One of the best parts of Curbside Classic is the comment section. For example, a story about the 1961 Studebaker Lark had a wide-ranging discussion about why why American Motors did better than Studebaker-Packard in the 1950s. But as with any loosely moderated discussion board, you need to exercise discernment in separating the astute ideas from those that are dubious.
For example, Steve (2018) rightly noted that American Motors head George Romney was able to secure funding from the same sources that James Nance of Studebaker-Packard was not. The difference? “Romney could convince the insurance companies that he had a turn around plan, while Nance could not.”
J. P. Cavanaugh (2018) agreed, noting that “AMC had its challenges, but its digestion of Hudson was relatively easy compared to the shit show of mismatched plants and needs after the S-P merger that was about as close to synergy-free as was possible.”
Steve (2018) countered that the Nash-Kelvinator’s digestion of Hudson to form American Motors was “also pretty much synergy free as the Hudson facilities and products were quickly abandoned. All Nash realized from the deal was the Hudson dealers and legacy service parts business.” Steve went on to suggest that American Motors secured funding because Romney was a “better salesman than Nance, in spite of Nance being the ‘super salesman’ at Hotpoint.”
Did Nash actually benefit from absorbing Hudson?
The above line of discussion strikes me as useful because it hints at something that I haven’t seen discussed in professionally written histories: Was Hudson a net plus for Nash or was it a distraction? Indeed, if you add up all of the costs of absorbing Hudson, did the merger end up being a net money loser for Nash?
It’s hard to see how Hudson’s meager sales in 1955-57 compensated for the added expenses of fielding a separate line of full-sized cars, setting up a Hudson division within American Motors and dispensing with excess plant capacity after all production was moved to Nash’s Kenosha, Wisconsin facilities.
If the main thing Nash wanted was to expand the number of dealers selling Ramblers, surely there was a cheaper way to do that than buying a moribund automaker whose dealer network had overlapping sales territories with Nash’s (Edwards, 1965).
Why haven’t these questions been discussed more? I suspect that the biggest reason is that the auto history field has internalized the assumption that postwar mergers were needed for survival . . . despite evidence to the contrary.
Did Packard wait too long to merge?
Steve (2018) went on to argue that a Studebaker-Packard combine could have worked better if it was created “a year earlier, and the Packard honchos left their pride behind them.” He pointed to the potential of Packard production being moved to Studebaker’s Chippewa Avenue plant. That would have concentrated all production in South Bend, Indiana rather than maintaining a separate Packard plant in Detroit, Michigan.
I don’t see why it would have made sense for Packard to dispense with its Detroit-based workforce and move production to South Bend. However, this idea does highlight that timing was a crucial factor in Packard’s failure to secure a partnership that had a reasonable chance of saving the brand.
Also see ‘Five (arguably) unresolved mysteries of postwar independent automakers’
For example, if Packard had moved more quickly it might have been able to buy Hudson, which would have given it a body-building plant and a junior brand that could have been built along side Packards at its Detroit assembly plant. Indeed, Steve (2014) had previously suggested this in another comment thread:
“End result: Packard solves it’s body supply problem, which became immediate when Chrysler bought Briggs in the fall of 53. Production volume at [Packard’s] East Grand is nearly doubled, which, if it didn’t get them above break even, it would at least cut the disastrous losses of 54-55. Packard would also pick up the Hudson dealers and repair parts business.”
That’s a pretty good assessment, although I question the long-term viability of such a small automaker trying to field two brands (go here for further discussion). But again, this discussion goes well beyond what I’ve seen from professional historians.
Should Nash have bought Studebaker?
Steve (2018) also argued that “Studebaker would have been a good acquisition for Nash as they would have gotten the Studebaker V8 and saved $10M in development and tooling expense.”
Studebaker’s V8 would have saved Nash money, but I am otherwise not seeing how this combine could have been a good fit. For one thing, the only way to stem Studebaker’s huge losses would have been to transfer all passenger-car production to Nash’s facilities. However, that wasn’t easily done without giving Studebaker disguised Ramblers and Nashes to sell. Why would that have worked any better than with Hudson?
Also see ‘Was the ‘Ford blitz’ to blame for the collapse of independent automakers?’
I suppose that the Loewy coupes could have been kept in production at Studebaker’s truck plant, but that would have generated only incremental sales. And perhaps the new combine would have had greater resources than Studebaker-Packard did to keep the light-truck line competitive — which could have been an increasingly valuable asset down the road.
Perhaps the biggest problem could have been integrating dealer networks in order to minimize overlapping products and dealer coverage areas. I could see the combine succumbing to dysfunctional badge engineering similar to the Plymouth and Dodge lineups in the second half of the 1970s.
If Nash mostly wanted a V8, it could have been less costly to buy it from Studebaker. In addition, we have argued that a V8 wasn’t nearly as important as commonly assumed, particularly for a compact (go here for further discussion).
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Cavanaugh, J P; 2018. Commentator in “Curbside Classic: 1961 Studebaker Lark VI – The Family Stud For 37 Years.” Curbside Classic. Posted Jan. 3, 8:46 a.m.
- Edwards, Charles E.; 1956. Dynamics of the United States Automobile Industry. University of South Carolina Press.
- Steve; 2014. Commentator in “Curbside Classic: 1956 Packard Patrician – Please Proceed to The Lifeboats.” Curbside Classic. Posted Oct. 24, 11:14 p.m.
- ——; 2018. Commentator in “Curbside Classic: 1961 Studebaker Lark VI – The Family Stud For 37 Years.” Curbside Classic. Reposted Jan. 3. Posted Jan. 3, 755 a.m. and 10:55 a.m.
ADVERTISING & BROCHURES
- oldcaradvertising.com: Hudson (1956, 1957); Packard (1956); Rambler (1956)
Man, if the 57 Hudson looked anything like that ad, it would have sold in six figures. No matter how you rearrange the musical chairs, any merger will come back to a shared platform at a shared factory. AMC did a much better job distinguishing the Nash and Hudson lines than S/P did. The 58 Packard look like bad AI renderings.
Perhaps historians have displayed “merger mania” because they start with the assumption that a merger would save a particular brand, and enable the new company to expand market coverage.
The real starting question should be how would a merger increase plant utilization and economies of scale. Starting from there, the one link-up that makes sense is Packard and Hudson. Packard gets a body facility, and Hudson gets a way to keep its plant viable.
Nash could go it alone with the Rambler.
Studebaker’s best partner might have been…Kaiser-Willys. Scale back the South Bend operations, but keep the Studebaker trucks in South Bend. (One of Studebaker’s big postwar failures was not building up its truck business.) Move the cars to Toledo, and then offer two sizes of cars – the Studebaker (with special emphasis on the Starliner/Starlight/Hawks) and the Willys Aero.
I like your idea but would do it in reverse. Put all truck and jeep operations in Toledo, and do the cars in South Bend.
Hi Geeber – and Steve. Geeber, l like your take on the “merger mania”(and all us “orphan” auto maker fans participate in it). l’ve often thought that a Studebaker-Willys hook up would have been quite beneficial to both. In the 50’s, the dimensionally small (approx. 24 inches long) Studebaker Champion engine would have fit in any Willys product and given it a horsepower boost. The expansion of a rationalized truck/Jeep line selling at many Studebaker dealers that were more urban, would have been interesting and highly profitable.
Smaller independent auto companies that “diluted” their reputation by marketing similar-looking cars in lower as well as higher price ranges often ran into some difficulties. Could the average American tell the difference between a Hudson Pacemaker and a Commodore? A ’51 Packard 200 and a Patrician? a ’51 Studebaker Champion and a Land Cruiser? The good reputations of each of those companies was built on medium and upper medium priced cars, but had to market lower priced models to try to keep up volume. My theory is that a “Studebaker Aero” should have taken the place of the Champion in the lower priced field, and the larger V8 Commanders and Presidents marketed in their traditional places (better yet, a newer 4door body using sheet metal and wheelbase from the Coupe/Hawk body) to maintain the more traditional place Studebakers were marketed.
l’m not convinced much of Hudson could be saved in any merger. The “bridge truss” method for building “stepdowns” had shown, by merger time, that while an innovation, it would not a flexibility in introducing new models without huge, unaffordable outlays of cash to modify the bodies.
The Willys-Studebaker merger would likely also have had a fairly dependable defense contract source of income at a time when Charlie Wilson’s new “narrow procurement” policy made it difficult for small auto manufacturers to get the much-needed business.