Geeber’s comment on our antitrust story significantly adds to the discussion so I’m elevating it to the front page as a letter to the editor:
GM had been pushing to centralize more functions at the corporate level even before there was serious talk of antitrust action. The main driver was the fragmentation of the market. One doesn’t have to be a GM accountant to realize that allowing each GM division to engineer and build its own version of a full-size car, intermediate and compact (with perhaps a personal luxury couple or pony car in the mix) was not sustainable over the long haul – even for a company the size of GM.
Also see ‘1965-68 GM big cars: The end of different strokes’
One reason GM management was unhappy with its 1961-63 “senior” compacts was that the unique technology used by each version raised costs and decreased profitability (without having any real demonstrable positive effect on sales). The 1964 A-bodies addressed that issue – and sold far better than their predecessors.
As for the difficulty of breaking up GM – even if a plant is under the control of General Motors Assembly Division (GMAD) instead of Chevrolet, if it builds Chevrolets, it should thus be easy to assign that plant to a newly created Chevrolet Car and Truck Corporation. That excuse leaves me scratching my head.
The real problem here was that, once one went beyond the B-body Chevrolet, which had sufficient volume to keep more than one plant busy, it would have been necessary for divisions to share plants to build vehicles on the same platform. I seriously doubt, for example, that it would have made economic sense to have separate plants build the Firebird and Camaro, even in the late 1960s. That is less an effort to thwart trustbusters than a logical response to a fragmenting market.
As the article notes, it also undercut GM’s rationale for having all of those brands in the first place, but the Sloan Brand Ladder had started to crumble in the 1950s. The process only accelerated in the 1960s with increased market fragmentation, when one could buy a Buick Special that was smaller and cheaper than a Chevrolet Impala (after decades of GM hammering home that increased size and price equated to increased prestige).
Also note that other countries – France, Italy and Great Britain – did not take a laissez-faire attitude regarding their respective auto industries. But those governments still ended up intervening, either via direct subsidies and government ownership, or strict protectionist measures that drove up costs to customers (while also discouraging the implementation of quality improvement measures that could have benefitted customers), to protect the home team.
— Geeber
RE:SOURCES
- oldcaradvertising.com: General Motors (1958, 1967)
Indie Auto invites your comments (see below) or letters to the editor (go here).
The more interesting question, I think, is whether and how Sloan would have handled market fragmentation differently than Donner. From what I understand, Sloan viewed GM corporate as essentially a merchant bank for the divisions. They had to make the case for an investment from corporate, and that would either be granted or not based on the expected return.
I suspect that had Sloan been around in the 60s, corporate would simply not have supported compacts/intermediates among 4 divisions. Or if it did, the model cycles for the more senior divisions would have to have been stretched longer.
In that scenario, Olds might not have had the Cutlass cannibalize the 88 as evidently happened. And one doubts Buick would have bothered with intermediates either.
And it is remotely possible that when smaller cars became a necessity for the more senior divisions after 1973 they would have been properly engineered as luxury models instead of ending up as badge engineered Novas.
The Sloan Ladder was effective and worked well.
Disastrous and unsustainable when applied to each bloody division within GM.
All those divisions, each a mini GM…what a logistics, planning and promotion nightmare
The problem was that the pressure to turn each division into a “mini GM” was driven by external factors.
As the market fragmented in the 1960s, each division – aside from Cadillac – wanted to compete in as many segments as possible. Buick wanted an intermediate…Chevrolet wanted an LTD-competitor…Pontiac wanted a pony car.
This was also driven by the dealers, who wanted a complete line of cars to sell, in order to insulate themselves from shifts in the market.
GM’s top management could have theoretically said “no,” but the challenge was that dealer franchise laws were (and are) written at the state level, and tilted in favor of the dealers. If Buick and Oldsmobile dealers had asked for a subcompact after the first fuel crunch, and GM management had turned down that request from each respective division, the dealers could instead have obtained a Datsun, Honda or Toyota franchise.