Curbside Classic recently posted an unusually detailed discussion in a comment thread about why a merger did not occur between Hudson, Nash, Packard and Studebaker (Shafer, 2015). While the speculation is interesting, I’d question the underlying assumption of a commentator that a four-way merger could have been as successful as American Motors under George Romney.
Steve sketches a clever scenario that suggests an exceptional level of knowledge about the intricacies of automobile production. However, his enthusiasm for a grand merger appears to minimize his attention to the 800-pound gorilla in the living room: How could such a financially weak and small combine quickly achieve the economies of scale to field three competitive platforms, three engine families, two major production plants and two satellite assembly plants?
Such high fixed costs could have been particularly problematic during the recession of the late-50s. It’s highly unlikely that this new combine could have avoided dramatic — and perhaps fatal — financial losses with its full-sized offerings. The new firm’s premium-priced and luxury car brands were particularly vulnerable because those fields saw the most dramatic sales declines.
The Big Three were large enough to absorb major losses; it’s questionable that such a small and fragile fourth automaker could also do so (go here for further discussion).
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RE:SOURCES
- Shafer, Jason; 2015. “Curbside Classic: 1957 Nash Ambassador — Getting Its Kicks on Route 66.” Curbside Classic. Posted July 30; accessed July 30.
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