1930s: The Depression years

1930s: The Depression years


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1930-1939 Timeline of Events (click to enlarge)

NADA almost didn’t survive the Great Depression. The first four months of 1932 left the association—after expenses of $20,879—with a net income of $837. In May, NADA’s general manager told the board that, based on the renewal record and members’ difficulty in paying dues, it would be “impossible to carry the association beyond the first six months of the year without drastic changes.”

 

The secretary was to find new quarters for the association at a cost not to exceed $50 per month. The board reduced activity to a minimum and for the rest of 1932 employed only a secretary-manager and a stenographer, who also handled bookkeeping. The general counsel, field staff and mailroom clerk were let go.

 

But a year later, things were different. In February 1933, NADA had 2,200 members, most of whom were behind in their dues. But by early 1934, NADA had an active, paid-up membership of more than 20,000. By the end of the year, there were 30,000. A motor magazine editor speaking at the 1934 convention said, “It is incredible that so infinite an improvement could have been recorded in so short a space. For the average dealer who had lived so close to the gates of hell that he could smell the sulphur, the swiftly changing scene has brought a glimpse of a business paradise to which he may aspire....Our grandchildren, reading their histories, will have a clearer conception than we of the swift sequence of portentous events which have crowded the past 11 months.”

 

The New Deal

The turnaround was the result of the New Deal’s National Recovery Administration and the new Code of Fair Competition for the Motor Vehicle Retailing Trade. When the mandate of industry-specific codes was announced, the nearly dissolved association went into a flurry of activity, developing a proposed code and visiting dealers around the country for suggestions and support.

 

Factory relations and dealer profitability were pressing topics throughout the 1930s. And until Prohibition ended in 1933, NADA lobbied on behalf of dealers who suffered losses when cars on which they held unpaid liens were confiscated by the Revenue Department because the owners had violated liquor laws. NADA also launched a publicity campaign urging customers to buy new cars.

 

In 1935, NADA announced a Speakers’ Bureau Service to help state and local dealer associations obtain lists of speakers who could address dealer groups for free. NADA also began regular, confidential studies—sales of new cars and equipment, used cars, reconditioning, parts and equipment, service, income tax, advertising—to define and quantify dealers’ problems. A survey of 359 dealers at the time showed an average gross profit per new-car sale of $171.87 (20 percent); direct expense of $89.09 per sale; indirect expense of $34.45; and an operating profit of $48.33 on a unit sales average of $853.17. These surveys continue in various forms today.

 

A focus on legislation

When NADA moved to Detroit in December 1936, it formed a new legislative department, prepared a Standard Used Car Appraisal Form, and began a dealer education program to demonstrate how to sell the used-car allowance to prospects and how to use the Guide. Dealer count, which had dropped to a low of 35,265 in 1933, was up to 41,992 in 1938. A 1939 article headline decried, “Too Many Dealers; What Can Be Done About It?”

 

For the 22nd convention in April 1939 (planned around the World’s Fair and Golden Gate Exposition), a special train was arranged to take dealers from Chicago to San Francisco. And for the 1940 convention in Pittsburgh, NADA invited Eastern dealers to travel to Pittsburgh via “The Dream Highway,” the new Pennsylvania Turnpike.