. Prepored by TECHNICAL INFORMATION DEPARTMENT GM Reworch Loborarorlai, Wf possible heat sources for a hybrid vehicle. 3y this time, many new radioisotopes had be- :ome available. Research physicists began heir study by establishing criteria for the jossible heat sources. The desired character- sties were: --a half life greater than one year. -- a power density greater than 0.1 kilowatt per kilogram. --a heat output of five kilowatts (about 6.7 horsepower, compared to the 135 hp considered in the '50's.) Of the more than 1000 radioisotopes considered, .Dnly five could meet the half life and power density requirements: plutonium, curium, thal- lium, promethium, and waste fission products. Even these, however, were judged impractical. Depending on the radioisotope chosen, the cost of a heat source for a single vehicle could range from $100,000 to $2.7 million! Availability of the "most available" of these radioisotopes -- waste fission products -- is such that even by 1980 only 500 of the five kilowatt vehicles could be built in a year. Heat Engin* and Gensralor Schematic of a hybrid vehicle with a radioactive heat source. Rodioiiotop. Producll PlulOKiun C.,i-» Tholiium Profn.thium Hall.lil. ly.art) 30 89 18 ' 3 Tolol W.ighl ol H.ot D.Vic. Ilbl 2.400 50 500 300 300 Coil/Cor Imillion. ol SI 0.1 2.7 03 0.5 1.0 u s Suppir in 1980 |h. p.> r.o'l 2.500 100 • 100 100 Selected Radioisotope Heat Sources Life Characteristics of Rodioisotope Heat Sources 280 Further, a heat source using gross fission products would be pi'ohibitively heavy -- 2,400 pounds per device. This would be due to the large amount of shielding needed to protect against the high level of gamma radiation which would be emitted by the fission products. Reactors Expensive Too GM feasibility studies of nuclear reactor sys- tems have covered a number of possible land and marine applications. During the 1956-60 period, the GM Research Laboratories evaluated gas -cooled reactor pow- er plants for ships; Electro-Motive Division investigated nuclear -powered snow train con- cepts, and Allison Division looked into the possibility of mobile compact reactors. From these studies and from concepts devel- oped by others for space power application, GM physicists drew these conclusions: • The weight of nuclear power systems for cars and trucks would be prohibitive. For ex- ample, the system for a car would weigh about 20,000 pounds and would include a minimum of three feet of concrete shielding on all sides of the fissionable material. • The weight of a locomotive, about 600,000 pounds, would be "marginal." • Car and truck applications would be ex- tremely dangerous; locomotive applications were judged questionable from a safety stand- point. Currently, trains are involved in about 4,000 accidents yearly -- a formidable prob- lem for nuclear power engineers developing locomotive systems. • The cost to develop prototypes in all cases would be in the millions of dollars. True, radioisotopes and nuclear power have many real and potentisil peacetime applications. GM scientists and engineers, for example, use radioisotopes routinely in applications varying I from basic research to production line quality control. Nonetheless, until new scientific breakthroughs occur, the use of nuclear energ in commercial and consumer vehicles appears! most unlikely. This schematic shows some of the major components required in a nuclear reactor power system for vehicles. Heat supplied by the reactor would be converted to moveable power by a turbine. This system would have to provide 200-300 kilowatts of power for a conven- tional size car, about 2000 kw for a locomotive. SNAP-8* SNAP-50* ML-1*' Heat Engine Ronkine Ronkine Brayton Application Space Space Land Power (kw) 100 1,000 300 Weight lib) 17,000 300,000 60,000 •SNAP - Space Nuclear Auxiliory Power **ML - Mobile Land This table identities typical reactor power systems now available for other than car and locomotive applica- tions. Extrapolating from this data, GM research phys- icists determined that the weight of a nuclear-powered car would be around 20,000 pounds, while the weight of a like powered locomotive would be 600,000 pounds. Prepared by TECHNICAL INFORMATION DEPARTMENT GM Research Laboratories, Warren, Michigan 48090 281 Exhibit 24 (Automobile Manufacturers Association's exhibit No. 14: paper by General otors Corporation, "GM Progress of Power— A General Motors Report on ehicular Power Systems, Presented at the General Motors Technical Center, arren, Michigan, May 7, 8, 1969.") A General Motors Report on Vehicular Power Systems Presented at the General Motors Technical Center, Warren, Michigan May 7, 8, 1969 282 Jrogress On May 7 and 8, 1969, General Motors showed to the news media, governmental officials and educators at its Technical Center in Warren, Michigan, a comprehensive display and demonstration of various pos- sible forms of automotive power. This presentation, called "Progress of Power," included 26 special vehicles, many of which were exhibited or demonstrated for the first time. Among the variety of unconventional powerplants shown were Turbine, steam, electric and hybrid systems, along with experimental piston engines with reduced air pollutant characteristics. The purpose of "Progress of Power" was to illustrate current technologi- cal progress by General Motors scientists and engineers and by GM con- sultants in various fields. The cars and power systems were working experimental models developed by General Motors as part of its con- stant exploration into all areas of vehicle propulsion. We have reproduced in this publication the news releases, remarks and photographs prepared for "Progress of Power." We hope you will find this material of interest. tIwrt»«»K4^ Oc Jd-U.*^^ Anthony De Lorenzo Vice President 283 CONTENTS NEWS RELEASES General Release 2 Experimental Steam Cars 5 Experimental Special Purpose Vehicles 8 Experimental Limited Emission Vehicles 12 REMARKS H. G. Warner 14 L. R. Hafstad 17 H. F. Barr 38 E. N. Cole 54 284 NEWS RELEASES GENERAL RELEASE Warren, Mich.— General Motors unveiled for the nation's press today, in the most comprehensive dis- play and demonstration of its kind ever undertaken by GM, the latest results of its continuing investiga- tion of various possible forms of automotive power. The "state of the art" show at the GM Technical Center here— called "Progress of Power"— included 26 special vehicles which were exhibited or demon- strated, many for the first time. These had a variety of unconventional power plants, including turbine, steam, electric and hybrid systems along with experi- mental piston engines with reduced air pollutant characteristics. Outlining the purpose of the special showing. General Motors President Edward N. Cole said: "The cars and power systems you see here today are working experimental models developed by General Motors. They are designed to illustrate cur- rent technological progress by General Motors scien- tists and engineers and by our consultants in various fields. "We do not claim breakthroughs for any of these projects and obviously considerable additional de- velopment is necessary before any of the vehicles on display could be available for production. We be- lieve, however, that through constant exploration into all areas of vehicle propulsion— including the actual operation of new systems in automobiles such as those exhibited today— more meaningful progress can be made. "General Motors will continue to aggressively press its research efforts in all areas of motive power in an attempt to reach solutions which will best serve the needs of society with respect to both air pollu- tion and overall transportation requirements." Other special vehicles in the show ranged from a giant military truck with Delco-Remy electric wheel propulsion and a GMC Truck & Coach Division turbine-powered coach to a golf cart powered by a zinc-air battery. In addition, a new vehicle emissions and safety laboratory was opened for inspection by GM Re- search Laboratories. The experimental car display included the fol- lowing: STEAM CARS • A 1969 Pontiac Grand Prix was modified t steam as a means of propulsion. Developed by t| : Research Laboratories, the car is called the i| SE-101 steam car. All components, such as the |. denser, expander, combustion system and s j generator, are housed under its hood. The 4-< j. der, in-line engine is rated at 160 horsepowei d uses fuel oil. Features include all power access( ; air conditioning and an automatic transmission. • Another car, called the GM SE-124 steam:, was equipped with a steam engine built by Ea Developments, Inc., of Oakland, California, v j contract to GM Research Laboratories. The s d power plant— a 2-cylinder, double-acting, V-cc ;. uration— is installed in a 1969 Chevelle M u sedan, and operates on fuel oil. All component e located under the hood. The vehicle has power s ■- ing, power brakes and a manual transmission. B x has more than four decades of steam engine ex - ence, having acquired the patents and technolo] i the Doble Steam Motor Company when that i ceased operation. "Both steam-powered vehicles were designed 1 built as experimental units to investigate the : bility and practicality of steam power, as well obtain first hand information on exhaust emiss Continuing problem areas common to both vel include power plant size, water consumption, f ing, cost, and startup time," Dr. Lawrence R. stad, GM vice president in charge of Rese Laboratories, said. LIMITED EMISSION VEHICLES To demonstrate some of the investigations - ducted by the Corporation toward the reductic f air pollution, as well as the great potential of th • temal combustion engine, six experimental polli t control systems were installed in GM automol . The systems included the use of unusual equipi t such as platinum coated catalysts and oven I stainless steel exhaust manifolds, as well as en it modifications. The installation of these system; • suited in a significant reduction in automc : emissions. 285 •. Hafstad noted that while the one-of-a-kind ly ms were excellent from the emissions stand- xt, each of the systems currently pose different, jr Ived problems. They include materials availabil- i^ ;erviceability, durability, performance, fuel con- 5U ition and cost. EXPERIMENTAL URBAN VEHICLES 512 SERIES hree experimental special purpose vehicles de- siiid for operation on a road system of their own al were exhibited. These vehicles— called the 512 ses-have basically the same two-passenger body gii and configuration. One is gasoline powered, an- oir is electric and the third is a hybrid gasoline- eiftric. Their design and development were directed bl^ngineering Staff in collaboration with GM Styl- iflStaff and Delco-Reray Division. I arry F. Barr, GM vice president in charge of Bineering Staff, explained that vehicles of this type, biiuse of their small size and comparatively low- sji^d performance, would have to operate on a road S"i5m of their own in an urban area or in a reserve ]S on existing roadways in the interest of safety. heir wheelbase ranges from 50 to 52 inches, bjht from 52 to 56 inches and length from 66 to a h; more than 86 inches. All have front entry. The hi rid and electric cars have canopy-like top-and- adshield combinations, while the gasoline 512 is ajpen roadster. iThe 512 hybrid power system consists of a 12- dic inch gasoline engine coupled with a series vironmental and social benefits. We recognize ma responsibility to control the polluting of his envir« ment. This is particularly important because thi are large quantities of pollutants from many natm sources over which he has no control — the terpei of the pine forests, gases from the volcanoes a swamps and dust from the deserts. In March Dr. Gallup released the results oJ survey on air and water pollution, soil erosion a the destruction of wildlife. Perhaps you saw Three out of four people interviewed backed up tb concern by stating they would be willing to p additional taxes to improve natural surroimdini This attitude is encouraging. In summary, behind the Progress of Power Sh is a great deal of GM philosophy. We believe show reflects our concern and awareness for cur environmental problems . . . and provides an obji" tive basis for evaluation and comparison of pov plants. Again, we are pleased to have you with us a hope that you find the day stimulating and pro ' able. 16 299 I j^iiarks by L. R. HAFSTAD, Vice President in charge of Research Laboratories totype is quite another matter. The researcher makes apparatus which can work. The production engineer must make devices which won't fail. When volume production is involved, not only must his products operate properly, but they must continue to function over a long period of time even when used under adverse conditions by careless or inexpert operators. Development of a production prototype is a long, tedious and expensive process. Compared to de- velopment, research is a relatively inexpensive proc- ess. This is one reason why researchers and inventors are forever pushing pet solutions to problems which somehow never get into production and use. For those of us who have been through the development process the reason for this is quite clear. We have learned that all conceivable adverse contingencies must be foreseen and guarded against. In produc- tion and in use, if any thing can go wrong, it will go wrong. In our business this is known as Murphy's Law. Let me give you an example of the gap between an idea and a product which I think is instructive. A couple of decades ago the electric blanket came on the market. Now here was an extremely simple idea. All that was needed was to sew an insulated resistance wire into a blanket and plug it into a 110 V socket. What could be simpler? Yet turning this simple, twenty dollar item into a safe, reliable product took 30-40 man years of engineering de- velopment time and a development expenditure of IVi million dollars. Perhafw now you see why in- ventors often have a little trouble selling their bright ideas. You may also have a better feel for the effort and expense involved in proving out a new engine concept or modification. In our presentation today, we are going to show you work underway in the research state bearing directly or indirectly on the air pollution problem. This latter problem is only one facet, though cur- rently the most important one, of the more general power plant problem, which has been with the in- dustry since its very beginning. Early combustion studies were focused mainly on efficiency and fuel economy since these are the items of most concern to the customer, and very real prog- ress was made. The high compression engine with antiknock fuel was a major contribution to our [r. Warner has indicated the general nature of tl pollution problem and some of the positive steps C eral Motors has been taking to reduce it. I now « t to tell you how we in the research end of the b ness are attacking the problem and to report i'l progress as we are making. We will be showing i itions which work in the laboratory, but may not t adequately developed for use in the field. Research— the word "Research"— means different tigs to different people. I want to spend a few tiutes telling you what it means to those of us in t business of industrial research, ^.esearch is to manufacturing as prospecting is to I ling. In research it is our business to explore, to hw and to understand. Design for production ;Qes later and is a different matter entirely. In learch we construct apparatus to prove that there I no laws of nature against us— that is why a re- !rch prototype can be a success even if it requires PhD's as nursemaids. Making a production pro- 17 300 economy. It is now estimated that to produce lead- free fuel of today's octane quality would cost an additional 2 cents per gallon. If we take this figure to make a rough estimate of the savings to our economy through the use of tetraethyl lead in the 1500 billion gallons of gasoline consumed since 1920, we come up with 30 billion dollars. This would be about Wi billion dollars for 1968— which is certainly worth saving. If we remove lead from the fuel to make our antipollution problem simpler, this annual saving goes down the drain. This is the kind of money that is involved in the decisions now being made in regard to fuel composition. While we are on the subject of fuel, let's take a look at a premise sometimes advanced by electric car proponents— that electric cars are inevitable be- cause we are going to run out of petroleum. The automotive industry has lived with such dire warnings throughout its lifetime. And like any rapidly expanding technology, it has been concerned with the question of raw material supply, particu- larly petroleum. CHART 1 shows a record of the official govern- ment predictions that we were about to run out of petroleum. Note that viewing with alarm goes back to the 1860's, even before internal combustion en- gines were using petroleum fuel. CHART 2 shows the actual buildup of proven reserves compared to production. The story is about the same for most other raw materials, such as iron for example, basic to our technological society. On the raw material supply side, we, as engineers, have been foresighted and have done well. However, in our preoccupation with these ques- tions, we missed the equally important question which is, "How does our kind of society efficienfly dispose of the accumulating waste?" There is every indication that it will be this waste disposal problem, rather than raw material supply, which will set the limits on our technological and, therefore, on our population expansion. If you stop and think a minute, it is not technology which produces pollu- tion, it is people. The pollution problem would dis- appear promptly if the population were reduced by a factor of ten. The pollution problem could also be made to disappear if economics could be ignored. In CHART 3 1 show the problem as it looks to a student using an operations research approach. Emissions can be reduced to any level specified, but the cost of each additional increment removed lij increasing the lower one goes. I would now like to show you some charts wl touch on several aspects of our air pollution search. In CHART 4 note tiiat tiie relative contribut of different pollutants from automobiles and o sources differ widely. Automobiles contribute p tically nothing in the sulphur dioxide area, but mainly responsible for carbon monoxide. In the « troversial oxides of nitrogen area, note that a mobiles produce less than one half of the total. CHART 5 shows the areas of concern createa the several major air pollutants. Again note variety of reactions. This shows why different c; worry most about different pollutants thus mal an overall solution more diflBcult. CHART 6 shows that whereas Los Angeles a very serious specific photochemical smog prob related to the automobile, Philadelphia and Chici for example, must be concerned with a more gen air pollution problem which is largely unrelatec automobiles. CHART 7 shows the principal sources of lutants from an automobile with no pollution con devices. In CHART 8 note that oxides of nitrogen a. only from the exhaust. Hydrocarbons come ma from the exhaust but also from the carburetor fuel tank, and from these latter sources even w the car engine is not running. To measure these evaporation sources precL j we have found it necessary to enclose the entire in a carefully sealed plastic "tent" and then measure in parts per million the hydrocarbon c tent of the air inside the tent (CHART 9). "? measurement method is more accurate and m flexible than any previous technique. To learn about the nature of the pollutant! the exhaust stream, an even more elaborate ins'i mentation approach is needed. In CHART 10 show a view of a smog chamber we refer to as Li : Los Angeles. Exhaust from a car in the back ro is suitably diluted and the mixture introduced the closed smog chamber on the right. Here i radiated with high intensity light adjusted to exactiy equivalent to the sunlight acting on th pollutants in the Los Angeles atmosphere. 1 complicated instrumentation on the left is necess 18 301 I ir;ntrol and analysis. (1ART 11 shows a long path infrared cell with ttied spectroscopic instrumentation of the type •c>ary to make analyses in the parts-per-million- i-j -ts-per-billion range. (s chromatography is another analytical tech- Iql which our people use in exploring this parts ■r illion chemistry. CHART 12 shows the com- ley of the products of combustion with which e e concerned. (IIART 13 shows the 100 to 150 separate and set hydrocarbons ii> the exhaust gas depicted I ; form of a tree. The large branches separate jihe parafins, olefins, aromatics, etc., and the n show the individual molecular types. Qearly le is plenty of first-class organic chemistry in- )ld here. ' th all this background work underway it has tt possible to make considerable progress on the 5 tion problem in the Los Angeles area as shown 1 TART 14. Note that the upward trend of emis- has been stopped and that with planned con- even with expanding car population, it should • )ssible to get the total automotive contribution to the 1940 level. :ides of nitrogen present a special problem, as K n in CHART 15. Here note that to bring down K lydrocarbons and carbon monoxide in the ex- i it is desirable to operate engines with a lean ii lel ratio. However, as these pollutants decrease, i()roduction of the oxides of nitrogen imavoid- b; tends to increase. The chemical reason for this 'it to eliminate the hydrocarbon and carbon mon- s ■ it is essential to provide an oxidizing atmos- h;-i.e., one rich in oxygen. This is the atmos- 1 e we have a lean air-fuel ratio. But this oxidizing t isphere is precisely the one which permits ele- ii:al nitrogen in the air to be oxidized into the t:tionable oxides of nitrogen. Since we cannot e;e an atmosphere which is simultaneously oxi- iig and reducing, this problem will remain with SI any combustion process using air, and there- 3 nitrogen, as one of the reactants. ) far we have considered only combustion prod- c as they are formed in the engine. Now we must c ider as well the additional reactions which occur ■ii these products are exposed to intense sunlight lie atmosphere. 'ith much further research it has been possible to rank many hydrocarbon components of the ex- haust gas in terms of a quantity called reactivity. The greater the reactivity the more likely it is that this particular chemical will result in a constituent of the atmosphere damaging to our health or our econ- omy in some manner. In CHART 16 the exhaust products are shown on a logarithmic scale. Note that the olefins at the top of the chart are five hundred times as reactive as methane at the bottom. In CHART 17 we show the best available informa- tion on the tolerance level of people to exposure to carbon monoxide. Note that for long exposure any- thing above about fifty parts per million is undesir- able. More data of this kind for other components of the atmosphere is urgently required. CHART 18 shows progress to date with respect to the several sources of pollutants from our con- ventional automobile mentioned in the beginning of this talk. Further progress depends on minimums for ambient levels set by government and economic facts of life. As has been shown, much work has been done to reduce the emissions from the internal combus- tion engine. Note (CHART 19) that substantial progress has been made to date at relatively low economic penalty, but that further improvements will be proportionately more costly. Mr. Barr will discuss this briefly in his remarks. Other engines, such as the continuous combustion engines shown, have inherently lower levels of pollutants but higher base cost. CHART 20 shows the situation as we see it for carbon monoxide. CHART 21 shows the story for oxides of nitrogen. Note that for the otherwise good continuous com- bustion engines, oxides of nitrogen tend to be high. If the standards ultimately set for tolerance levels, turn out to be too low to be attained by the internal combustion engines as modified, then alternative power plants— even at high cost— must be considered (CHART 22). At the moment steam powered cars seem to be most favored in congressional circles and certain other parts of the Washington community. We at General Motors have been fortunate in this area in having as our laboratory manager Mr. Arthur Underwood. Mr. Underwood, who had early per- sonal experience with steam cars, initiated work on external combustion Stirling-cycle engines here at the Laboratories more than two decades ago, and on 19 302 vapor-cycle engines a few years later. General Motors' first-hand steam engine experi- ence includes a 1929 program in which the Truck & Coach Division tested a steam powered Delling Coach and this GM Yellow Coach equipped with a Doble engine (CHART 23). Through personal con- tacts we have had the good fortune of being able to turn to the Besler organization (Besler Develop- ments, Inc.) of Oakland, California, who acquired the famous Doble steam car residual patents and technology, for advice and consultation on current steam engine technology. Besler, incidentally, was the last company to be producing steam cars commer- cially and continued this work throughout the 1930's, selling steam automobiles and rail cars, among other products, both in this country and abroad. CHART 24 shows a classic Doble steam car from the Besler stable which will be on display here today. CHART 25 shows a 1933 steam powered airplane produced and flown by the Besler brothers. CHART 26 shows the GM SE-124 Chevelle powered with the Besler steam engine built for General Motors by Besler's enthusiastic and dedi- cated staff of old time steam experts. We at the Research Laboratories are most appreciative of the hard work of the Besler organization. The GM SE-101 Grand Prix is powered by a GMR-built steam engine (CHART 27). This engine, built with modern materials and fabrication tech- niques, incorporates technology from our gas turbine and other research experience as well as suggestions based on the long experience of the Besler org tion. The GM SE-101 is the first steam powere< with modem air conditioning and other powa manding accessories currently taken for grants the average customer. It is also, to the best ol knowledge, the first steam powered car with a b made to the standards of the modern ASME b code. These accomplishments and experiences some of the General Motors credentials for exp ing opinions in regard to steam engine techno and costs. The final CHART 28 shows our present as" ment of the relative advantages and disadvantag f the various power plants which might be consic ] for automobiles. Note that there is good agreei t on the relative cost estimates between GM anc ; Morse Committee* report except in the case o ; steam engine. Here the Morse panel was cli / more optimistic than GM as to the potential for t reduction. We think this is because while the s i engine itself— the expander— is indeed simple, ou perience indicates that the steam generator I burner controls, and the condenser and water trols seem not to fall in such a category. For reason we feel that unless some really major i reducing breakthrough occurs, the Otto cycle s ignition engine still remains the most probable wi • in the current antipollution sweepstakes. * * * * Panel on Electrically Powered Vehicles, De] ■ ment of Commerce. 20 303 GOVERNMENT PROPHECIES AND REALITIES U.S. OIL PRODUCTION 1859-1952 BILLION BARRELS PER YEAR 304 U. S. 1 35 1.74 2 17 PRODUCTioisr ^^^ ■■■■ ^^m 2.74 2.90 3.24 u. s. RESERVES =19401 119451 119501 119551 119601 11965= BILLIONS ^m ^m ^m OF 29.54 ^^^ ^^^ BARRELS ^H ^m OF CRUDE AND 35 ^^ ^^= NATURAL GAS 38.43 LIQUIDS Source: Petroleum Facts & Figures, API. 1959 & 1967 Editions. 39.38 \ 9 / V| POLLUTION COST ^ / \ / GRAMS ^^ #^ PER ^V / MILE N. „--'"' iK«« ..--^'^ DOLLARS TIME^ 305 LU < a O < u. O UJ U o o -5 Z 4! -SP joax ->ad suox uojUjyy ui suojssjujg 306 CO 2 O^ UJ §§ — u I— H o o a. < CO < LU < \r— _ "D \\ ^ '^ o ^^^ ^ At— — ^ o) o ^^^^B ^^^^H \\ ''"■' \ iz o ^^^ ^ I 1 o u ^ i lO -0 c c o -D O • - a □ u >- " 3 .~ O '^H ^^^^H "S51 ^^ ^^^^v ^^^^ Qt '^ irt > i^ i A,^^, * f CT> ^ e ^~ S3 -1 ^ a. V Plant Damag • ■ ■ .^ • • • ■ X '" a. c 4> 0) 0> ^ Wl O) "O >< *A c o O 0) O O ,N ■qO 3 SI ^ O i_ *" u O X o Z 3 c o O a. -D 3 CO o X 0) T3 K O £ ^ £~ .9 ^•1 307 AIR POLLUTION PROBLEM DIFFERENT IN VARIOUS CITIES 1965 - 1966 LOS ANGELES PHILADELPHIA ST. LOUIS WASHINGTON CHICAGO 34.1% IPHOTOCHEMICAI SMOG Percent of days oxidant exceeds 0.15 ppm for 1 hour IGENERAL AIR POLLUTION Percent of days sulfur dioxide exceeds 0.30 ppm for 1 fiour 34.4% RELATIVE HYDROCARBON EMISSIONS WITH NO CONTROLS FUEL TANK EMISSION 9% CARBURETOR- EMISSIONS 9% EXHAUST EMISSION 62% CRANKCASE EMISSION 20% 32-493 O— 69— pt. 1 21 308 AVERAGE HYDROCARBON AND NITROGEN OXIDE EMISSIONS FROM UNCONTROLLED VEHICLES IN LOS ANGELES Hydrocarbons Nit 'ogen Oxides g/doy g/day Crankcase 113 Exhaust 354 200 Carburetor 50 Fuel Tank Total 50 200 8 567 309 JO 11 310 12 n-Decane t;Butyl benzene l-Methyl-4-ethyl benzene n; Octane — 2,2,5-Trimethyl hexane 3-Methyl heptane JS2QQ 2.3 4-Trlmethyl pentane 2,4 (2,'5i- Dimethyl hexane .rrr?.?.3-Trimethyl pentane iMethyl (yclohexane — n-Heptane - , , 2,2,4-Trimethyl pentane xlOOO ^^^ethyl hexane 2.^^,,.^, ,,,3,^ 12 .r=- 3,3- Dimethyl pentane Cyclohexane *^ ?4-nimethvl Dentane m-Xylene p-Xylene 2,3-Dimethyl pentane -Benzene = — Methyl 2 cyclopentane I,4-D|meth 'Cyclopentane 2,2-Dimethyl butane jT-Hexane 3-Methyl pentane — 2-Wethyl pentane 2,3-Oimetnyl Butane n- Pentane ^ Cyclopentene W=°— 2-Met hvl -2-butene c r^-lsopren g 2- Pentene Q-Pentene Ti-fiT I 1 u .„„„ — n- Pentane Methyl-1-butene - - i- Pentane >3-Methyl-l-Butene 1x500 cis-2-Butene >trans-2-Butene -s^iliButadiene O-Butane •i-Butene 1-Butene .Propyne Propadiene Ethane -Propylene -Ethylene x200 SWITCH VALVE Methane 0* 311 13 EXHAUST GAS 312 14 o o EFFECT OF CONTROLS ON MOTOR VEHICLE HYDROCARBON EMISSIONS LOS ANGELES BASIN 4000 3200 2400 o 1600 800 ^ No Control^^ -<«!!^*""\ ^ '*', \ \J With Controls'"" 1940 50 60 70 Year End 1980 15 AIR FUEL RATIO 313 100.0 50.0 I DISUB. INTERNAL OLEFINS I CYCLOPENTENES 10.0 ^ 5.0 I MONOSUB. INTERNAL OLEFINS BuNSUB. INTERNAL OLEFINS I I CYCLOHEXENES TRI- & TETRAALKYLBENZENES ■ DIOLEFINS DIALKYLBENZENES TERMINAL OLEFINS 16 o 1.0 C^+ PARAFFINS MONO- ALKYL- BENZENES 0.5 - PROPANE • 2,2-DIIV\ETHYLPROPANE t BENZENE ETHANE • METHANE 0.1 314 17 DEATH COMA |'v'om'i't"collapse throbbing headache HOURS EXPOSURE 18 EFFECT OF CONTROLS ON TOTAL HYDROCARBON EMISSION FROM PASSENGER CARS CALIFORNIA DATA 600 §500 LU Q. 400 >- Q 300 °- 200 < 100 o CRANKCASE 113 EXHAUST 354 354 108 106' EVAPORATION 100 100 100 12 567 TOTAL 454 208 118 '60 '61 '66 '70 '60 61 '66 '70 '60 '61 '66 '70 60 '61 66 '70 YEARS Includes eight groms for inleracllon effect of evoporative control system (20 PPM overage) 315 HYDROCARBON REDUCTION ECONOMICS California Vehicles (I960 - No Controls • 1961 - Crankcase • 1966 - Exhaust + C.C. -1970 - Imp. Exhaust + C.C. + Evap. -1972 - Tentative Calif. Std. r f 197X - Exhaust Reactors X/y////////yy/////////A Stirling, Gas Turbine, Steam, etc ^w///)( m'//'- RELATIVE POWERPLANT COST 19 CARBON MONOXIDE REDUCTION ECONOMICS California Vehicles ■I960 - No Controls 20 • 1966 - Exhaust I >^1970 - Imp. Exhaust ^'il970 - Calif. Std. /197X - Exhaust Reactors J////////////////////, . Stirling, Gas Turbine, Steam, etc. -7 jm^//////////A RELATIVE POWERPLANT COST 316 21 NITROGEN OXIDES REDUCTION ECONOMICS California Vehicles 6«-1960 - No Controls = 5 - B 4 Q -> X o z: 2 O o a: I— E 1 k 1971 - Tentative Calif. Std. 197X - Exhaust Recirculation ? 1972 - Tentative Calif. Std. #1974 - Tentative Calif. Std. y-197X - Exhaust Reactors ■W/////////W//////////- RELATIVE POWERPLANT COST 22 COmOTTEB ] THE SEARCH FOR A LOW-EMISSION VEHICLE STAFF REPORT COMMITTEE ON COMMERCE UNITED STATES SENATE of the Committee o 317 24 318 25 The Besler Steam Airplane and Author 26 319 27 COMPARISON OF VARIOUS VEHICULAR POWERPLANTS 28 EMISSIONS Grams/Mile California Driving Cycle EMIS- SION INDEX NOISE INDEX FUEL CONSUMP- TION Lbs/HP-Hr RELATIVE WEIGHT RELATIVE COST Morse Estimate RELATIVE COST GM Estimate HC CO NOx GASOLINE ENGINE 1960 11.0 80 6 HIGH MEDIUM .45 1 1 1 GASOLINE ENGINE 1970 2.2 23 6? MEDIUM MEDIUM .50 1-1.5 ... 1-1.5 197x LOWER LOW DIESEL 3.5 5 4 MEDIUM HIGH .40 2.5 1.85 2-2.5 REGENERATIVE GAS TURBINE 0.22 2.4 1.0 LOW MEDIUM .45 2 3.75 3 STIRLING 0.1 1.0 2.6 LOW LOW .40 2.5 2.5 3 STEAM 0.62 2.8 1.0 LOW LOW .70+ 3.0 1.5 3 ELECTRIC BAHERY AND MOTOR .... .... LOW LOW 7 4? ... 6? PROPOSED 1970 FEDERAL STANDARDS: Hydrocarbons: 2.2 Grams per Mile Cartwn Monoxide: 23 Grams per Mile 320 Remarks by H. F. BARR, Vice President in charge of Engineering Staff Dr. Hafstad has explained the experimental na- ture of the work at Research Laboratories. Perhaps it is an oversimplification to say that we in GM Engineering Staff move in at a specific point where Dr. Hafstad and his associates leave off, although basically this is true. In most of the enterprises en- gaging his organization and ours, we usually can stake out where a research effort ended and engi- neering development began. The mission of the Research Laboratories is to establish whether an idea, a concept or a system is technically feasible. Technical feasibility is similar to scientific feasibility in this context. Essentially, as Dr. Hafstad has explained, this is a one-of-a-kind proposition. Our assigimient at Engineering Staff is to determine whether an idea that is technically feasi- ble may eventually become technologically feasible. Here technology and commercial feasibility are synonymous. To become technologically feasible, an idea or a concept must be practicable, reproducible. serviceable and acceptable in the market because of its inherent value to the customer. I can explain this technical-to-technological se- quence with an example which is related to our Progress of Power presentation here today. You may recall that in 1958 when some of the early work on air pollution control was under way, the question was raised as to whether a catalytic converter could effectively reduce hydrocarbons and carbon monoxide in the exhaust stream. The idea appeared promising and the Research Laboratories went to work on it. As a result of this work. Research Laboratories demonstrated technical feasibility of catalytic con- version, but the research prototype understandably had problems (CHART 1). It was large, cumber- some, expensive, pretty hot and somewhat short lived. But it established technical feasibility. So the project moved to Engineering Staff. We soon learned that while we had expertise in exhaust system hardware, a number of chemical companies outside General Motors had the necessary knowledge of catalysts. A contract was arranged with catalyst suppliers and the working sample of an exhaust system was designed to use it. We came up with this system (CHART 2) which occupied a little more space beneath a car than a muffler. We also uncovered some new difficulties, not completely unexpected. Under certain driving conditions it could overheat and burn out the cata- lyst. The system needed temperature sensors and a reliable bypass valve. We also demonstrated the need for another air source, so an air pump was designed for this function. The result was a smaller system with improved reliability (CHART 3). Economically, it seemed within reasonable range. But it fell short of techno- logical feasibility because of the short life of the catalyst. Although we have in the meantime developed en- gine modification systems for reducing hydrocarbons and carbon monoxide emissions to both California and federal standards, work continues on catalytic techniques to reduce catalyst deterioration. You'll see an example in the exhibits today of such a converter (CHART 4). It utilizes a precious metal and produces excellent results, providing 321 unleaded fuels are used. In other words, the idea is still technically feasible. Technologically, it has two major drawbacks: Precious metal is not abundant enough to supply the entire industry and unleaded fuels are in short supply. Nonetheless, we along with the chemical companies are looking for a substitute cata- lyst that is both inexpensive and resistant to lead. I would like to mention one more example of the typical research-to-engineering sequence. It involves the air injection reactor system we introduced in our 1966 models in California. In the early 1960's after some not too hopeful experiments, engineers at Re- search Laboratories and AC Spark Plug Division began to log some promising results with an experi- mental system of air injection (CHART 5). By intro- ducing fresh air into the exhaust manifold, they were able to sustain oxidation of unreacted hydrocarbons and at the same time reduce CO levels. This verified technical feasibility. The next step, of course, was to find out whether a laboratory version of this system could be de- signed into a vehicle. It could. Then came the mul- tiple complexities of making such a system operate effectively on some 23 engines in our five automotive divisions— the high volume engines for which we re- quested certification in California. The heart of such an air injection technique was a well designed reliable pump (CHARTS 6, 7) that would get the right amount of air to a point near the engine exhaust valves. Too much air would smother the reaction. Too little would permit it to expire. You had to have just the proper quantity to sustain it. Time doesn't permit details of the crash program preceding the 1966 certification of the Air Injection Reactor system in California — the intensive field testing, the modifications, the fine tuning of the sys- tem in the entire product lines of the five passenger car and two truck divisions. This had to be done to determine technological feasibility of an idea that had been proved technically feasible earlier. It involved an unusually large outpouring of en- gineering talent, experience and effort, with impor- tant contributions from GM's own component divi- sions. It also involved another relationship that we in recent years have become familiar with— the rela- tionship between our industry and government. Indeed, one of our reasons for meeting with you here today is to discuss what this government-indus- try relationship involves. In the process of regulation in the emission field, we believe the first step for regulatory agencies is to establish acceptable pollutant limits or air standards for individual pollutants in the atmosphere. What is the atmospheric carbon monoxide level at which effects can be noted? How much exposure is likely to be injurious to health? What are the acceptable limits for sulphuric effluents? What hydrocarbon limits are permissible, keeping in mind a region's prevailing climate? What are the limits for nitrogen dioxide concentrations? With such atmospheric pollution limits confirmed and clearly defined, the regulatory agencies' next undertaking is to identify individual pollution sources —mobile and stationary— for each of the pollutants, such as sulphur, hydrocarbons, oxides of nitrogen and carbon monoxide. Once this is done, then regu- lation of the individual polluters— the industries, processors, utilities and individual vehicles can be approached on a rational basis. This was the overall procedural sequence initially followed by California regulators. The first order of regulation was to determine what public health limits were acceptable for atmospheric standards. Then fol- lowed a comprehensive inventory of sources, quali- tative and quantative. Then a regulatory pattern was established to moderate the sources, and from it evolved the California automotive test cycle and standards. These gave our industry certain emission targets to design to. The federal department of Health, Education and Welfare is now beginning to determine ambient air quality criteria and to survey and inventory air pol- lution sources in various regions or airsheds. The ultimate goal is a balanced, meaningful enforcement program on pollutant sources to attain air quality levels based on clearly defined needs. In the light of all these developments, what do we consider the obligation of our industry? It is to de- velop the technologically feasible control systems to meet the emission standards for our vehicles that are truly needed in the public interest. Before discussing the future, what has the auto- motive industry accomplished up to now in reducing emissions from our vehicles and what is the cost to our customer in relation to such a reduction? I would like to take a moment or two here to offer some interesting figures and projections. In 1960 a 322 car without any emission control equipment emitted 567 grams of hydrocarbons per day to the atmos- phere, as shown on this simple bar chart. With the 1970 models in California and 1971 models nationally, this total will be reduced from 567 grams of hydrocarbons per car per day to 108 grams (CHART 8). As you see, this is over an 80 per cent reduction. In addition to this reduction in HC, carbon mon- oxide emissions will be reduced by 63 per cent. In a little while you will be seeing some displays in our Progress of Power presentation here this morning. Three of these displays indicate that— in- deed— additional reductions in emissions are techni- cally possible. You'll see three experimental exhaust manifold reactors or afterburners that can do this. For instance, a 50 per cent reduction, in hydrocar- bons would result in total hydrocarbon emissions of 54 grams per day (CHART 9). Now, what are the relative costs involved in these reductions? On the right side of CHART 10 we have added a scale showing the relative cost factor. We have placed the cost of the 459 gram reduction of hydrocarbons that is already programmed at a rela- tive cost factor of one. On CHART 11 I call your attention to the short bar representing hydrocarbon emissions for a future 50 per cent reduction beside the tall pile of coins representing the relative cost required to do that job. This shows that if an additional 54 gram reduction in hydrocarbons is needed, the relative cost factor based on cost estimates of anticipated hardware requirements would be 8.5. This means an additional reduction of 54 grains will cost 8.5 times as much per gram reduction as the cost of all of the reductions made in the last decade. Stated another way, the cost to get an additional reduction of 54 grams would be almost equal to the cost of getting the original 459 gram reduction. That is why we say it is important now that gov- ernment agencies should be sure their ambient air quality standards are based on proven need. After all, the customer pays for whatever air pollution control is mandated into his vehicle, regardless of his personal preference. So we believe he should benefit from well reasoned and balanced regulation. At this point I would like to discuss with you briefly another environmental stimulus— metropolitan traffic congestion— a problem that has been with us some time (CHART 12). Even today it is still with us (CHART 13) and we are responding to it with some interesting experimental engineering. As you go through our exhibits here today you will see at least five special purpose vehicles. Four are operable and you will have a chance to drive or ride in them. Three are known as our 512 series. One is the 511, with a three-wheel suspension system. There are environmental overtones in these spe- cial purpose car experiments. Among the ground rules observed by their designers were: Minimum emissions, small size, convenience, reliability, fuel economy, ease of handling or operation. These would represent basic transportation for special pur- poses, as distinguished from the general purpose vehicles most of us drive today. In the 512 series we have included designs with gasoline, gasoline-electric and electric power plants. Obviously, you can see these vehicles would require a separate road system or exclusive lanes on today's roads for safety reasons. These cars are for short trip service. They are comparatively low speed performers and wouldn't mix in freeway or boulevard traffic. They would be handy in your immediate vicinity for a run to the supermarket, to the nearby school, the library, the drugstore or perhaps the golf club. The other operating vehicle in our presentation is the 511, an interesting three-wheel design. The 511 would be a commuter car, designed to carry two people into the city and back. The basic difference between this vehicle and the 512 series— other than the three and four-wheel running gear— is perform- ance. The 51 1 would be able to mix with freeway or street traffic, with its four-cylinder gasoline power plant. It might be the type of car you would drive to your office in the morning and back home in the evening. Its speed and range makes it attractive for metropolitan area driving— but it is doubtful if you ever would make a vacation trip with your family in it. You may be interested to know that the three 5 1 2 cars and the 5 1 1 car have been shown to a number of federal officials from Housing and Urban Development and the Department of Transportation. The cars themselves, however, were not involved in any government funded studies, projects or contracts. We have been working on them for about three years. I must emphasize that in their present state these four vehicles are experimental test beds to develop 323 mechanical details of respective engineering pro- posals. They are not designed for styling or esthetic reasons. We have a fifth experimental vehicle with us today. It is called the XP-883 and it is a complete design concept proposal with styling balance and appearance. This is a full-size mockup and, overall, it is a larger vehicle than the 512 series. For in- stance, it has room for two adults in the forward facing seats and two children in seats facing rear- ward. When the two rear seats are not in use, addi- tional luggage space is provided— more than in the 512 series. From a performance standpoint, however, this car would be able to mix with today's traffic. There- fore, you would call it a commuter car, similar in purpose to the 511. The car was designed by GM Styling and we in Engineering Staff are considering proposals for its power plant. Computer studies indicate a hybrid gasoline-electric arrangement, a new design of the hybrid version in the 512 car you saw in an earlier slide. However, the XP-883 also can be powered with either gasoline or electric systems. Again, I return to my original thesis. These ve- hicles are examples of technical feasibility— one of a kind. They are experiments to give us experience in a highly specialized field of vehicle engineering. Experimentation, to look back a bit, is not new to General Motors. . . . I don't believe too many of you in this room have personal recollections of the 1939-40 New York World's Fair in which General Motors presented its Highways and Horizons— a tour of future America (CHART 14). This dramatized a transcontinental flight over America in 1960, as imagined back in 1939. Then we had the more contemporary Futurama of the 1964-65 New York World's Fair (CHART 15). I know many of you here today saw some of these scenes. These were serious, carefully thought out pan- oramas (CHART 16). In between those two New York presentations we have had a number of GM Styling studies involving the future possibilities of special purpose vehicles. We have had the Metro- Mobility concept of mass transit and the continuing studies of the Research Laboratories Transportation Research department. One more point about the Progress of Power event here this morning. When you entered this building you walked through an exhibit dramatizing historical eras and certain landmark engines and transmissions. I hope you looked at our displays depicting not only engines and transmissions but also key developments in other technologies contributing to our industry. Obviously, the Otto cycle engine marked the be- ginning of a great transportation evolution in which General Motors has participated to the fullest. Thanks to the generosity of the Smithsonian Insti- tute, the Alfred P. Sloan Museum of Flint and a number of private collectors, we have assembled what we believe to be an imposing array of auto- motive engineering achievements. Among them in the engine group is the first V-8 L Head production engine from a 1914 Cadillac (CHART 17). And be- fore that, of course we have the 1912 Cadillac with the first electric starter. The in-hne 1929 Chevrolet six (CHART 18) was a major achievement of its day, giving the owner of the low price vehicle a consid- erable increase in product value in comparison with the previous four-cylinder standard Chevrolet. A 1947 in-line six (CHART 19) designed by Re- search Laboratories indicated the potential of high compression engine designs. You may recall it was tested with the superfuel, .Triptane. Later, in 1948, of course, came the Cadillac overhead valve high compression short stroke V-8 (CHART 20), which was the forerunner of all modern V-8 engines in our industry today. Naturally, the success of the internal combustion engine is closely allied with transmission develop- ments, and our historical collection in the Progress of Power contains a number of very important speci- mens. We have the 1928 Cadillac three-speed syn- chromesh, again a GM development adapted from the design of the late Earl Thompson. And he later formed the GM product study group that developed the first automatic transmission with a fluid coupling for 1941 models of Oldsmobile and Cadillac (CHART 21). We know it today as the Hydra-Matic. Then came the 1948 torque converter, another first in its field, introduced by Buick (CHART 22). By 1950 Chevrolet had the first torque converter in the low price field, just as in 1929 it introduced the first six cylinder engine in the low price field. If you didn't get time to see this historical presen- 32-193 O— 69— pt. 1- -22 324 tation, 1 hope you can find time to examine it tbis afternoon. In summarj-. this Progress of Power presentation \erifies that General Motors is working on many advanced concepts of the interna! combustion engine and alternate power plants as well, with such en- vironmental realities m mind as reduction in emis- sions, improvement in urban congestion, and vehicle safely. Our objective is to meet the new social needs while still providing our customers maximum value m fast, economical, persona] transportation. 325 326 '?*,* i. 327 328 MOTOR VEHICLE HYDROCARBON EMISSIONS 500 - 567 567 1 400 - 300 - 81% REDUCTION GRAMS/CAR/DAY 200 ■ 100 - f 108 I960 1970 MOTOR VEHICLE HYDROCARBON EMISSIONS 567 567 500 - 300 GRAMS CAR/DAY 200 ■ 100 - ^m^mm^^ 81% REDUCTION 1960 108 t 108 50% REDUCTION 54 f UTURt 329 MOTOR VEHICLE HYDROCARBON EMISSIONS 400 ■ 3, MS/CAR DAY 300 y 459 ILl 54 l^ n' RELATIVE - S cost fACIOR Y 2 MOTOR VEHICLE HYDROCARBON EMISSIONS 567 1 400 ■ CAMS/CAR/DAY m 300 ^459 ill FUTURE 8 RELATIVE COST FACTOR 10 11 12. 13 332 17 333 1^ "^r^^^^s-n J » (^ *~iTiir-r"- „J|J J8 19 334 20. 21 335 S 22 336 Remarks by E. N. COLE, President Good afternoon, gentlemen. I want to add my welcome and thank you for taking time to be with us today. What you saw and heard this morning represents the latest studies and developments by General Motors' scientists and engineers in the field of energy conversion for automobiles. But energy conversion research is only one of the areas in which General Motors is committed to a leadership role, both in awareness and competence. There are many others which are vital not only to the future of our business but also to the continued growth and general well-being of our nation. We operate in a highly volatile and competitive business environment spurred by increasing consumer demands, rising costs and other pressures of our business and of society. Our basic requirement is to provide automotive vehicles which are safe, reliable, durable and which represent a high level of trans- portation value for the consumer against competition from all other types of goods and services. Meeting this challenge requires continued emphasis on proving the efficiency of our operations through! novations both in technology and management. 1 we must do if we are to serve our customers m effectively and also earn satisfactory dividends our shareholders and protect the stability of own business and of the nation's economy. But society today expects more from the busiiu man than just doing a good job of running his bi ness. It looks to him for leadership in seeking sc tions to the major challenges of our times. We in the automobile industry are particulii concerned with those social and environmental issi related to the use of our products and the operat* of our facilities— traffic safety, air and water po; tion, and urban transportation. We also are all with others in the business community in helping meet many other complex challenges of our mod society— such as the crisis in our cities, education i the problems of the disadvantaged. In all of th areas, both technical and non-technical, we are cc mitted to constructive action. In the technical areas of research and devel ment, air pollution and automotive safety are two major problems facing us today. The automobile industry has made tremend" progress in improving the safety of its vehicles o the years. This includes advances both in the ca) bility for avoiding accidents and protecting the cupants in the event of an accident. And we > make even further progress in years to come. But we are concerned that similar attention is ! being given by state and federal authorities to i provements in both roads and driver performani Regardless of the continuing advances in automot' safety design, we cannot expect a significant red tion in traffic deaths and injuries unless there strong nationwide efforts to upgrade the quality our highways and drivers. From the vehicle viewpoint, the passive saf) features— those which require little or no particif tion on the part of the driver or occupants— are 1 most desirable. We have assigned high priority to ti development of features which will improve t capabilities of the driver to avoid an accident. Es< of handling and rapid response characteristics basic. Power steering, brakes and the automa' 54 337 Lpiissic ision also represent important features which [ e driver effort and allow him to concentrate on ll driving tasks. t the tire is perhaps the best example of a ii/e safety feature in helping the driver avoid cents. The tire is the car's only contact with the i-the medium through which all control is exer- ; by the driver. e latest development in tire technology is the J My, glass fiber belted tire currently available as nal equipment on some industry models but j;ted to gain wider usage during the next year. 1 new tire offers improved traction, particularly I'et roads. It has greater resistance to damage : road hazards and significantly longer tread life, addition to improved crash avoidance capabili- ithe car of the future, in my opinion, also will many new built-in features which will help to b the tremendous amount of kinetic energy in- :d in a severe accident. These energy-absorbing res for increased occupant protection might in- ;; instrument panels of different shapes, materials location, and devices which would provide a on for occupants in the event of an accident ind a certain level of severity. Other new con- of energy-absorption— both on the outside and e of the car— are under study, the area of air pollution control, we have made :antial progress toward cleaner air. \i pointed out earlier this morning, our current ;-ol systems have reduced the amount of both ocarbon and carbon monoxide emissions more 60 per cent compared with non-equipped cars. 1970 model passenger cars will have modified sion control systems that will further reduce .ust hydrocarbon and carbon monoxide emissions .n estimated 10 per cent. In CaUfornia, we will a system on 1970 models to control evaporative s from the carburetor and fuel tank which will ce total hydrocarbon emissions by over 80 per compared with an uncontrolled car. he matter of controlling oxides of nitrogen is •A frequently by air pollution authorities, particu- r in California. On the basis of limited testing xperimental cars to date, General Motors is op- stic that oxides of nitrogen emissions from most ts 1970 model passenger cars will approach the I required in the 1971 California standards, vever, the value of oxides of nitrogen control has been questioned because available data indicate that a reduction in oxides of nitrogen could actually in- crease smog instead of reduce it due to the p>eculiar chemistry of the photochemical reaction. We have turned the comer in controlling automo- tive emissions, but we are continuing to devote ex- tensive efforts toward even further improvements. Our show today spotlights a variety of advance power concepts, most of which in their basic opera- tions have relatively low pollutant emissions. The purpose of this program is to demonstrate the magni- tude of General Motors research and development activities in all types of power plants and control systems and to discuss the potential of these con- cepts for reducing vehicular air pollution in the future. The historical exhibit of automotive power de- velopment you saw in the lobby of this building traces nearly four centuries of progress. There were two aspects of this display which impressed me. First, the compression of time in the five eras depicted by our engineers demonstrates dramatically the acceleration of automotive development. The first era- from crude, gunpowder engine experiments to the four-stroke engine developed by N. A. Otto in 1876— spaimed 200 years. The second era— a period of experimentation and growth— took 25 years. The next two periods involved stabilization, mass produc- tion and refinement, and lasted 20 and 15 years, respectively. The fifth and current era began only nine years ago, and is characterized by power train optimization. Clearly more progress is being made in shorter time frames, and it is equally clear that greater expenditures of time and effort are required to develop new concepts today to meet the more spe- cialized and demanding requirements of the Ameri- can motorist. The second major impression I received from the exhibit was the highly competitive nature of early power plant development from which the internal combustion engine successfully emerged. In 1900, for example, when 4,192 vehicles were manufactured in this country, 1,681 of them were powered by steam, 1,575 by electricity, and only 939 by gasoline engines. Why then did the gasoline engine achieve the position it holds today? The answer is that under the refining pressures of 55 I 338 research and development, the internal combustion engine was proven to be the most feasible, the most practical, and the best suited to the job of powering a car. That task, incidentally, places a variety of severe demands on a power plant— much more so today than at any time in the past. Starting from an inferior position, the inherent technical and economic advantages of the gasoline engine were developed more readily and to a higher state of art than the competing steam and electric imits. Research on steam and electric vehicles, how- ever, continued over the years. Floyd Clymer's auto- motive history records more than 1 1 nameplates of steam powered cars in this country. Some of the same disadvantages of steam and electric power plants which caused them to lose out in the early competition with the gasoline engine remain today as significant obstacles to their broad automotive application. The only valid reason for the support of electric and steam power plants today is their promise of relatively low levels of pollutants. However, the trade-offs necessary to use of these power plants in their present stages of development are severe. Even though we are firm in our belief in the su- periority of the internal combustion engine, we are similarly firm in our commitment to thoroughly in- vestigate all possible alternative power plants for automobiles. The industry, during the past 40 years, has ex- plored just about every type and configuration of power plant that could possibly comf)ete with the gasoline internal combustion engine. This includes various forms of electric power plants, the steam en- gine, the Stirling external combustion engine, free piston engine, Diesel and gas turbine power plants, and hybrid power plants. All of these advance power concepts have ad- vantages—real or potential— over the internal com- bustion engine, with lower pollutant emissions being a major plus in virtually every case. But each of them also has major disadvantages which reduce its prac- tical value as an all-round competitor to the internal combustion engine, as you have seen and heard this morning. If any new power plants are to achieve broad usage— with no reductions in safety, economy and convenience— major technological breakthroughs will be required. We do not claim breakthroughs for any of these I projects you have seen today. And obviously siderable additional development is necessar ^ fore any of the vehicles on display could be available for production. General Motors, however, will continue to aj sively press its research efforts in all areas of ir^ power in an attempt to reach solutions whicl ju best serve the needs of society with respect to fli air pollution and overall transportation requiren s. The time and effort required to develop a t kind of automotive power plant is not gen ly recognized by those outside of the power-ori xl industries. I believe the history of the gas tu le engine illustrates the magnitude of this task. The GM Research Laboratories has been s |. ing gas turbine engines and their possible applic ,0 to vehicles for more than 20 years. An experiir a] gas turbine engine was constructed and tested i le late 1940's. The first gas turbine powered pass ;r car built in this country— the Firebird I— was > duced by GM in 1954. Subsequent development work led to other en s not only at our Research Laboratories but al it our Allison and Electro-Motive Divisions. Res h units were installed in Firebirds II and III, i h were built in the late 1950's. In addition, thes :- perimental engines were installed in trucks d coaches to investigate their potential in these ; i- cations. Turbine work continued here at the Tecl il Center and in some of our divisions, and addi; j! engineering effort led to such developments a x regenerative gas turbine engine and GM's f a transfer— both of which helped to solve some < ii power plant's problems regarding automotive : i cations. The latest development came recently in th i nouncement by our Detroit Diesel Engine Di' i that production of gas turbine engines for 1 applications would begin in 1971. I Thus, after years of extensive and intensiv j search and development— including the constn; I of special laboratories and other facilities— thi u turbine engine has been developed from initia :■ periments to a production model for special pui i applications. This power plant, however, still cannot con ( with the internal combustion engine as a passi ) car power plant. A major reason is that becaus' i 56 339 riturbine engine inherently operates at continuous, 1 1 temperature levels, the present materials technol- )' requires the tise of expensive materials. In addi- j;, the transient response characteristics of the gas I'line cannot match the internal combustion engine. Me it is competitive with other truck and bus ncs which operate over longer periods at rela- jly steady speeds and loads, the gas turbine en- nters difficulty in competing with the internal ibustion engine in stop and go traffic, rapid ijleration, and other typical city driving modes. nteresting parallels can be drawn between the ; turbine and current discussions about steam ines. You saw two GM steam engines today, and e heard their advantages and disadvantages dis- ced. While steam engines certainly are not new, r stage of development as modern automobile ,er plants approximates the early days of gas ()ine engines. Compared to the internal combustion engine, the im engine is inefficient. Its size, weight, and cost Imajor components also are serious handicaps. !lhermore, the freezing problem is critical unless a I working fluid can be developed. I n its basic design, the steam engine is simple. But lilso is very poorly suited to provide the power ded and demanded by the American motorist, en modifications are made to help the steam ine meet these complex automotive requirements )r example, to reduce size or provide accessory ver— then the complexity and cost of the steam ;ine rises rapidly. To be truly competitive with sent engines, any alternative power plant must isfy all automotive requirements, not just provide lie power. And it must be economically feasible— nust be able to be manufactured inexpensively on nass production basis using ordinary materials as II as be inexpensive to operate and maintain. With respect to the steam cars you saw this morn- ing, it was pointed out that one has an engine built by Besler Developments, Inc., and the other an engine built by GM Research Laboratories. We claim no great scientific breakthroughs on these de- velopments, but General Motors is willing to share the steam technology represented in these two vehicles through the grant of licenses on any features for which we obtain patents. An accurate perspective of engine development effort is essential for decisions affecting automotive power plants. If we expect to develop a truly com- petitive alternative power plant, I cannot emphasize too strongly the need for technological break- throughs. And these require considerable develop- ment effort. At the present state of technology, the internal combustion engine is the best all-round power source for the automobile. We recognize that its emissions do contribute to air pollution and we share the nation's concern over this important and complex problem. However, we believe that clean air quality objectives in the foreseeable future can be achieved most quickly and at a lower cost through further de- velopment and refinement of the conventional in- ternal combustion engine, along with improvement in emission control systems and fuels. As our times change and our technological knowl- edge increases, so do the ways people live and travel. We in General Motors are committed to re- search and development programs which will give us the technological competence not only to meet the increasing requirements of our business but also to provide leadership in insuring the continuing progress and well-being of our nation and its people. We are meeting this responsibility today— and we will continue to meet it in the future. Thank you. 57 32-493 O— 69— pt. 1- -23 340 341 342 Exhibit 25 (Automobile Manufacturers Association's exhibit No. 15: paper by the E ^ neering Office, Chrysler Corporation, "History of Chrysler Corporation G Turbine Vehicles" (Jan. 1964, revised Aug. 1966).) History o Chrysler Corporatioi GAS T U R B I N I VEHICLE BfGINEERING OFFICE w CHRYSLER CORPORATION 343 HISTORY of CHRYSLER CORPORATION GAS TURBINE VEHICLES MARCH 1954 - JUNE 1966 A review of gas turbine -powered vehicles shown publicly by Chrysler Corporation. CHRYSLER CORPORATION ENGINEERING OFFICE Technical Information January, 1964 Revised: August 1966 Pai 344 CONTENTS EARLY INVESTIGATIONS AND RESEARCH 1 Survey before World War U Navy contract for aircraft engine Automotive turbine development Problems to be solved with the turbine Advantages of today's turbine THE FIRST TURBINE CAR 1954 Plymouth Turbine Display at Waldorf-Astoria in New York City Demonstration at the Chrysler Proving Grounds The first engine and its important features Installation in a 1955 Plymouth -niE 1956 CROSS-COUNTRY ENDURANCE TEST 6 1956 Plymouth test from New York City to Los Angeles Improvements in the engine THE SECOND GENERATION TURBINE 8 1959 Plymouth test from Detroit to New York The engine and its major improvements (efficiency and materials) A TRIO OF GAS TURBINE VEHICLES 10 The Turboflite 1960 Plymouth Turbine car Two-and-a-haLf ton Dodge truck with a turbine engine Gas Tkrbine Power Conference in March 1961 AN IMPORTANT PHASE OF RESEARCH AND DEVELOPMENT L A coast-to-coast engineering evaluation 1962 Dodge Turbo Dart The third generation turbine (CR2A) and its specifications 345 CONTENTS (cont'd) Page (■)NSUMER REACTION TOURS 16 1962 Dodge Turbo Dart and Plymouth Turbo Fury Arrangements for the tours Consumer reactions Announcement to build 50 to 75 turbine cars Dodge Turbo Truck Chicago Automobile Show Engineering award received by Mr. G.J. Huebner, Jr. .TURBINE CAR FOR PUBLIC EVALUATION 20 Chrysler Corporation Turbine Car TTie Fourth generation turbine engine and its specifications Driving the car Production facilities Consumer Research Program Selection of users First consumer delivery Summary of Consumer Delivery Program ESULTS OF CONSUMER EVALUATION PROGRAM 32 Users' Reactions Engineering gains from the users' program The Service Aspect THER EXPOSURES OF THE TURBINE CAR 38 Shopping Center Exhibit World Tour The Turbine Car at the World's Fair Tour of Colleges Remarks i i LOOK TO THE FUTURE 42 346 HISTORY of CHRYSLER CORPORATION GAS TURBINE VEHICLES MARCH 1954 - JUNE 1966 ,.^ EARLY INVESTIGATIONS AND RESEARCH At Chrysler Corporation, the earliest work on gas turbine engines dates back to before World War Il.when an exploratory engineering survey was conducted. These studies showed that, although the gas turbine engine had strong possibilities of being an ideal automobile engine, neither materials nor techniques had advanced to the point where th cost and time of intensive research would be warranted. At the close of World War II, studies of completely new concepts in gas turbine design-j were started. As a result of this work, Chrysler was awarded, in the fall of 1945, »<< research and development contract by the Bureau of Aeronautics of the U. S. Navy to'ij^'i create a turboprop engine for aircraft. This program- -although terminated in 1949-- resulted in the development of a turboprop engine which achieved fuel economy ap- proaching that of aircraft piston engines. Chrysler research scientists and engineers then returned to their original objective- - the automotive gas turbine engine. In the early 1950's, experimental gas turbine poweii plants were operated on dynamometers and in test vehicles . Active component developi ment programs were carried out to improve compressors, regenerators, turbine sections, burner controls, gears, and accessories. Here they faced many challenges: fuel consumption had to be competitive with conven- tional engines; components had to be small and highly efficient; noise had to be in the tolerable range; engine braking was a necessity, and the acceleration time-lag had to be reasonable. In addition, readily available and non- strategic high temperature materials had to be developed, exhaust gas temperatures had to be low, and development work had to meet< the requirements of building an engine which would be light, compact, reliable, easy tc maintain and, from the cost aspect, competitive with the conventional automobile engin In spite of these difficult requirements, Chrysler research engineers were convinced that the potentialities of the automotive gas turbine engine were more than sufficient to warrant intensive research and a full-scale design and development program. 347 day, it is obvious that the advantages of the gas turbine over the conventional engine indeed, real. Some of these advantages are: . Maintenance is reduced considerably . Engine life-expectancy is much longer . Development potential is remarkable . The number of parts is reduced 80% . Tuning-up is almost eliminated . Low-temperature starting difficulties are eliminated . No warm-up period is necessary , Antifreeze is not needed . Instant heat is available in the winter . The engine will not stall with sudden overloading . Engine operation is vibration-free . Operates on wide variety of fuels . Oil consumption is negligible . Engine weight is reduced . Exhaust gases are cool and clean 348 3 - THE FIRST TURBINE CAR March 25, 1954 was a very important date in automotive gas turbine history: Chryi Corporation disclosed the development and successful road testing of a 1954 product! model Plymouth sport coupe which was powered by a turbine engine. The same car on display from April 7 through 11 at the Waldorf-Astoria Hotel in New York City, on June 16, 1954, it was demonstrated publicly at the dedication of the Chrysler Engj neering Proving Grounds near Chelsea, Michigan. 1954 PLYMOUTH TURBINE GETS A PROVING GROUNDS WORKOUT This car marked the first attempt by an American automotive firm to install a gas tuj bine engine in a production automobile . The engine was rated at 100 shaft horsepower. Although built essentially as a laboratory development tool, it was considered to be "a milestone in automotive powe engineering" because it embodied solutions to two of the major problems long associa J with vehicular gas turbines --high fuel consumption and scorching exhaust gas. The key feature which contributed to removing these technical barriers was the revo- lutionary new heat exchanger, or regenerator. It extracted heat from the hot exhaust gases, transferred this energy to the incoming air, and thus lightened the burner's jo of raising the gas temperature. The result was conservation of fuel as well as lower exhaust temperatures. 349 - 4 - TURBINE ENGINE FITS NEATLY INTO 1954 PLYMOUTH Igas turbine engine without a regenerator would have required several times the amount fuel normally used in a regenerator-equipped engine. The extra fuel would be re- tired to heat the gases to operating levels . )e regenerator also performed another important function. It reduced the exhaust gas mperature from about 1200 degrees F at full engine power to a safe level of less than )0 degrees F. Even more important, at idle the temperature was reduced to 170 ,;grees F. By the time the gases pass through the exhaust ducts to the atmosphere, the mperature was reduced even further. ven with these breakthroughs, a great deal of work and many development problems iiU remained. On the date of the original turbine disclosure (March 24, 1954), "hrysler Corporation stated: "Whether we ultimately shall see commercial production : gas turbines for passenger cars depends on the long-range solution of many complex letallurgical and manufacturing problems. There is no telling at this time how long it ill take to solve these problems . " 350 - 5 Almost a year later, the same basic engine was installed in a 1955 Plymouth. Thisc although never displayed at public exhibits, was used for driving evaluation tests on Detroit area streets. DETROIT TRAFFIC TEST FOR 1955 PLYMOUTH TURBINE 351 THE 1956 CROSS-COUNTRY ENDURANCE TEST 1 March, 1956, another historic event took place- -the first transcontinental journey f an automobile powered by a gas turbine engine. 1956 TURBINE SPECIAL EN ROUTE CROSS-COUNTRY I The turbine car- -a four-door 1956 Plymouth sedan, a standard production model in every respect except for the revolutionary Chrysler-developed power plant- -departed from the Chrysler Building in New York City on March 26. On March 30, four days and 3,020 miles later, it completed the cross-country endurance lest when it arrived at the City Hall in Los Angeles, California. The purpose of the run was to test the turbine's durability, acceleration, fuel economy, control in traffic, action on steep grades, and operation under various climatic conditions. It marked another Chrysler Corporation "first" in the automotive record books and was considered a successful test. Over the entire trip, fuel economy averaged approximately 13 miles per gallon using mostly "white" (unleaded) gasoline and some diesel fuel. The run was interrupted only twice for minor repairs which did not involve the turbine engine (a faulty bearing in the reduction gear and an intake casting were replaced). The engine itself and its basic components performed very well and without faUures of any kind. 352 I The experimental turbine engine was essentially the same as the one tested previous! in the 1954 Plymouth. However, it reflected progress in the following major poi engine friction was greatly reduced; considerable work had been done with plain bearii instead of more expensive types of antifriction bearings; the combustion system was inl proved, and engine controls were developed further. Automatic controls allowed dl driver to operate the turbine car just as he would a conventional automobile . MAIN COMPONENTS OF THE FIRST GENERATION GAS TURBINE ENGINE were: (A) Accessory Drive Gears; (B) Compressor Impeller; (C) Regenerator; (D) Combus- tion Chamber; (E) First-Stage Turbine, which drives the compressor impjeller and accessories; (F) Second-Stage Turbine, which supplies power to the transmission; and (G) Double -Stage Reduction Gearing to the transmission. 353 THE SECOND GENERATION TURBINE Biing their calculations on extensive test data and performance results of the 1956 -ss-country trip, Chrysler engineers designed and developed a second engine. After e3;nsive laboratory tests, it was installed in a standard production 1959 Plymouthfour- iiT hardtop. 1959 PLYMOUTH TURBINE SPECIAL READY FOR ROAD EVALUATION December, 1958, this latest Turbine Special made a 576-mile test run from Detroit New York. The results showed significant improvements in fuel economy. lis second generation turbine (also a laboratory development tool) operated in the 200 )rsepower range; and, although it was improved in almost every respect, two areas ,sre particularly outstanding- -efficiency and materials. hree major engine components (compressor, regenerator and burner) showed signifi- int improvements in operating efficiency. The compressor efficiency was brought up 354 9 - to 80 per cent, a 10 per cent increase. The regenerator or heat exchanger unit re- claimed almost 90 per cent of the heat energy in the exhaust gas whereas peakefficie in the 1956 cross-country run was around 86 per cent. Burner efficiency also was in? proved so that it was approaching the point of ideal combustion. Less apparent, but fully as important as the engine design advances, was the progre in turbine metallurgy. Prior to this time, automotive turbine metals were similar t< those used in aircraft jet engines. Although these existing materials certainly were adequate for test engines, they would not be suitable for automotive production for key reasons: cost, and the simple fact that neither production capacity nor the avail world supply of the required alloying materials could support such a program. Through Chrysler metallurgical research, new materials were developed which: con tained plentiful and relatively inexpensive elements; could be fabricated by conventioi means; and had excellent resistance to heat and oxidation at elevated temperatures. Applications for these new materials were combustion chamber liners, turbine wheel and blades, etc. The accompanying illustration shows a three-inch disc of the new material (left), with a disc of high-grade stainless steel (right). Both samples were exposed in air to tem- peratures above 2, 000 degrees F in an electric furnace for 150 hours , At the end of that time, the new Chrysler -developed ma- terial showed no distortion or disintegration, while the effect on the stainless steel sample is apparent. METALLURGICAL BREAKTHROUGH 355 10 - A TRIO OF GAS TURBINE VEHICLES incouraged by previous progress, Chrysler engineers designed the third generation )f the turbine and introduced it in tliree different vehicles. The initial showing was to lewsmen on February 28, 1961. The vehicles were displayed publicly in Washington, D. C, March 5-9, 1961, in conjunction with the Turbine Power Conference of the American Society of Mechanical Engineers, co-sponsored by the Department of Defense . TURBOFLITE--ADVANCED POWER, ADVANCED STYLING The first of these gas turbine vehicles was an experimental sports car called the "Turboflite" (shown above). In addition to the engine, other advanced ideas of the car were the retractable headlights, a deceleration air-flap suspended between the two stability struts, and an automatic canopied roof. This "idea" car received wide public interest and was shown at auto shows in New York City, Chicago, London, Paris, etc. I960 TURBINE -POWERED PLYMOUTH 32-493 O— 69— pt, 1 24 356 - 11 The second of the vehicles was a 1960 Plymouth (shown on the previous page) which was standard in every respect except for the engine and minor exterior styling modi- fications . The final member of this trio was a two-and-a-half-ton Dodge truck which was a stand- ard production vehicle- -except for its gas turbine engine. This application demon- strated the turbine's versatility and adaptability because the engine in this truck was basically the same as those in the passenger cars. TURBINE POWER FOR I960 DODGE TRUCK 357 - 12 AN IMPORTANT PHASE OF RESEARCH AND DEVELOPMENT After months of test and development work, a CR2A gas turbine engine was installed in a modified 1962 Dodge. Called the Dodge Turbo Dart, styling modifications to the car were adapted to reflect its radically different power plant. The bladed wheel motif of the grille and wheel covers reflected the appearance of the vital components of the gas turbine. COAST-TO-COAST TEST VEHICLE— 1962 DODGE TURBO DART The car left New York City on December 27, 1961 , to begin a coast-to-coast engineer- ing evaluation . After traveling 3, 100 miles through snowstorms, freezing rain, sub- zero temperatures and 25 to 40 mile per hour head winds, it arrived in Los Angeles on December 31. The turbine had not only lived up to all expectations but had exceeded them! An inspec- tion showed every part of the engine in excellent condition. Fuel economy was consist- ently better than a conventional car which traveled with the turbine car and was exposed to the same conditions. 358 - 13 MAIN COMPONENTS OF THE CR2A gas turbine are: (A) the starter-generator; (B) fuel pump; (C) regenerator; (D) compressor impeller; (E) combustion chamber; (F) first-stage turbine, which drives the compressor impeller and accessories; (G) variable second-stage nozzle; (H) second-stage turbine which supplies power to the driveshaft; (I) one of two exhaust outlets; 0) single-stage helical reduction gear of 8.53-to-l ratio which reduces power turbine rpm of 39,000 to 45, 730, to a rated out- put speed of 4, 570 to 5, 360 rpm. 359 14 SPECIFICATIONS OF CHRYSLER CORPORATION'S MODEL CR2A GAS TURBINE ENGINE GENERAL Type: Regenerative gas turbine * Rated Output: Power - 140 bhp @ 4, 570 rpm output shaft speed Torque - 375 Ib-ft @ zero rpm output shaft speed Weight: 450 lbs Basic Engine Dimensions (without accessories) Length Width Height With automotive accessories in place, the over-all length is: Fuels: Unleaded gasoline, diesel fuel, kerosene, JP-4, etc. 27 inches 35 inches 27 inches 36 inches COMPONENTS Compressor: Type • Stages Pressure Ratio Centrifugal One 4:1 Efficiency 80% First Stage Turbine: Type Stages Efficiency - Axial - One - 87% Second Stage Turbine: Type - Axial Stages - One Efficiency - 84% Regenerator: Type - Single rotating disk Effectiveness - 90% Burner: Type - Single can, reverse flow Efficiency - 95% * DESIGN POINT CHARACTERISTICS Maximum Gas Generator Speed - 44, 600 rpm Maximum Second Stage Turbine Speed - 45, 700 rpm Maximum Output Speed (after reduction gears) - 5, 360 rpm Maximum Regenerator Speed - 17 rpm Compressor Air Flow - 2.2 lb/sec ^ First Stage Turbine Inlet Temperature -^ 1700 F Exhaust Temperature (full power) - 500 F * Ambient conditions: Temperature - 85°F; Barometric Pressure - 29.92 in. Hg 360 15 The key to the excellent performance and economy of the third generation gas turbine (called the CR2A) was its new variable turbine nozzle mechanism. THE VARIABLE NOZZLE MECHANISM is installed by a research engineer in the rea» of the CR2A-turbine engine housing (left). The nozzle mechanism (right) acts in shutter fashion to provide engine braking, improve acceleration and increase fuel ec( nomy by controlling and directing the angle of the jet stream to the power turbin& blades. The automatic second stage turbine nozzles provided optimum results throughout the entire operating range of the engine. Thus, economy, performance, or engine brakii could be maximized as required by the driver. For example, one area of performan* is what is termed acceleration lag- -the time it takes the compressor section to reach operating speed after the accelerator pedal is depressed. The first turbine engine ha an acceleration lag of seven seconds from idle to full -rate output; the second engine required three seconds to achieve maximum vehicle acceleration, while this new engi required less than one and one-half seconds to accomplish the same performance. 361 16 CONSUMER REACTION TOURS \nother experimental turbine-powered car--the Plymouth Turbo Fury — joined the .Dodge Turbo Dart, and the two turbine-powered cars began extensive consumer reac- |;ion tours at dealerships throughout the country in cities such as Los Angeles, San Francisco, Kansas City, St. Louis, Cleveland, Detroit, Chicago, etc. Two other airbine cars, a second Dodge and a second Plymouth, were added during the month of April in order to expand coverage of the tours. AU four cars were powered by ver- sions of the CR2A turbine engine. 1962 TURBINE TWINS The tour schedule was similar in each area. When the cars arrived in a given city they were first displayed to members of the local press. The press events involved explaining the turbine and answering questions, giving each newsman a ride in one of the cars, and, in some cases, staging special tests. After menibers of the press had viewed the cars, they were then displayed at various dealerships. 362 - 17 One of the key reasons for these tours and exhibits was to elicit and evaluate consumei reactions to the turbine. The cars were shown at Plymouth and Dodge dealerships in approximately 90 major cities in the United States and Canada. STOPOVER POINTS ON CONSUMER REACTION TOUR During this time hundreds of thousands of people came to see the turbine vehicles, and( public interest was intense and serious. When asked, "if this car were offered forsal« to the motoring pijblic, do you think you would buy one?" 30 per cent of the turbine viewers said "yes" they would definitely buy one and 54 per cent answered they would think seriously of buying one. 363 18 i a result, on February 14, 1962, Chrysler Corporation announced that it would build to 75 turbine -powered passenger cars which would be available to selected users by e end of 1963. Typical motorists would be offered an opportunity to evaluate turbine irs under a variety of driving conditions. February 14, 1962, in Chicago, Chrysler Corporation exhibited another gas turbine 'hide- -the Dodge Turbo Truck. This medium-duty truck (also equipped with the 12A experimental engine) had just completed a 290-mile test run from Detroit to licago . TURBINE PULLING POWER TESTED IN 1962 DODGE TURBO TRUCK Irom February 17 through 25, three gas turbine-powered vehicles (the Plymouth. )odge, and Dodge Truck) were exhibited at the Chicago Automobile Show. In March 7, 1962, George J. Huebner, Jr., Executive Engineer of Research for Zhrysler Corporation, received an award from the Power Division of the American 364 19 GEORGE J. HUEBNER, JR. RECEIVES AWARD FOR GAS TURBINE LEADERSHIP Society of Mechanical Engineers "for his leadership in the development of the first automotive gas turbine suitable for mass-produced passenger automobiles." It was the first such award ever given to an automotive engineer. 365 20 A TURBINE CAR FOR PUBLIC EVALUATION toy 14, 1963, was an eventful day in t±ie history of automotive design--tlie Chrysler lorporation Turbine Car was unveiled to newsmen at the Essex House in New York City. )n the same day, a ride-drive program for the press was held on a two and one-half lile course at the Roosevelt Raceway on Long Island. On May 15, the car was viewed t the Waldorf-Astoria Hotel in New York City by Chrysler's Metropolitan New York ealers . rhese events signalled the public launching of Chrysler Corporation's program of build- ng 50 turbine -powered test cars and placing them in the hands of typical drivers for ■valuation in everyday use. i rhis program was an outstanding point in the history of turbine vehicles for two reasons: t was the first time any company had committed itself to build a substantial number of !ras turbine automobiles; and it was the first time turbine -powered automobiles would ye driven and evaluated by private individuals outside the corporation. The Turbine Car was a completely new automobile. Since the sole purpose was to determine the reaction of typical American drivers to turbine -powered vehicles, the engine was placed in a family-type car designed for everyday use. This formed a familiar evaluation background for the driver. The styling theme provided an exciting setting for the vehicle itself, creating an over-all impression of fresh styling appeal with strong emphasis on a contemporary and luxurious appearance. Ornamentation was A COMPLETELY NEW CAR 366 21 REAR VIEW EMPHASIZES AERODYNAMIC STYLING based on the bladed turbine motif which is characteristic of the engine. The interi featured a full-length center console and extensive use of leather. I :.^-,---^_jjlro Aru Uu Parted Mllaag* Personal Car' Utar Aga> Occupation 37. MinneaDOlis. Minn. Miami. Fla. 6/18/64- 9/18/64 9339 Ford 1954 Wallace Danson 32 Reliability Engineer 38. 6/24/64- 9/24/64 4769 Plymouth 1961 James Shively 29 Employee Benefit Consultant Business Mactline Salesman Auditor 39. Portland. Ore. 6/29/64- 9/29/64 10024 Chevrolet 1961 Andrew Corn 44 40. Kansas City. Mo. 7/ 1/64- 10/ 1/64 5487 Plymouth 1960 Don Suttles 47 41. Detroit. Mich. 7/ 1/64- 10/ 1/64 7487 Chevrolet 1956 Leo Rahal 58 Barber 42. Atlanta. Ga. 7/ 1/64- 10/ 1/64 4380 Pontiac 1963 Herbert Kirschner 49 43. Washington. D. C. 7/ 8/64- 10/ 8/64 4461 Dodge 1961 Margaret Vance (Miss) 54 Dietitian 44. Indianapolis. Ind. 7/ 8/64- 10/ 8/64 5815 Volkswagen 1959 William Montgomery 52 Surgeon 45. St. Louis. Mo. 7/ 9/64- 10/ 9/64 10502 Chevrolet 1963 Malcolm Stevens 48 Railroad Switchman 46. New Haven, Conn. 7/15/64- 10/15/64 2617 Plymouth 1959 Maurice Libson 45 Industrial Designer College Student 47. Philadelphia. Pa. 7/17/64- 10/17/64 2784 Ford 1962 Stephen Marks 21 48. Denver. Colo. 7/22/64- 10/22/64 5492 Valiant 1963 Robert Ellingboe 24 College Student Fire Department Ueuteni Steam Fitter 49. Cincinnati. Ohio 7/23/64- 10/23/64 4287 Plymouth 1957 Jack Phelps Harold Adams 36 50. Des Moines, lov/a 7/29/64- 10/29/64 4201 Plymouth 1957 47 51. Seattle. Wash. 7/30/64- 10/30/64 8407 Buick 1948 William Potter 52 Bank Trust Officer 52. Raleigh. N. C. 8/ 5/64- 11/ 5/64 5108 Plymouth 1959 Ferdinand Lemus 47 Operations Research Ant Interior Decorator 53. Los Angeles. Calif. 8/ 6/64- 11/ 6/54 4613 Dodge 1958 Robert Hall 46 54. Boston. Mass. 8/ 7/64- 11/ 7/64 2488 Plymouth 1958 Thomas Lawn 47 Telephone Repairman 55. El Paso. Texas 8/12/64- 11/12/64 2514 Dodge 1962 Alice Schult2 3ary, Indiana 2/ 4/65- - 5/ 4/65 6361 Lincoln 1957 Walberta Herndon (Mr { resno, Calit. 2/ 9/65- - 5/ 9/65 7532 Chevrolet 1963 Eugene Winter ,m,lolk, Va. 2/10/65- - 5/10/65 5583 Chrysler 1956 Robert Adkisson '■ ■mladPlphia, Pa. 2/11/65- - 5/11/65 1734 Plymouth 1951 Niles Jaquay i' Jrlindo, Fla. 2/16/65- - 5/16/65 2866 Chrysler 1962 Seth Moorhead, Jr. t -ale'Son. N. J. 2/18/65- - 5/18/65 6640 Plymouth 1962 Irving Koetting Bill Krielemeyer , \,','y> 1 Kansas 2/18/65- ■ 5/18/65 10324 Dodge 1961 2/18/65- • 5/! 8/65 11935 Dart 1963 Thomas Sheehan III, Ohio 2/23/65- ■ 5/23/65 5492 Chevrolet 1962 Newton Cross ( )wn. Ohio 2/25/65- • 5/25/65 2604 Ford 1963 Emanuel Catsoules 3/ 3/65- - 6/ 3/65 5528 Chrysler 1964 Roland Whitman = ■. Wis. 3/ 4/65- ■ 6/ 4/65 7831 Chrysler 1957 Raymond Penn Lht. Petersburg. Fla. HacKsonvitle. Fla. 3/ 5/65- ■ 6/ 5/65 5680 Buick 1958 Frances Willy (Mrs,) 3/ 9/65- • 6/ 9/65 5438 Ford 1960 Martha Linton (Mrs,) Kan Bernardino, Calif. 3/11/65- ■ 6/11/65 5286 Chevrolet 1962 Frank Pyle KolUfnbia, S. C. 3/17/65- • 6/17/65 4514 Plymouth 1958 Joseph Byrd ihharloHe, N. C. 3/18/65- - 6/18/65 4580 Chrysler Dodge 1963 James Downing UiuHalo. N. Y. 3/18/65- - 6/18/65 3795 1962 Stuart Kestee, Jr, llucson. Ariz. 3/18/65- 6/18/65 6842 Ford 1960 Duane Doane : lirmingham. Ala. 3/24/65- 6/24/65 4361 Chevrolet 1962 William Russell )akland. Calif. 3/25/65- 6/25/65 2732 DeSoto 1960 Glen Coberly ■ demphis, Tenn. 4/ 1/65- 7/ 1/65 5123 Plymouth 1959 Hugh Perkins ittte Rock. Ark. 4/ 1/65- 7/ 1/65 4801 Plymouth 1958 Paul Carlton acoma. Wash. 4/ 1/65- 7/ 1/65 8098 Plymouth 1962 Mane Hinderv (Mrs,) ' iM^hnma City. Okla. 4/14/65- 7/14/65 6126 Plymouth 1959 Arthur Forrester ' n, Vt. 4/15/65- 7/15/65 3114 Ford 1963 Raymond Baldwin <, Texas 4/22/65- 7/22 '65 3775 Buick 1961 James Irion ,s, Nev. 4/22/65- 7/22/65 3874 Plymouth 1962 Thomas Schofield ij, Ohio 4/28/65- 7/28/65 10192 Plymouth 1957 Harold Buscher „ . „,,,.. 11. Pa. 4/29/65- 7/29/65 6387 Imperial 1955 Raymond Baracaia ,jn A'ltonio. Texas 4/29/65- 7/29/65 2698 Thunderbird 1958 Lawrence Pawkett 'New Brunswick. N.J. 5/ 4/65- 8/ 4/65 4548 Plymouth 1963 John Moore : ;o«ini1on. Ky. 5/ 4/65- 8/ 4/65 7332 Plymouth 1957 Mary DeMaria (Mrs.) . ."hicago. III. 5/ 6/65- 8/ 6/65 5062 DeSoto 1960 Arthur Karnstedt . ihreveport. La. 5/ 6/65- 8/ 6/65 4993 Chevrolet 1959 Ray Kelly . Jaltimore. Md. 5/11/65- 8/11/65 2555 Plymouth 1962 Gerald Herman . :olumbus, Ohio 5/12/65- 8/12/65 5032 Falcon 1961 Garrell Spires ^'lewoort News. Va. 5/13/65- 8/13/65 4043 Valiant 1962 James Langston Ijuluth, Minn. 5/13/65- 8/13/65 12242 DeSoto 1958 Alden Olson .'•lagstaft. Ariz. 5/14/65- ■ 8/14/65 6464 Chrysler 1963 Charles Ryriel .ISary. Ind. 5/18/65- 8/18/65 7146 Plymouth 1960 Arvella Miner (Mrs,) ::hattanoo8a. Tenn. ^aterson. N. J. 5/20/65- 8/20/65 6930 Chrysler 1958 Wade Hampton 5/25/65- 8/25/65 14046 Chrysler 1963 Edwin Schuiz Mew York, N. Y. 5/27/65- 8/27/65 8122 Plymouth 1963 David Poucher Arlington. Va. 5/27/65- 9/27/65 4302 Pontiac 1963 Elmer Hobbs, Jr, field, Mass, 10/ 7/65- 1/ 7/66 10076 Mercury 1958 Richard Remillard Portland. Ore. 10/ 7/65- 1/ 7/66 4992 Dodge 1963 Robert Ford New Orleans, La, 10/12/65- 1/12/66 1025 Buick 1955 Hazel Mabrv(Mrs.) Rochester, N. Y, 10/13/65- 1/13/66 5100 Chrysler 1963 John Ferranti Cedar Raoids. Iowa 10/14/65- 1/14/66 8675 Plymouth 1957 Thomas Reilly, Jr. W, Palm Beach, Fla. 10/26/65- 1/26/66 2767 Thunderbird 1960 Maximilhan Crispin Chicago, III, 10/28/65- 1/28/66 2641 Corvair 1960 Patricia Anderson (Mr! 58 Marke-ing Speci.ilist 30 School Teaclier 64 Insurance Broker 53 Prof, of Agricultural Econonr ' Covering Sale Raiiro ad Condui -tor Appliance Sales Pharn naceutical Salesmi Interv Newer, Bui eau 01 ( Cabin et Maker Petrol leum Distr Attorr Busin Engin eenng Supervisor President, Air Condition 36 Store Manager, Furnituri Real Estate Appraiser Welding Foreman Service Station Owner Hous»wile Hospital Supply Salesman Real Estate Broker & Builde Beverage Salesman Hair Stylist Bank President Utility Company Employee nvestigator-rlaval Supply Center 47 Investigator Production Foreman Secretary Aircraft Mechanic T rade & Educ. Director State of Wyo uditor-u. S. Govt, A H F xecutive. Tool and Die 1 (1 wner and Ope rator- Auto Electric S ecretarial Sta ff— Press arole Officer— SlateofCalifon ;eal Estate Builler le^lth & Safety Supervisor- Chemical Company tant Siilety Supervisor Telephone Company 47 Textboo -General Practitic 52 Paint Sa 38 Custom Hon 35 Accountant 33 Pharmaceutical Salesrr 50 Physician-Surgeon .) 47 Executive Secretary rjtten to Chrysrer requesting use of turbine car. 376 31 - RESULTS OF CONSUMER EVALUATION PROGRAM The experience of the user program indicates that the idea of turbine -powered passenger cars is capable of earning widespread consumer acceptance. Users' Reactions Each user was interviewed within two weeks of the conclusion of his use period. Usersi generally were enthusiastic about the turbine car. Although it was expected that anyonei who had free use of a new and unique automobile would have a favorable attitude toward it, interviewers were satisfied, after sufficient questioning, that it was the performance of the turbine engine itself that caused favorable reaction among users. Many people expressed the conviction that gas turbine power plants would eventually replace conventional piston engines. Others, while enthusiastic about the car, said they thought that acceleration and fuel economy would have to be improved before turbine* cars could be marketed successfully. Three out of four singled out the smooth, vibrationless operation of the engine as its principal advantage. They were impressed by this aspect of the turbine engine, and talked about a "gliding sensation" which was felt at all speeds, especially on long trips. The second most important advantage was reduced maintenance. Although the users recognized that a three-month test consisting of normal driving would not prove that ani( engine is exceptionally durable or maintenance-free, they generally assumed that thei sm.aller number of moving parts would naturally lead to less need for periodic mainte- nance. Another strong point of turbine engines, according to users, was starting ability. Regardless of the make and model year of the car each owned, users consistently con- sidered the turbine car superior to others in providing fast, sure ignition. This wasi especially noticeable in the colder climates where as soon as it was started, the turbine^ provided heat. Users appreciated getting instant heat in the passenger compartment! on a cold winter day- -and not having to think of antifreeze. 377 32 '\W i^~im THE TURBINE CARS WERE EXPOSED TO A WIDE VARIETY OF CLIMATE IN THE PROGRAM Turbine users mentioned other advantages like good engine power, quietness of oper- ation, and non-stalling characteristics. Mainly, though, vibrationless engine operation and the prospect of reduced maintenance were uppermost in their minds. In commenting on disadvantages, about one person in three expressed some dissatis- faction with acceleration lag, primarily, when starting from standstill. It was not as noticeable when cruising. In fact, most people felt that the car had exceptional acceler- ation at expressway speeds. About one person in four expressed disappointment with fuel economy. Most of the users had been driving lighter cars with less performance and relatively good fuel economy. They generally spent much time demonstrating the turbine car to friends, making frequent starts and stops, or simply idling the engine while people gathered to look at the car. Consequently their over-all fuel consumption could not be considered atrue measurement of the car's fuel mileage capability. In this area, Chrysler regards its own proving grounds and road test experience as a more valid measure of the turbine's actual fuel consumption. 378 - 33 - In reacting to the sound of the turbine engine, users tended to contradict each other. For every person who complained about the noise level of the engine, there were three or four who liked the sound of turbine power. The car was described as immensely more quiet, especially at high speeds, than the conventional piston-powered automobile. Lack of fuel availability and lack of service facilities were cited by turbine car users as disadvantages at the present time. Users sometimes found it inconvenient to locate diesel fuel or unleaded gasoline, especially on long trips. However, they knew that this situation would be alleviated if turbines came into more common use. Engineer ing Gains from the Users' Program From an engineering standpoint, the program afforded an opportunity to observe and to judge the behavior of turbine engines under actual customer driving conditions --the first time that automobile turbine engines were tested to such a wide extent under such circumstances. The turbine car user program provided an engineering record of over one million miles by 203 different drivers, men and women, old and young, in 48 states. ^"^Wii ONE OF THE 22 WOMEN SELECTED IN THE USER'S PROGRAM 379 34 ;hrysler was primarily interested in the life of engine parts and components, their lerformance and reliability, the degree and nature of maintenance required, and the mount of training desirable for service people. The program also made it possible or engineers to field test and compare different concepts and designs. This was im- )ortant because not all of the 50 turbine engines were exactly the same. As a car was )uilt and put into service, it sometimes incorporated a more advanced turbine engine :omponent or fabrication technique that engineers wanted to test under field conditions. )ften these more advanced parts were installed when an engine was brought in for iervice. ingineers were especially watching for problems that had not shown up in laboratory )r proving grounds tests. For example, regular inspections showed that some engines lad been subjected to temperatures much higher than normally would be allowed by the 'uel control. The fuel control itself was found to be working properly, but finally it was lioticed that some drivers by-passed the automatic starting system by shifting the gear selector quickly before the engine had reached idle speed. The trouble was cured by Tiodifying the automatic starting system so that the driver could not override it. (Each engine in the 50 test cars had a combined starter -generator which had performed iwell in previous testing. But during the user program it was found that the starter- generator brushes would not stand up to a combination of high altitude and low humidity, lit was concluded that until further progress occurs in brush design or materials, the best solution is to have separate starter and alternator units. Early igniters showed rapid electrical erosion and oxidation of the electrodes. Modifi- cations were made to the electrodes and the flow of air that cools them to improve igniter life to more than 20, 000 miles during the program. However, this was not con- sidered adequate and further improvement is sought. It is hoped that redesigned igniters will more than double this life. The test proved-out one of the features of a turbine engine--that power loss over a period of time is small. Moreover, it was found that the turbine engine can be brought back to its original power rating by simply introducing cleaning compound into the engine intake. 380 - 35 - The material used in compressor turbine wheels of all but three of the 50 cars was cast CRM-6D, one of the family of high-strength, high-temperature, low-cost turbin« wheel alloys developed by Chrysler Research. Operating experience with this materiaj was highly satisfactory. Other versions of the CRM-6D material proved adequate foi the variable nozzle vanes of the second stage, and for the first-stage nozzle, which U subjected to metal temperatures in excess of 1800 F during vehicle acceleration. In addition to these materials tests, the 50-car program was used as a means of testinj progressive design modifications and exploring various turbine wheel fabricatioi techniques. As viewed by Chrysler engineers, vehicle response and acceleration were surprisingl; good during the program--when it is considered that the engine was rated at only 13( horsepower and the car weighed about 4100 pounds. Acceleration time from to 60 mpl was generally around 12 seconds with an outside temperature of 85 F, and better oi cooler days. Chrysler engineers have since improved acceleration response by mean, of a faster-acting variable nozzle actuator. The nozzle blades snap into their acceler ation position about three times faster. Engine braking action of the variable nozzle also has been improved by causing thij blades to switch to their braking position faster and by making it possible for them t go a little farther, also, without an increase in temperature that could cause damage 1 I Vehicle response and acceleration are related to the responsiveness of the gas generate:! (first-stage turbine and compressor) which must speed up whenever additional powe: I is called for. (The maximum "response time" is the time it takes the gas generator ti| accelerate from idle speed to full power.) In the engines of the 50 test cars, the re sponse time was from 1-1/2 to 2 seconds--a substantial improvement over earliei engines. The many miles and hours of engine operation in the program showed thaj acceleration temperature could be increased without damaging the engine. This, plusi a reduction in the inertia of the gas generator rotor, resulted in eliminating anothej half second in the time it takes the gas generator to reach full speed. Thus acceleratioi "lag" was diminished and performance improved. Located all over the nation, the turbine cars were exposed to wide ranges of starting temperatures. Some very cold areas required the use of a 24-volt battery system, as a temporary expedient. Since then, the accessory load and bearing losses in the gas 381 36 - nerator have been reduced so that dependable starting is achieved in all climates witli 12-volt system. 5 an outgrowth of the test program, noise is being reduced by modifying accessory ive gears, reducing the speed at which the accessories run at idle, and improving e intake filter -silencers. le 1.1 million miles accumulated during the 50-car program have been a valuable, rect source of information on the daily, over-the-road behavior of gas turbine engines id components. The program was useful in judging the potential value and acceptance the gas turbine as an automobile power plant, and the lessons learned will be useful helping Chrysler engineers improve performance, reliability, life, and manufacturing * etliods. lie Service Aspect n extremely beneficial aspect of the program was the experience gained in turbine igine maintenance and in the training of service personnel. For this program, Chrys- r had five field service men and two supervisors who were charged with providing FIELD SERVICE WAS PERFORMED ACROSS THE NATION BY FIVE TECHNICIANS I 382 37 engine service and keeping track of the time during which engines could not be operate because of malfunction. The service required on 50 cars, scattered the length afl breadth of the nation, was performed essentially by these five men. During the early weeks of the program, operating time lost because of engine malfuno tion amounted to about 4 per cent. Eventually this was reduced to slightly more tha 1 per cent. Considering that many of the lost days included travel time for service me and shipping time for parts --a situation that would not exist with a vehicle that is pro duced and sold in volume --this was a remarkable record for an experimental engini out on its own for the first time. The experience of the 50-car program indicated that training of mechanics in th maintenance and repair of gas turbines would not present unusual problems. Mechanii cally, the turbine power plant is less complex than most piston engines and some othe current automobile components, so that the trained mechanic would have no troubB performing any maintenance or repair operation thatwould normally be done in the fielo' 383 - 38 OTHER EXPOSURES OF THE TURBINE CAR MODEL OF SHOPPING CENTER TURBINE EXHIBIT i BHOPPING CENTER EXHIBIT 1^ traveling exhibit began visiting large shopping centers across the United States in January, 1964. The exhibits included a turbine car, turbine engine displays, and regular Iproduction Chrysler Corporation products. Each stop-over lasted several days or TYPICAL SCENE AT SHOPPING CENTER EXHIBIT 384 39 weeks. Chrysler representatives accompanied the exhibits and explained the turbin and Chrysler's program to interested visitors. WORLD TOUR A turbine car also was taken on a world tour. From September 12, 1963, throug January 8, 1964, the car was shown in 23 cities in 21 countries. The 47,000-mil journey by a chartered aircraft included stop-overs in Geneva, Paris, London, Turir Bombay, Singapore, Tokyo, Sydney, Cape Town, Buenos Aires, and Mexico City. / ^ CHRYSLER INTEIIMATIONAl h.k. WORLD TOUR OF TURBINE CAR THE TURBINE CAR AT THE WORLD'S FAIR The Turbine Car was one of the popular attractions of the Chrysler Exhibit at the 1964- 1965 New York World's Fair. One Turbine Car was shown in a static display anc another was used for rides to Fair visitors who were selected on a random basis. 385 -40 - l)ver 350, 000 enthusiastic people were given demonstration rides in the Turbine Car .uring the Fair's two-year existence. They rode on a small circular track fashioned in the five-acre site. The static display of the Turbine Car also included a separate utaway version of the turbine engine. \long with the other Chrysler attractions at the Fair site, the Turbine Cars were 'iewed by over 18,500,000 people. GIVING RIDES AT THE CHRYSLER FAIR EXHIBIT TOUR OF COLLEGES After completion of the user evaluation program in January 1966, several turbine cars toured college campuses. University lectures, classroom presentations and seminars were conducted by turbine research engineers who discussed pioneering development of the turbine engine. 386 - 41 - THE TURBINE DREW CROWDS AT EVERY COLLEGE CAMPUS SHOWING REMARKS Tnroughout all aspects of the consumer evaluation, shopping center exhibit, world tour and college tour programs, Chrysler has been obtaining reactions from the genera public — from those who have driven or ridden in this new kind of car and from thi millions who have viewed it. These programs have served as a continuing stud; concerning the size and characteristics of the potential market for this new kind o automobile . 387 - 42 - A LOOK TO THE FUTURE Now that Chrysler Corporation has completed its successful gas turbine car consumer evaluation program, the turbine has established itself as worthy of further serious jconsideration. In the space of a dozen years, Chrysler Corporation research and engineering has been able to develop a power plant that can compete with and, in some respects, perform better than the piston engine which has been in automotive use nearly three-quarters of a century. Moreover, although the progress of the gas turbine and its advantages are impressive, Chrysler Corporation engineers have by no means reached the full design potential of this engine. Additional progress in improved component efficiencies, particularly in the compressor, and the future possibility inherent in increased operating temperatures, are extremely promising. For example, a 400-degree increase in nozzle inlet temper- ature would mean a 40 per cent increase in specific output for a given-size power plant or, conversely, a corresponding reduction in size for a fixed horsepower. The same 400 degrees increase would improve fuel economy over 20 per cent without needing to take advantage of any further increase in component efficiency. Chrysler Research scientists, who are working with materials that may make this possible, consider the problems associatedwith these higher temperatures no more difficult than those already solved. Based on the encouraging technical progress made thus far, as well as the enthusiastic response of 203 turbine car drivers, Chrysler Corporation is going ahead with the de- velopment of a new, fifth generation, turbine engine for possible use in future passenger cars. As with any new engine, it is impossible to predict how long the development process will take. When Chrysler Corporation is satisfied it has a turbine design that is capable of being mass-produced at a suitable economic level, as well as being at least the equal of the piston engine in performance, fuel economy, and reliability, the design can be frozen and the complex process of developing the tools and facilities necessary for mass pro- ducing the engines can begin. It must be recognized that truly major decisions still lie ahead. The adoption of a new type of power plant like the turbine for motor vehicles is a serious decision- -with implications of great magnitude and far-reaching effects. The determining factor in this decision will be an objective assessment of what benefit turbine power canbeto the motorist and to the general public, coupled with an appraisal of the public's probable response if given an opportunity to buy turbine-powered auto- mobiles. It is likely that initial reaction would be highly favorable. Yet, this does not obviate the fact that there must be some solid advantages to enable the turbme engme to compete on a purely functional and economic basis with other types of power plants. Many people already are convinced that the gas turbine has great promise for propelling automobiles smoothly, economically, and dependably . Fulfillment of that promise rests on success in continuing turbine engine development progress. What will be the outcome? What role will the automotive gas turbine play in the future? These are the central questions that still await a final answer. 32-493 O— 69— pt. 1 26 388 Mr. Mann. Now, Senator, with apologies for the length of my statement, the last of the seven topics that you gave us to comment on — the effect of large corporations on life in America. The question has been asked what effect large corporations have on the values of American society. Many of us, I believe, have nostalgic memories about "the good old days" when virtually all of our institutions, both public and private, were smaller and life was a good deal simpler. Having come from a small town in the Southwest I especially appreciate those sentiments. However, I also believe that the good old days seem better in retro- spect than they actually were. I doubt that many of us would actually choose to go back to those days. One reason why life was simpler is that people were poorer and spent most of their time doing the things they had to do to provide for themselves and their families. The num- ber of options and opportunities available to them were rather limited. We have changed from a rural to an urban nation and from a funda- mentally agricultural to a highly industrialized society. Our popula- tion is larger and more concentrated. It is no longer possible for each individual to provide for most of his own basic needs, much less tliose things he feels are required for his well-being. All of us are increas- ingly dependent on the activities of greater numbers of people. I be- lieve it is fair to assume that the size of many modern day enter- prises and institutions is, in part, an outgrowth of these developments. This is not to say, however, that there is no role for small institu- tions or businesses. In the automobile industry, for example, the emer- gence of large manufacturers has been accompanied by the creation of a great many new small business enterprises. Each one of the auto- mobile manufacturing companies buys products and services from thousands of firms located in every State of the Union, As the record of these hearings already shows, one of the manufacturers buys from about 37,000 suppliers around the country. Another has some 25,000 suppliers. A third buys from approximately 20,000 different suppliers. Also, the distribution system of the automobile industry creates op- portunities for many more thousands of small businesses engaged iv retail sales and service. It seems to me that individual freedom and opportunity can best be preserved by assuring that no single element of our society has con- trolling power over all others. Our economic as well as our political system has been one of checks and balances. There are today a great number of disciplines which limit the power of the private sector. The regulatory powers of government is one of the most important of these disciplines. Labor unions also play a significant role in this re- gard. Perhaps the most important is the discipline of an open, free and competitive economic system. The retention of this system is of major importance to individual freedom and individual opportunity. In my opinion the greatest single threat to the importance of the individual in our society resides in the potential misuse of the regula- tory and other powers of government. Many countries in the world today regulate business to a degree reminiscent of earlier days when mercantilist economic theories were in vogue. Others own and operate Ibusiness enterprises on the theory that Government officials and theoreticians are better business planners and managers than the owners of business establishments or those selected by oAvners to man- 389 age. In all of these societies competitive striving is the exception. And after 24 years abroad, Senator, this is a conviction that I have very deep within me, in all of these societies, competitive striving is the exception rather than the rule and monopoly is the rule rather than the exception. In all of these societies the living standards of people are Ipwer than ours. One may conclude after observing these societies in action that where the individual has little economic freedom he is likely to have little political freedom as well — and that the more pervasive the regulatory powers of government, the less important the individ- ual becomes in the scheme of things. As our society has evolved, there has been more, rather than less individual opportunity and freedom. The ranges of choice in where a person chooses to live, how he chooses to earn a living, the manner in which he chooses to spend his increased leisure time are rnuch trreater today in this country than ever before or in any other society. I might suggest here that the automobile has enhanced opportunity and freedom. It gives the individual a mobility never before available to him. It expands his choice for places to live and work and it per- mits him to enjoy the kind of travel for pleasure formerly reserved to the wealthy. The average American can see more of his country on a vacation -trip than his great grandparents may have seen m a ^ Airprogress is accompanied by new problems. Our cities suffer from continued growth in population and the movement from the rural areas. The problem of the pollution of our environment is a Dressing one. And along with the new problems, we still have some of the old ones. But as a Nation we have done well, I think, m finding solutions for problems without impairing our concept of the worth ot the individual. There may be some argument about thefectsol af- fluence on society but that argument has more to do with the nature of mankind tha/with the process by which we achieved our affluence. Andlt is good to keep in mind that the great economic abundance, which basiLly has be\provided by the P-^ate sect-;* our econ^ omy, is responsible for the opportunity ^^^.l^^^^^^^^J^'^L^s X^^^ more of our time and energies to the correction of the problems wlucn ""TThe complete prepared statement of Mr. Mann follows :) STATEMENT BY THOMAS C. MaNN, PEESIDENT, AUTOMOBILE MANtTFACTUBEBS Association Mr. Chairman, thank you for this opportuni^ to vre^-^^^,,^-t of view concerning some of the Questions bemg consider^ by this Comm^^^^^ Perhaps I should begin by saying a few ^^/^f ,,^P^^„"„^ _7%e ten member corn- sent. Because of the competitive nature and tradit^ns of the ten^i^^^^ ^^^^ ^^^ panies, and because of the ^eq^^^^^^^^^s of o^^^^^^ areas of competition concern itself with what may be^ broadly described as t^^ ^^^^^.^.^i^^ ij, ^any between the companies. Thus, ^he Association has no res^^^^^ relationships, areas such as service, costs and P"^f^^; ,^/XdS and ^^ warranties of product, advertising, product development ana o^ ^^^.^ interest in these areas is «t"<^«y limited to hose ^^^^^^^ .^^ ^^ ^H of knowledge and which in no way affect .^^o^^.P^t^^ion. My m j^ these subjects is limited to that ^'bieh^^ J^J^.f ^ Ji^.^uarmember companies In the areas in which the Association ^^orkslndl^^ualm .^.^^ often have conflicting interests and different Pf;°.tXstrv and in my opinion, reflects the intensely competitive nature of the industry ana is. 390 desirable. I mention tliis diversity of interest and opinion liere so that every- one will understand that the views I express here are my own and do not necessarily represent the opinions of individual member companies. This applies not only to my written statement but to answers to questions put to me and opinions which I may volunteer during the discussion periods. Since several witnesses have described what they consider to be wrong with the industry, perhaps it would lend some perspective to the discussion if, before considering several of the questions posed in this hearing, I were briefly to list some of the things that the industry does well — specifically, the ways in which it contributes to the strength and dynamism of our economy. The ten companies are taxpayers rather than subsidy "receivers. Last year they paid around $4 billion in direct local, state and federal taxes. Similarly, in 1968 motor vehicle owners paid $14.3 billion in special state and federal motor vehicle taxes, one-third of which were taxes on trucks. More than 13 million people are employed in the manufacture, distribution, maintenance and commercial use of motor vehicles. In one way or another, one out of seven American workers is dependent on the motor vehicle industry for his employment.* An estimated 819,000 U.S. businesses, one in every six, depend on the manu- facture, distribution, service and use of motor vehicles. The number of people who, through the direct purchase of stocks, share in the ownership of the industry now stands at about 3 million and millions more participate through mutual funds, insurance company investment portfolios and the like. While Michigan, Missouri, California, Ohio and Wisconsin lead in automotive assembly, the industry is important to the economy of every state in the union. The Association I represent is in the process of compiling data on the contribu- tion which the industry makes to the economy of each state. We have completed some 48 of these studies which I have with me and which the Committee or its staff may be interested in looking at. I have no objection to their inclusion in the record if that is the Committee's wish. The industry plays a key role in transporting people and goods from one place to another. Eight-six percent of travelers* use automobiles. Eighty-two percent of commuting workers use f nfomob'les ns a mpans of transport. Ninety i)ercent of all livestock and 65% of all fruits and vegetables are delivered to major mark- ets by trucks. Trucks haul 52% of all inter-city tonnage of manufactured prod- ucts excluding petroleum and coal products. These figures convey, I hope, not only some idea of the importance of the auto- motive industry to our economic well being but also the magnitude of the eco- nomic job done by this industry. More than any other industry, it has promoted mass consumption and prosperity through mass production. PRICE COMPETITION Ultimately, competition in price or in anything else is of value because of what it does for the consumer. As you know, the Consumer Price Index considers the average price level in 1957-1959 to be 100. The Index for May, 1969 shows that the level for all included items has risen to 126.8 while the index of new cars has risen to only 101.8. The index for public transportation, for example, has risen to 148.0, home ownership to 138.0, food to 123.7, medical care to 154.5 The price index for new cars is among the lowest of the major components of the index. In contra.st with the 1.8 percentage increase in the car price index since the 1957-59 base period, oflScial indexes show the following increases in some impor- tant elements entering into the cost of manufacturing an automobile : Iron and steel, up 10 percent ; non-ferrous metals, up 34 percent ; glass, up 15 percent ; metalworking machinery, up 32 percent : commercial and factory buildings up 45 percent ; average hourly wages in motor vehicle manufacturing, up 55 percent. Another way of looking at performance would be to compare the average price actually paid for a new car. Based on Survey Research Center data, average ex- penditures for new cars have increased by only 1.2% per year between 1959 and 1968. This increase does not take into account infiation or the general improve- ment in the quality of cars (e.g., a better laminated windshield) or the increase •Defined as trips to and from an out-of-town place for overnight or longer or to and from a place at least 100 miles awa.v. 391 in equipment features on the car (e.g., the rate of installation of air conditioning in new cars has risen from 6.2 percent in 1959 to 43.3 percent in 1968) . As I understand the record of these hearings, the critics have not contended that the industry has a poor price performance record. Rather they speculate that it could have been better. And they seem to be saying that automotive prices are not ultimately determined in the marketplace but are contrived in advance by manufacturers. One suspects that this thesis is, in part at least, the result of a lack of understanding how the industry actually operates in the real world. While I have no firsthand knowledge about individual company prod- uct development or pricing procedures, it is common knowledge that it takes two to four years to design, develop and produce a new model automobile. In considering whether a new model should be produced any manufacturer obviously must consider a number of factors. He must consider whether the proposed new model offers something to the public which his prior offerings and his competitors' products do not have. He must estimate the level of customer demand for the new product. And because of the "lead time" involved, he must attempt to anticipate what changes there will be in customer preferences in this interval. He must guess what his competitors will be offering when he offers his new product. He must determine whether new technological develop- ments can be relied upon to reduce costs. He must attempt to estimate the future levels of personal income and take into account -general economic trends which may affect sales. (Obviously, many of these estimates involve subjective judgments which can neither be proved nor disproved in advance. These and the size of the capital required to bring out a new model help to explain why this is a high-risk indus- try. Even more important, the manufacturer knows that most of his potential customers now have cars and do not have to buy any new car — that they will not buy unless they are offered a superior product at an attractive price. There are no pat formulas for success as the failure of many automotive manufacturers and the shifting fortunes of those who have survived (which I shall refer to later) attest. At any point during this process, a company may well conclude that its hoped for new model will not sell or will not sell at a price which makes it production worthwhile. Under these circumstances, the model may well have to be dropped. All of the time, effort and money expended upon it may be lost However, let us assume that a manufacturer has surmounted these difficulties, developed a new model and initiated production. The next step is to make a decision as to the price which will be asked for this new product. This is not a "fixed" price. It is an initial offering price arrived at after considering all of the factors which are important in the marketplace. No manufacturer can price his product much above comparable models of his competitors without diminishing his own volume of gales. Likewise there are limits to a manufacturer's ability to reduce prices to meet competition and still, risks considered, make a profit adequate to attract investors. I have tried to describe some of the factors which must be considered by a manufacturer in arriving at the initial offering price. It may happen that this price is not competitive. Mistakes in judgment may have been made. Or condi- tions may have changed. In 1958 imported cars demonstrated a demand for smaller cars. American Motors responded with its Rambler, the first American compact. Other domestic producers followed with their compacts. In 1967, in response to a resurgence of foreign car sales American Motors sharply reduced the price of the Rambler American to a position midway between domestic compacts and imports. The recent introduction by Ford of the Mustang and then the Maverick are other examples of changed conditions. The Mustang forced other manufaetiirers to react — e.g., GM brought out the Camaro and the Firebird and American Motors brought out the .Javelin. The Maverick wa.s, in part, a response by Ford to foreign comi>etition to which all U.S. manufacturers are subjected. Chrysiler, responding to the Maverick, recently substantially reduced the price of its Valiant in order to improve its competitive iK>sition. For similar rea.sons, GM reduced the price of its Nova relative to other cars at the beginning of the 1969 model run. Another example of competition in offering price : In 1968 GM's list prices for its 1969 models were lower than those announced earlier by Chrysler for its 1969 models. Shortly thereafter Chrysler reduced its prices. In addition to this kind of price competition, manufacturers engage in price competition with each other during the model year through incentive programs 3&2 to salesmen and dealers. Many of these, by in effect reducing manufacturers' prices to dealers, enable dealers to sell to the customer at a lower price. As the records of these hearings show, these incentives vary from small amounts per unit up to $400 or more. Programs of this kind are frequently reported in the trade press. I have here a number of press clippings describing them which the Committee may wish to see. I have no objection to the inclusion of these in the record if the Committee so desires. To sum up what I have said about price competition at the manufacturer's level : Prices are not static. The effective price to the dealer changes in response to changing conditions in the marketplace and the efforts of each manufacturer to increase his sales and share of the market. These changes benefit the consumer and partially explain the excellent price performance of the automotive industry. There are other aspects of price competition that I would like briefly to refer to: There is also intensive price competition at the retail level. I do not think there is any need to describe this in detail. It is a matter of common knowledge that dealers compete vigorously with others handling the same make as well as with dealers handling different makes. This competition at the dealer level is, of course, reflected back to the manufacturer. It is a major element leading to the previously described price competition at the manufacturing level. There is price competition not only between different makes of new cars but between new cars and used cars. The fact that there is a very strong used car market in this country which provides direct competition for new car sales is of considerable importance. There is also competition between new cars and other forms of transportation and between new cars and non-automotive products and services. A prospective buyer of a new car has a wide range of options. He may elect to keep the car he has for awhile longer. He may decide to buy a used car. He may decide to do without a car and use other forms of transportation. He may decide to invest his savings, buy a house or to take a trip or to do a number of other things. The result of all this is that each manufacturer is forced to improve his product and keep his prices down. At this point, I should say a few words about alleged price "dominance" of the industry by a single company. It would be wrong to say that the pricing decisions of any one of the four major domestic passenger car manufacturers has no effect on the others. In a competitive economic system something would be wrong if any manufacturer could ignore his competitor's prices and charged whatever he wished. No one in the auto industry can do this. However, domestic manufacturers and foreign firms able to ship a substantial volume of cars into the U.S., can each influence prices in a downward direction. In this sense, they all have "dominance". If, on the other hand, "dominance" is meant to imply the ability to raise prices by restricting overall supply, the evidence I have seen leads me to conclude that no automotive manufacturer has this capability. Should any producer attempt to raise prices by restricting output it seems clear to me that it would be acting against its own interests because its competitors, having the ability to increase their production, could quickly fill the vacuum and, in the process, increase their sales and shares of the market. Self-interest in this competitive setting is the best price protection the consumer can have. THE DEALER DISTRIBUTION SYSTEM I know of no "artificial" barriers to entry of new companies into the auto- mobile industry. There are a number of natural ones in this industry just as there are in others. The most obvious of these is the existence of eflScient com- petitive firms which produce superior products. Another is the substantial in- vestment required for large-scale production of a complex machine. Another is the technical, managerial and other skills which a large organization requires to be efficient. Another is the need for an effective system for sales and servicing. If we think of these so-called barriers in terms of producing and selling an automobile which is inferior in performance and quality at the price of products now being offered the consumer, they can be formidable. If, on the other hand, someone comes up with a better mousetrap — with a better or lower priced auto- mobile than those now available — these "barriers" disappear. This appears to me to be entirely compatible with the basic principles of our economic system. One question posed in this hearing is whether newcomers can market their products on their merits. 393 The answer to this question is, I think, in the aflarmative. Manufacturer- dealer agreements are nonexclusive : Dealers may and do sell competitive cars, joth within the framework of single business at the same location and within the "ramework of multiple outlets operated by the same owner as separate and iistinct operations. One company has stated in these hearings that of its more than 14,000 dealers, more thn 1,000 handle at the s;ime locations new vehicles produced by domestic or foreign competitors. Another has estimated that of lits approximately 7,000 dealers, around 440 sell cars made by other manufac- turers. Another manufacturer has estimated of its more than 6,300 dealers about 1,000 sell cars made by other manufacturer.s. I understand that more than one- fourth of the dealers of the fourth domestic pa.ssenger car manufacturer sell the products of competitors. These figures might well be higher were it not for the belief on the part of some dealers that they can sell more efficiently and effectively by concentrating on one car line ; and by the belief on the part of others that the substantial addi- tional investment required to sell and service more than one line would not be justified by the increase in sales that might result from selling other products. However this may be, dealers do sell and service competitors' products and also switch from one manufacturer to another. Good dealers, like other good businessmen, are hard to come by. There is com- petition among manufacturers for dealers able to sell cars and to keep their customers satisfied by providing good service. Manufacturers give careful con- sideration to the advice and counsel of such dealers. The contention seems to be that notwithstanding the freedom of dealers to sell a competitor's product their wills are forced by "pressures" of manufacturers. Perhaps what is needed is a generally accepted definition of the word "pressures." What one person may consider the exercise of his legitimate right to stress the merits of his product and to promote its sale may be regarded by another as a campaign to force the will of dealers. Nothing that I have seen and read in the press in my two and half years with the Association leads me to believe that dealers are timid about pressing their own independent points of view or defending in various forums what they can- sider to be their own individual rights and interests. They have what appears to me to be a very active, articulate and effective national organization. The dealer system is not based simply on an abstract idea about how to market cars. Other methods have been tried. The present system evolved to meet a num- ber of legitimate needs : The need for dependable local businessmen capable of marketing in their communities a complicated, expensive machine under intensely competitive conditions. The need for dependable local businessmen capable of providing the facili- ties, equipment and mechanical skills necessary to service a product which is not only complex but highly mobile. The need for local businessmen capable of providing information concern- ing current and probable future demand for automotive products to manu- facturers engaged in high risk, large-scale production operations. It is not an accident that the dealer system has been adopted throughout the world by major automotive manufacturers, both foreign and domestic. The distribution system does not, of course, guarantee success for either the manufacturer or the dealers. Efficient systems did not prevent the discontinu- ance of the DeSoto, the Edsel or the Corvair. A distribution system will not make up for a product which consumers are unwilling to buy. It is rather a system which, up to this point in time, automobile manufacturers have found to be the most efficient and effective way to distribute and .service their products. A newcomer to the manufacturing industry is, however, not obliged to use the existing dealer network. He is free to market and service his cars in any way he chooses. He could decide, for example, to distribute and service his product through a large retail chain enterprise which sells a variety of products. He could decide to establish his own independent dealer network as German and Japanese manufacturers have recently demonstrated can be done in a relatively short span of time. He is free to convince franchise dealers handling his com- petitors' products that they should also distribute his product — or to convince them that they should handle only his product. He could sell directly to retail buyers or distribute only through factory-owned retail outlets. 394 NUMBER OF COMPETITORS M Prior to the mid-20's, the high profits made in those years by a few successful automobile manufacturers attracted a large number of entrepreneurs. Hundreds of companies failed and in doing so, demonstrated that the industry was not only potentially high profit but also high risk. Those who survived the intense competition presumably did so because they were more eflBcient and because^ consumers chose to buy their products. The passenger car companies which survived continued to compete with each other. There are several ways to judge the quality of the competition amongi them : One is the price performance of the industry. As pointed out earlier, this per- formance record is excellent. Another way to judge quality of competition is by looking at the areas of competition between the companies. It would be theoretically possible for oa company to concentrate its efforts in producing small economy cars. Anothe; might produce a slightly larger "compact" car, another an "intermediate" sizi car and another, large luxury cars. But instead the companies traditionally havi met each other in head-on competition in a wide range of automotive products It should be noted that different companies lead in different product groups, the record of these hearings show, for example, in 1967 Chrysler led in sales oi domestic compacts. Ford led in domestic specialty cars and General Motors led in domestic intermediates. Another way to judge the quality of competition is by the variety of choio which is offered the public. The more than 360 different model cars produce by domestic manufacturers offer the consumer a wide range of choice in produci price, in size, functional characteristics, style and other features. In addition, the options available to the consumer provide him with an almost unlimited number of vehicle combinations to choose from. It is much more difiicult for manufacturers to offer a great variety of models and options than it is to offer a few. The fact they offer such a great variety is solid evidence of competition, Another way of judging the quality of competition is by looking at the in- dustry's record of change and innovation. All anyone has to do is to compare the automobile of today with those of yesteryear to see the many improvements that have been made in handling and stability (e.g., lowering the center of grav- ity and improving cornering characteristics), in passenger comfort and con- venience (e.g., power steering, power brakes, air conditioning, reduction of noise levels), in materials (e.g., high strength fibers, new alloys) and in many other! areas. This record of continuous innovation is also solid evidence of competition. In the post AVorld AVar II period General Motors' share of new car sales has varied from 38% in 1946 up to 51% in 1954, down to 42% in 1959, up to 52% in 1962, down to 47% in 1968. Ford's sales, which reached a peak of some 60% in • the early 1920's, were under 19% in 1948, up to over 307o in 1954. down to 24% in 1968. Chrysler's share was almost 26% in 1946, down to less than 10% in 1962 and up to over 16% in 1968. American Motors' share was about 2% in the mid-1950's (prior to its introduction of the compact), up to about 7% in 1960 and down to about 3% in 1968. Every company must earn its place in the market each model year by competing for customer preference. These changes in the fortunes of particular companies are solid evidence of competitive striving. A great deal has been said about the niunber of domestic manufacturers of passenger cars. The correct picture is not of a single giant towering over three snoall, weak, defenseless firms. The correct picture shows four aggressive, ex- perienced domestic producers that, in the process of competitive striving over the years, have grown into efficient, innovative corporations. Each is large by al- most any standard. Each believes it has a superior product. Each has confidence in its future. The correct picture would also show more than a dozen foreign competitors each of which is striving to increase its sales in the United States and other markets. The United States market is especially attractive to foreign automobile manufacturers. They are highly efiicient producers with a high degree of tech- nology. They have an advantage over domestic manufacturers in wage rates. They have an advantage in tariff barriers. Our tariffs on automotive products, which were among the lowest in the world, were further reduced in the recent Kennedy Round ; yet our automobile manu- facturers have never asked for protection against foreign competition. By con- trast, many foreign countries maintain, in addition to higher tariffs, formidable non-tariff barriers against our automotive exports. 395 It is worthwhile noting, in this connection, that foreign manufacturers cite iperior technology, managerial skills and competitive efficiency of American auufacturers in justification of this lack of reciprocity— a thesis which is tactly the opposite of a point of view which has been expressed in these hear- gs. Partly because of larger markets created by regional trading arrange- ents— thereby creating markets more comparable to ours in size — it is also in- {resting to note that the trend abroad is towards larger and fewer, not smaller id more numerous, automotive manufacturing enterprises (e.g., Leyland-British otors). The passenger car manufacturing industry is in a very real sense a world in- astry. Foreign passenger car manufacturers compete with American manu- icturers in all countries which have liberal policies towards automotive im- [)rts. Our domestic market is truly an international market. That there is real and effective competition here at home between foreign and jmestic manufacturers is evident from the fact that foreign manufacturers chieved about 10.2 per cent of sales in 1959, declined to about 4.9 per cent in )62 because of vigorous price and product competition from the U.S. companies nd fought their way back to about 10.5 per cent of the domestic market in 1968. a sum, the American consumer may choose not only from the products of the )ur domestic automobile manufacturers but from the products of a dozen or lore foreign manufacturers as well. I do not mean to imply by all of this that I believe the quality of competition i determined by numbers. At most numbers is only a single criterion and not a ery reliable one at that. Contrary to what some have said, I believe competition an be just as vigorous between a relatively small number of firms as between larger number. To the extent, however, that numbers of competitors have elevance to the quality of competition, the number in the United States market 3 closer to 14 than to 4. I do not think there is a great deal to be gained by debating theoretical con- epts about optimum size of manufacturing establishments. I doubt that anyone nows what the answer is. I especially doubt whether general theories, intended apply to all industries, are necessarily applicable to the automobile industry s it actually functions. The process of designing, testing, mass producing, iiarketing and servicing a highly mobile machine consisting of 15,000 parts is mique in many respects. The capital required is large. Risks are high. Man- igerial, engineering, marketing and many other skills are required in depth. i]fficient automobile producers are, I believe, likely to be large in any case. We can be sure, however, that the risk to our national economic strength and veil-being would be very considerable if the government should attempt artifi- 'ially to reconstruct the automobile industry according to theoretical concepts, uet us suppose, for the sake of argument, that government should artificially IX limits on the share in our market which any manufacturer could have. Would lot the most efficient few slacken their competitive efforts when they approached the limits of their allotted share? What would the incentive be to improve the product or reduce price to the consumer if companies had no hope of substantially increasing sales and profits? What assurance would there be that price to the consumer would not increase? Or let us suppose, for the sake of argument, that having created a large num- ber of small companies, they were all left free to compete with each other. What reason would there be to believe that some would not become more efficient than others *> What reason is there to believe that the less efficient producers would not gradually be eliminated as they were in the past? And what reason do we have for believing that the companies who survived and enlarged their share of the market would not again be made targets of attack simply because they had succeeded in producing a better or a cheaper product for the consumer i THE CONFIDENTIALITY OF DIVISIONAL FINANCIAL DATA AND PRODUCT COSTS The question is asked : Is there too much "secrecy" about internal financial data of the automotive industry? ^ ^v, * i. 4.i,„4. I should first like to point out that there is nothing new about the fact that •'Gimbels doesn't tell Macy's." Automotive companies are no more secretive about their internal data than other industries and perhaps less so than most. There is a great deal of information already available to the public. iJacn automotive manufacturer provides annual and quarterly financial reports and makes reports to the SEC and to the financial community. The information available to the public includes industry or company data, or both, on produc- 396 tion and sales, investment and employment, product characteristics and features and information on research, engineering and the production process. A wide variety of information has been provided the government over the years. The question of whether there should be additional disclosure of corporate financial information with respect to registration statements is currently undel intensive study by the Securities and Exchange Commission. A large number ol business firms, including many Association members, have filed extensive comi raents with the SEC on this issue. These comments are a matter of public recon In view of these proceedings, it seems to me premature to debate the questioi of the need for more information before we know what additional data, if any! will be required by the SEC. I would be less than candid, however, if I did not question whether thi public interest would be served by disclosing financial data which traditional has been considered confidential by all industries. As reflected in the commen to the SEC, this is a matter of concern to other industries as well. I assu that this committee would consider that all businesses should be subject to t same disclosure regulations. The disclosure of detailed financial data by a company would enable competi tors to determine its points of weakness and strength. The competitors coul then avoid a competitor's strengths and exploit his weaknesses. Detailed knowl edge of a competitor's cost and profit data would, for example, assist a manu- facturer in making decisions about his own production of a competitive unit. Ac counting methods and procedures themselves are considered important mana gerial tools and proprietary in nature ; release of detailed data through whic these methods and procedures could be revealed would be, in my opinion, undesirable. The release of confidential data would be especially burdensome for the in novator. If advantages gained through research, the development of better man agement techniques, better cost accounting methods and in other ways were reni vealed almost immediately through the requirement of disclosure of detailed" data, there would be less incentive to find ways to reduce costs, increase pro- ductivity, improve quality or reduce prices. It is important to underscore that the competitive position of United States manufacturers would be prejudiced if U.S. companies were obliged to disclose their costs while their foreign competitors were not. This does not seem to me to be a prudent thing to do especially at a time when the United States is hav- ing balance of payments diflSculties. I do not doubt for a minute that our foreign competitors would know how to use this internal data to their advantage botli at home and abroad. As I understand it, some courts and oflScials of the Department of Justice have, in the past, taken the view that generally speaking the exchange or disclo- sure of cost as well as other internal information by competitors can lead to less rather than more competition. I would be surprised, for example, if the Depart- ment of Justice would not attack as anti-competitive any exchange of cost and profit data between the companies. It seems to me. in sum, that the public interest in informing investors, or whatever other advantage might be gained by disclosure in detail of confidential ' information, should be balanced against the anti-competitive effects of such action. TRAFFIC SAFETY Last year about 100 million vehicles of all kinds traveled an estimated 1 tril- lion miles in the United States. There were about ~t.~) fatalities for each hundred million miles traveled. According to the data I have seen, this rate is the lowest in the world and considerably lower than it was