Page images
PDF
EPUB

is the range of list prices of the various models or versions of these items in 1965 when sold as optional equipment:

[blocks in formation]

In 1965 the use of these items on General Motors cars was not uniform, although many of them were standard equipment on certain models. Giving consideration to usage, that is, eliminating those models on which these items had previously been standard equipment, the weighted average list price of these items in 1965 as options was $53. The weighted average increase in 1966 model General Motors passengers car list price for the addition of these items was $47.50, which is more than 10% below the previous price as optional equipment. There has been no allocation to individual items of this adjustment to car price.

Also, in 1966, General Motors added the Air Injector Reactor System to nearly all its cars for the California market in accordance with the laws of that State. In 1967, this Air Injector Reactor System will also be available on cars for the General Services Administration. This system has a list price of $42.50.

For 1967, General Motors is planning to add as standard equipment the 4-way emergency flasher (presently available as optional equipment on all models at a list price of about $11.00), and the dual master cylinder brake system (presently standard equipment on Cadillac models) and warning light in addition to a number of further improvements to existing safety features. Thus, those 1967 model General Motors passenger cars that are sold to the General Services Administration will include all 17 items in the Federal Standard No. 515.

With respect to steering columns, those on our 1966 models already more than meet 1967 GSA Standards. However, General Motors has developed an improved energy-absorbing, or collapsible steering column which provides added driver protection in a severe front-end collision. This improved system will also be standard on all 1967 model General Motors pasenger cars.

In line with our usual practice, the 1967 model prices will not be established until shortly before new model introduction this fall in order to take into consideration the latest possible information with respect to items added to the car, cost, competitive and market conditions. If you wish, I will advise you of our pricing at that time. Very truly yours,

JAMES M. Roche, President.
AMERICAN MOTORS CORP.

Detroit, April 12, 1966.
Mr. H. A. ABERSFELLER,
Commissioner, General Services Administration,
Washington, D.C.

DEAR MR. ABERSFELLER: This will acknowledge your letter of March 25 requesting a statement "of increased vehicle costs, if any, caused by each of the 17 devices and designs required by Federal Standard No. 515 for the 1967 model series of vehicles."

Those devices and designs established by Federal Standard No. 515 that will be incorporated in our 1967 models, and to the extent that they are not now standard equipment, will, of course, represent added production costs. They will also represent added value to car purchasers. Vehicle advertised delivered prices necessarily take account of all factors of cost, including broad design and material changes as well as the basic level of labor and other costs. There is, therefore, no practicable way to segregate and identify the effect on the advertised delivered price, of any specific change in the vehicle. In any event, I should point out that prices for 1967 models will not be set until shortly before public introduction of these new models in the early fall.

For the reasons I have outlined, I am sorry that we are unable to be of assistance to you in this connection. Sincerely,

ROY ABERNETHY, President.

CHRYSLER CORP.,

Detroit, Mich., April 4, 1966. Commissioner H. A. ABERSFELLER, General Services Administration, Federal Supply Service, Washington, D.C.

DEAR MR. ABERSFELLER: This will acknowledge receipt of your letter of March 25 to Lynn A. Townsend, President of Chrysler Corporation, the same inquiring as to possible answers to questions which were asked of you at hearings of the Senate Commerce Committee.

This matter of costs raised by the questioner is one which has been quite often raised in various ways in connection with the automobile business and raised to Chrysler Corporation.

I am sure you are aware of the highly competitive nature of the automobile industry. Because of this Chrysler has always taken the position that it cannot divulge cost information in any sense that might make it available to competitors.

I am sure you will understand this and I am equally sure that Senator Hartke will as well and that there will be appreciation of why this information just cannot be made the subject of disclosure. Sincerely,

DAVID W. KENDALL,

Vice President, Legal Affairs. Senator RIBICOFF. From the date that Public Law 88-515 was passed until you revoked your standards in September, did any automobile official or representative tell the GSA that the inclusion of a certain standard would result in a price increase of the cars you purchased ?

Mr. ABERSFELLER. Yes.

Senator RIBICOFF. If so, how much weight did you give your deliberations in setting the standards?

PRICE INCREASES CONSIDERED BY GSA

Mr. ABERSFELLER. We gave considerable deliberation to those we established as far as cost was concerned, although we were fortunate in that most of those that we developed were in our view relatively minor in cost. It was our estimate and we so testified in 1966 to the Committee on Commerce of the Senate, that it was our view that the retail price of the 17 safety standards would be about $125 and that the wholesale price would be about $75.

It would appear from what I read that the Bureau of Labor Statisties has reported that that is about what it amounted to. We had another standard which we did not develop because we thought the cost was high and we did not have supporting data to show how many lives might be saved if we were to introduce it. This standard dealt with a nonslipping brake system which has now proved to be feasible. The cost still seems to be in the ball park of $200 or $300 which would concern us. But, Mr. Chairman, I must point out that the safety business is not an easy one. Certainly, Mr. Bridwell and Dr. Haddon know this too well. I was only in it for a matter of 2 years but there is conflicting expert testimony.

There is no information worthy of the name with regard to the cause of deaths. Every expert has his own view. We, as we testified before you in 1965, used the Cornell Aeronautical Laboratory work which we thought was the best work available and I think it had many weaknesses but we developed a view from this work that we needed to contain people in the automobile in the case of collision and now having them contained, we need to restrain them or provide cushioning inside the car so that what now is commonly referred to as a second collision would not cause death or injury. Since much of this is my personal responsibility within the agency, I will speak to it firsthand.

SAFETY FEATURES MORE IMPORTANT THAN COST

I found it difficult, if I had evidence that a life could be saved, to give great consideration to the cost. I want to give you an example of that. This has to do with fuel tank and the fires in automobiles.

I had a strong personal view that something needed to be done about this because I saw five people burned one day in a car. I was told this was going to cost money and the amount we were talking about at that time was $25 or $35 or something like that. But frankly I would have pushed that, Mr. Chairman, if it would have cost a hundred dollars. I cannot put the value on human life.

We were told, while we were pursuing this particular point, that only one-half of 1 percent of the fatalities in the automobile fatality area were created by fire in a car. Well, one-half of 1 percent is not very much of 50,000 but it is still a large number of people. So we did consider cost but I am proud to tell you—at least I have some pride in the fact—that cost did not sway us when we thought human life was involved.

ALTERNATIVES TO AMERICAN CARS

Senator RIBICOFF. Thank you very much for your testimony. We do appreciate your being here. I think you ought to give--before I turn it over to Senator Hansen-I think you should give some consideration-make recommendations to the Congress concerning a situation where goods and merchandise you need cannot be procured, what alternatives you have. What do you think would happen with the American automobile dealers if you told them that while you want to buy American cars, if they refuse to bid on your cars, then you had no alternative but to buy a foreign car. Do you think the American manufacturer would hasten to submit bids to you?

Mr. ABERSFELLER. I do not know. I do not know. We have been toying with that idea but I do not know.

Senator RIBICOFF. Well, I do not think the Federal Government should ever be placed at the mercy or the whim or the caprice or the arbitrary action of any manufacturer.

Mr. ABERSFELLER. As the purchaser of goods, one of the principal purchasers of common goods in Government, we are deeply concerned about these situations. There are times—as I recounted for you here this afternoon—that we have not been able to make the grade, but this does not mean we still are not working on it because we are. We may find a solution to it.

Senator RIBICOFF. Would not this be a blot on American industry if the Federal Government found it had no alternative but to procure its merchandise from abroad?

COMPETITION IN AUTO INDUSTRY NOT VIGOROUS

Mr. ABERSFELLER. I would think so and I do not think that the time will ever come but we are not getting the competition today that we would like to have.

Senator RIBICOFF. I mean basically it would seem to me if there is not any collusion involved, it seems incredible to me that when the Government puts in a request for 3,000 motor vehicles, there is only one bidder out of four, because I had been given to understand that the automobile companies are very competitive. They seek to outpace one another in the number of sales. They spend millions and millions of dollars in advertising to induce the public to buy their cars. And all they have to do to get an order for 3,000 is to put in a bid.

Mr. ABERSFELLER. A low bid.

Senator RIBICOFF. A low bid, without going through salesmen, advertisers, service required, everything else that is involved.

What was the volume of automobiles you procured over the last 2 years? Does it average about 3,000 a year or do you buy more?

Mr. ABERSFELLER. Well, actually we buy many more trucks, Mr. Chairman, than we buy sedans or station wagons. We buy on the average of 4,000 to 6,000 sedans and station wagons. Senator RIBICOFF. How many? Mr. ABERSFELLER. 4,000 to 6,000 sedans and station wagons a year,

a and would buy in the neighborhood of 30,000 to 40,000 trucks a year.

AGGREGATE BUYING HAS UNJUST RESULTS

Senator RIBICOFF. What would happen if you ever had a bulk request—a bid for trucks and cars at the same time?

Mr. ABERSFELLER. Well, we do, but we have not yet provided for aggregate award arrangements. That would be where you would award only to the individual who bid or the company who bid on both, mainly because to do so would be a disservice to some of the automobile companies. You see, we do business with many more than the four automobile manufacturers. We do business for trucks with International Harvester, for example, with the Kaiser Jeep, with a wide variety of truck manufacturers, and to lump trucks with automobiles and make the award to, then, the low responsive bidder, provided he bid on all the items, would be, in my view, unfair to the other producers. American Motors, for example, does not produce trucks.

Senator RIBICOFF. Some of these truck manufacturers, if they were such a good manufacturer, could they produce automobiles, too?

Mr. ABERSFELLER. I think the answer is they could produce them. I do not think the volume of automobiles we buy would warrant the manufacture of automobiles.

TOP MANUFACTURERS MAY CONTROL PROCUREMENT POLICIES

Senator RIBICOFF. So, basically, you are subject to the policies of the BIG Three.

Mr. ABERSFELLER. We have a serious problem, Mr. Chairman, and I do not know whether it is subject to their policies or not, but we certainly have a large problem in the area of procurement. I have no evidence that this is their policy to make it difficult, but

Senator RIBICOFF. In other words, you buy it on their terms or you do not buy it at all.

Mr. ABERSFELLER. Well, in the case of sedans, if they do not bid, there is nothing that can compel them to bid and then we are forced to buy from those who bid, in this case American Motors.

Senator RIBICOFF. And yet, the variety that you need, American Motors, I would assume, does not have a full supply to supply your basic needs?

Mr. ABERSFELLER. That is true, they do not have.

Senator RIBICOFF. That is your problem. In other words, many of your needs could be supplied by American Motors but you have needs beyond the range of automobiles manufactured by American Motors.

Mr. ABERSTELLER. Right. Actually, the largest single agency we buy for is the Post Office Department. These are postal trucks of varying sizes. This represents the procurements in the neighborhood of 12 to 14,000 trucks a year for the Post Office alone.

Senator RIBICOFF. Senator Hansen ?

FOREIGN MANUFACTURERS UNAFFECTED BY S. 2865

Senator HANSEN. Does the GSA purchase vehicles from foreign manufacturers ?

Mr. ABERSFELLER No, we do not, sir.

Senator HANSEN. Could S. 2865 result in requiring the cost or price information from U.S. manufacturers only, then!

Mr. ABERSFELLER. Yes, that would be the effect of it.

Senator HANSEN. In that sense would not the bill discriminate against U.S. manufacturers by making their proprietary data available but not requiring that similar data by foreign manufacturers be revealed ?

Mr. ABERSFELLER. Yes.

Senator HANSEN. Would this result in a competitive advantage to the foreign producers in establishing their U.S. prices after the adoption of new safety standards ?

Mr. ABERSFELLER. I am sorry, Senator, I do not follow that question.

Senator HANSEN. Could this result in a competitive advantage to the foreign producers in establishing their U.S. prices after the adoption of new safety standards?

« PreviousContinue »