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THE
REVIEW
VOL. LXXIX. No. 16 Published Every Saturday. Edward Lymaa Bill, Inc., 3S3 Madison Ave., New York, N.Y. Oct. 18, 1924
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A Little Analysis Is a Good Thing
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the recent Ohio convention Dan J. Nolan, of the Cleveland Cadillac Co., that city, and at one time
prominent in the piano trade as manager of the piano department of the May Co., delivered a
thoroughly interesting address to the assembled music merchants. In the course of this he impressed
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upon their minds that, though they considered their trade-in problem very real, it was not a cir-
cumstance to the problem as it confronted the automobile dealer. In fact he declared that so far as trade-ins
were concerned, the piano dealer was sitting on the world, so to speak, and did not know it.
In the course of his address Mr. Nolan called attention to the fact that, according to reports compiled
by the National Automobile Dealers' Association, used car losses suffered by dealers in that field during 1922 rep-
resented the huge sum of $123,000,000, Through the adoption of better business methods, however, particu-
larly in granting allowances on used cars, these losses were cut to $57,000,000 during 1923, and will probably
be reduced to less than half that figure during the current year.
At first glance, this figure of $123,000,000 in used car losses seems appalling, and even $57,000,000 loss
is enough to cause the music dealer to gasp. As Goldberg, the cartoonist, declares, "It doesn't mean any-
thing," however, so far as the music trade is concerned, for the reason that the figures apply directly to the
automobile industry which in all respects is a far more extensive trade than the manufacture and sale of musi-
cal instruments. When comparisons are made on the basis of amount of business done, the music dealer is
not in a much better position than his friend the automobile retailer.
A few figures which have been taken from records of the two trades involved, and therefore must be
considered more or less authoritative, should prove interesting. During 1923, automobiles including trucks to
the retail value of $2,405,943,259 were sold in this country by 43,588 dealers. During the peak year of 1922,
when losses on used cars were estimated at $123,000,000, that loss represented only 5.9 per cent of the total
volume of business, and averaged only $2,618 per individual dealer. In 1923 the used car losses were cut to
$57,000,000, or 2.36 per cent of total sales, with an average loss per dealer of only slightly over $1,300.
In comparison with these figures take the condition of the average piano dealer. During 1923 the retail
value of pianos sold was approximately $223,249,616. Were the piano dealers to suffer the same proportion of
loss on trade-ins as the automobile men, during 1923 it would have amounted to $11,430,839, or $1,971 per
dealer, and this on a much smaller volume of business which does not allow for sufficient turnover to readily
offset it.
The significant point is, however, that the automobile men have not only recognized the seriousness of
their trade-in problem as emphasized by used car orders, but have gone to work systematically to devise ways
and means for standardizing practice in relation to trade-ins with a view to effecting savings. The success of
these efforts is indicated by the fact that in one year alone these losses were reduced over 53 per cent or, in
money, $66,000,000. It might be well for the piano trade to give thought to this matter and profit by the action
of the motor car dealers.
The trade is familiar with the various efforts that have been made from time to time to adopt trade-in
schedules and develop methods in relation to instruments taken in exchange with a view to putting this un-
desirable but apparently necessary feature of the piano trade on at least a business-like basis.
Within the past year or so some of the best minds of the trade have given thought to this trade-in
situation, and have made definite recommendations to the music merchants in convention, but without result.
The difficulty appears to be that, although recognizing the trade-in problem as national, each dealer feels he
himself can best handle his own difficulties. It should not require the hundred million dollar losses, or more,
of the automobile dealer to convince piano dealers of the necessity of some pruning process in trade-in
allowances.