(EXPANDED FROM 12/30/2022)
A few years ago we had a debate in a comment thread about the importance of scale in the U.S. auto industry (go here). I thought I would add another layer to the conversation by discussing the decline of General Motors in the 1980s.
GM should have had a far easier time navigating this decade than its smaller domestic rivals, the Ford Motor Company and Chrysler Corporation. After all, GM was in close to top form in the late-70s when it came to market share and financial strength.
GM’s deep pockets allowed it to fund an exceptionally ambitious revamping of its passenger-car lineup in the late-70s and early-80s. This was in response to federal CAFE fuel economy standards as well as intensifying competition from foreign automakers.
GM downsized almost its entire passenger-car lineup by mostly shifting from rear-wheel drive to front-wheel drive.
This stood in stark contrast to the rest of the U.S. auto industry: International pulled out of light-truck production; AMC lost its independence to French automaker Renault; and Chrysler went through a government-backed restructuring that left it a shadow of its former glory. Even Ford struggled mightily in the early-80s to modernize its lineup.
Foreign automakers take biggest bite from GM
In the fall of 1979, when GM unveiled its front-wheel-drive X-body subcompacts, it looked like a juggernaut. Yet over the next decade the General experienced the greatest market share drop of any U.S. automaker.
As you can see from the graph below, GM’s market share of total car and truck sales fell from almost 47 percent in 1976 to under 35 percent in 1987.
Of course, the big winners were foreign automakers, who saw their collective market share increase from under 12 percent in 1976 to over 28 percent in 1987.
Not surprisingly, in the 1980s GM went into the red for the first time since the 1920s (Wearden, 2009). Oh, the irony that this was the same automaker which did not lose money through the entire Great Depression (Sawyers, 2008).
Market share numbers look even more ominous when placed on a gain/loss graph. From 1976 to 1990 foreign automakers added around 16 percent in market share and GM lost more than 11 points. Meanwhile, Ford lost under 1 percent and Chrysler fell by roughly 2 points. The remaining independents, who were heavy-truck producers, saw a 2 percent decline.
The reason I picked 1976 as the baseline year was because this was when GM reached its peak market share in the 1970s. Not so coincidentally, this year was also particularly good for domestic automakers because of a return in popularity of larger cars after the country bounced back from the first oil embargo.
I picked 1990 as the final year of this graph partly because it rounded out the decade, but also to include the first year of the luxury brands Lexus and Infiniti.
Why did Ford and Chrysler do better than GM?
When producing the above graphs I was surprised that Ford and Chrysler ended the 1980s so close to their market share in the (relatively) good old days of 1976.
Granted, both automakers made impressive comebacks in the 1980s. Ford had fallen to a low of under 20 percent in 1980 before rebounding to 24.5 percent in 1989 on the strength of groundbreaking new designs such as the 1983 Thunderbird and 1986 Taurus.
Meanwhile, Chrysler bottomed out at 9 percent in 1980 but used its venerable K-car platform to inch back up to 14 percent in 1988.
Why did Ford an Chrysler do so much better in withstanding the imports than mighty GM? Some have quite rightly pointed to specific mistakes made by what was once the world’s largest automaker, such as reputation-destroying reliability issues with its X-cars. GM arguably made things worse by fighting a federal effort to issue a recall that fixed the cars’ brakes, which had a tendency to lock up (Hunting, 2019).
GM also made some design blunders along the way, such as going too far in downsizing its E-body triumvirate, the Buick Riviera, Oldsmobile Toronado and Cadillac Seville/Eldorado.
GM was too big to shift nimbly as the market changed
Other analysts have pointed to broader problems. For example, Maryann Keller argued that GM suffered from a corporate culture that had “an almost pathological resistance to the glaring shifts in American life and values — and how these changes might translate into automobile purchases” (1993; p. 116).
One way this played out was that a growing number of buyers wanted the practicality of a minivan, sport-utility vehicle or truck over the trendy styling and “prestige” of a family car or personal coupe. That hurt GM more than Ford and Chrysler because it had traditionally dominated the latter market niches.
Also see ‘Auto industry analyst Maryann Keller was a key critic of Detroit Mind’
I would suggest that GM’s much larger size than Ford and Chrysler made it less able to quickly adapt. For example, historically one of GM’s greatest strengths was its larger number of brands, which allowed it to cover the market more comprehensively than its rivals. However, by the 1980s GM’s hierarchy of brands would prove to be an albatross around the automaker’s neck.
One reason why is that each of GM’s five passenger-car brands — Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac — would press for models in hot new market segments. This resulted in so much product proliferation that the brands saw their individuality erode. That can be seen most obviously with the Cadillac Cimarron, which suffered from a particularly embarrassing case of badge engineering. Only after GM collapsed in 2008 was there sufficient momentum to rationalize its unwieldy lineup, particularly by eliminating brands.
Too big can be just as problematic as too small
Of course, the decline and fall of GM is a much longer and more complex story than what has been sketched here. The main point I want to make is that economies of scale can be a double-edged sword: It can give an automaker greater access to the resources needed to survive in a changing market, but a larger corporation may have more layers of change-resistant bureaucracy.
In the end, Ford may have been better sized to navigate the 1980s than either GM or Chrysler. Ford was large enough to benefit from decent economies of scale but small enough to shift directions more quickly than GM.
NOTES:
This story was originally posted on June 7, 2021 and expanded on Dec. 30, 2022 and Feb. 23, 2024. Market share figures are from Wards Auto (2017). These figures look somewhat different from those typically used at Indie Auto because they are for sales of cars and trucks of all types.
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Hunting, Benjamin; 2019. “GM’s X-Cars: Anatomy of a Miserable Failure.” Automobile. Posted May 21.
- Keller, Maryann; 1993. Collision: GM, Toyota, Volkswagen and the Race to Own the 21st Century. Currency Doubleday.
- Sawyers, Ariena; 2008. “Even during the Depression, GM managed to make money.” Automotive News. Posted Sept. 14.
- Wearden, Graeme; 2009. “General Motors – countdown to collapse.” The Guardian. Posted June 1.
- Wards Auto; 2017. “U.S. Total Vehicle Sales Market Share by Company.”
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OMGosh, GM in the 80s… someone should write a book 😉. The name should have been changed to BEM, “Badge-Engineered Motors”. Could management have been more tone-deaf? They sucked the individuality right out of every brand – your father’s Oldsmobile furst & foremost – and let consumers be unwitting guinea pigs for cars that clearly weren’t ready for mass production, such as firey Fieros. And then the Cadillac Allante! Classic “answer to a question no one asked”! Exactly who was running GM then and why didn’t someone stop them? Oh, and whose idea was it to call it the Chevrolet Citation – a former Edsel moniker (see also AMC Pacer)? One can only conclude that GM in the 80s was America’s longest running sitcom of the decade.
They could have kept the GM signage and changed the meaning to ‘Generic Motors’, which it had kinda become.
With tongue not in cheek, I would say that GM did better, big as it was, when its car divisions had greater autonomy. The centralization of power, leading to wrong-headed cost cutting and homogeneous car designs, diversification into non-core business/products and the employment of management that didn’t know cars from toasters, turned GM into a bloated, inert giant. The only real surprise is that other car makers, domestic and offshore, didn’t seize the opportunity to take even more marketshare away from GM (with superior products and service). This could have forced the corporation to do more than simply continue on down the road to the inevitable bankruptcy of 2008.
CJ, that makes sense. What I wonder is how GM could have revamped its sprawling lineup without relying upon badge engineering given the costs of downsizing. Sheetmetal variations can get expensive, particularly if you’re no longer talking about body-on-frame construction.
Another consideration: If GM gave more of its cars distinctive sheetmetal in the 1980s, that might not have performed the same sales magic as in previous decades. Once Americans experienced the superior quality of design and manufacture of imports — particularly from Japan — superficial stylistic differences might have mattered less.
Now, what if GM went back to allowing its divisions to control car assembly and develop major components such as engines and suspensions? Might that have given room for DeLorean-type division managers to more aggressively compete against the imports? It sounds like an interesting idea but I still come back to the question of how much variance in components could GM have afforded given the increasing costs of new technology?
That really is a question rather than a veiled comment. I assume that it would take an industry insider to offer a more granular response than I could. That said, yes, GM’s diversification efforts hardly helped the situation.
Of course, GM could have saved itself money by in some fashion restructuring its brands. Killing off even one brand would have been very difficult in the 1980s, so perhaps a first step would have been to reduce product overlap and partially integrate dealer networks.
Well, at least in theory they could have done that. Brands and dealer networks seemed to be so sacrosanct back then that even when Chrysler was on the ropes it could not bring itself to kill off Plymouth and eliminate competing Dodge and Chrysler-Plymouth dealer networks.
A big part of the problem here is that GM’s overall brand structure no longer made sense in the 1970s. Giving back autonomy to the divisions may sound good to car enthusiasts, but one doesn’t have to be a bean counter to realize that this wasn’t feasible when each division’s dealer body wanted to sell the widest line-up possible. Meanwhile, the certification requirements imposed by federal emissions and fuel economy regulations made sharing drivetrain components even more critical. Again, one doesn’t have to be a flinty-eyed GM accountant to realize that this duplication would have represented an enormous expense that did little, if anything, to improve GM’s competitive position.
On top of those trends, growing sales of foreign cars made the distinctions between various GM platform mates meaningless to younger customers. When one could choose between an Audi, BMW, Mercedes-Benz and Volvo (and, later, an Acura, Infiniti and Lexus), the differences between a Buick and an Oldsmobile were hardly worth noting.
The only way I could see this working is if GM had somehow managed to restructure its dealer body so that each dealer sold the full range of GM vehicles. Then the divisional line-ups could have been pared down to focus on more specific segments. Chevrolet could have sold economy cars and trucks, Pontiac performance cars, Oldsmobile mid-size family sedans and Buick large, near-luxury cars. Cadillac could have focused on the upper reaches of the luxury market. (One challenge – Lexus has made superior customer service a key selling point. One wonders how GM could get its dealers to consistently provide superior service to Cadillac owners when the cars were sold and serviced by the same personnel in the same facility as lesser GM marques.) This would also involve, however, eliminating a large number of dealers.
Unfortunately, that sort of vision wasn’t coming out of GM’s executive suite at that time. And properly executing it would have challenged even the most stellar executive team.
Restructuring GM’s dealer body sounds like a key step. The question is how that could have been done in a way that allowed GM to streamline its lineup while also allowing it to continue to be competitive in key niches. For example, if it made sense for Cadillac to continue to have stand-alone dealers in major urban centers, why mess with that? Perhaps in smaller markets brands could be paired based upon demographic targets as well as the performance of individual dealers.
I go back and forth about how to deal with the divisions. As long as their structure was in place, they would fight to protect their turf. That inevitably meant pressure to, for example, give each of the premium brands a full lineup regardless of the redundancies. That’s not good. At the same time, if brands had more autonomy to deviate from the standard GM car, we might have seen better attempts to compete with the imports.
GM strikes me as having much more difficult managerial challenges than Ford in the 1980s. Ford certainly had to dramatically overhaul its lineup, but it could coast through the decade without having to rethink its brands and dealer network. In contrast, GM desperately needed to make some major structural changes. No, management didn’t step up to the plate to do so. My question: Was that merely a product of weak high-level executives or could it also have been colored by the organizational culture?
Brock Yates offered harsh criticism of GM’s management culture, which he compared to the highly insular world of the priesthood. How could someone with a fresh perspective make it to the top ranks in that kind of culture?
As to whether the failure of GM’s management to institute necessary structural changes was because of weak executives or the corporation’s culture – I would say, “all of the above.”
At GM, the path to the top involved not making waves. A person learned to never disagree with higher-ranking managers. I’ve also read that, until Robert Stempel was fired by the board in 1992, it was really, really hard to get fired at GM.
That atmosphere is guaranteed to produce insular, complacent thinking among the executive team, as well as middle management in general.
Of the view GM would have been better off embracing an earlier TASC or expanded V(auxhall)-O(pel)-H(olden) Interchangeability Programme from the 1960s, whilst retaining differing exterior styling and engines for a bit longer.
One question that does come to mind would be when did brand loyalty begin to become less of sticking point in North America for the likes of GM to consider rationalising down their global marque portfolio down to something like Chevrolet, Cadillac and GMC/Hummer (if not Buick to supersede Vauxhall, Opel, Holden and others to bestow a more upmarket image)? – http://vauxpedianet.uk2sitebuilder.com/vauxhall—opel—holden-interchangeability-programme
Drawing influence from the following two articles, am somewhat convinced there was an opportunity for Cadillac to both downsize early one as well as have a fairly reasonable chance of breaking into the UK/European markets under the right circumstances with UK/European division fielding a three car range with Cadillac cachet composed of the Opel KAD (e.g. Opel Diplomat), GM V-Platform and a smaller V-Platform derived model (via the Vauxhall Cerian proposal) with a 70s styling theme resembling the 1976 Vauxhall VX Prestige prototype built by Panther Westwinds.
https://www.curbsideclassic.com/alternate-history/automotive-alter-history-1965-cadillac-seville-the-car-that-beat-back-mercedes-and-became-a-global-best-seller/
http://vauxpedianet.uk2sitebuilder.com/vauxhall-u-car—cavalier-mk1-part-1
https://driventowrite.com/2017/11/11/vauxhall-future-under-psa-1976-vx-prestige-prototype/
Excellent points, Steve. You’re bang on about reliance on badge-engineering and the costs of sheetmetal changes on unibody cars. Had smarter management come aboard, they would have realized that GMs 80s-era cookie-cutter cars illustrated that the company could no longer sustain the Sloanian principle of a car for every pocketbook, especially when there was little to substantially differentiate a Pontiac 6000 from a Buick Century, or a Cadillac Eldorado from an Oldsmobile Toronado.
Division overlap needed to be severely curtailed and products weeded out in order to allow each division to rebuild a strong brand identity. Basic architecture could still be shared, as you suggest, and developed under the auspices of the 5 divisions and not corporate groups, but the cars needed to look unique. People stopped buying Plymouths, Mercurys and Oldsmobiles because they were just copies of Dodges, Fords and Chevrolets.
On a bit of a tangent here, I think GM made a huge mistake not to develop a new a rear-drive platform in the 80s and 90s. The reason? Lexus. GM refused to put Chevy’s Caprice on the front drive platform (goodbye fleet sales) shared by the contemporary Bonneville/Delta/LeSabre/DeVille. It was okay for Cadillac’s mainstream models to go front-drive however, resulting, IMO, the worst looking Cadillacs, ever. Keeping the Fleetwood on its stale-dated 1977 platform and restyling it in the manner of the whale/hippo 1991 Caprice was just a further downgrading of “The Standard of the World”. More proof that GM just didn’t get it.
If you don’t care about your top of the line brand, do you honestly believe customers will look favourably on your low and mid-range offerings? The 92 Seville, all too briefly, showed what Cadillac could do (still on a front-drive platform however), but then the 2003 CTS came along and showed us that styling had been thrown out the window in favour of “art & science”; different isn’t always better. In the end, no lessons were learned. GM went on to rebrand so many of its cars, causing a lot of former loyal customers to walk away in confusion… it’s not an Oldsmobile, it’s an Aurora, no that’s not a LeSabre, it’s a Lucerne; goodbye Pontiac G8, hello Toyota Avalon. And now GM is a maker of what?
Indeed, if GM had designed the Caprice in a design more closer to the Crown Victoria and Mercury Grand Marquis, things might have been different.
GM in the 1980s proved that the advantages of scale and large size can be squandered by inept leadership. GM’s size was a handicap to the extent that it allowed leadership to believe that the corporation was invincible. Turns out it wasn’t.
Regarding Ford, I do believe that Ford of Europe helped prop up the company during the lean years of the 1980s. Ford was also blessed with higher quality executives than GM was during the 1980s. Phil Caldwell and Donald Petersen were head-and-shoulders above their GM counterparts. That counts for something.
All of these observations and points were true, but there is something else at play here. When Frederic G. Donner assumed the reins from Alfred P. Sloan, his focus on cutting off the legs of “the car guys” in favor of the New York City bean-counters ultimately led, in my opinion, to the conflict that ultimately destroyed General Motors. (I do not consider the post-bankruptcy, Ren-Cen G.M. the same company that may bear the name of the company created by Billy Durant, Charles Nash, Sloan, Pierre Dupont, Big Bill Knudsen, Engine Charlie Wilson and Harlow Curtice, a company that today except for the Corvette, exists as badge-engineering in all of its divisions: Chevys are Buicks, Cadillacs are deluxe Buicks and G.M.C.’s are deluxe Chevrolet trucks and S.U.V.s with the upcoming proposed Escalade brand even more plush Chevrolet Tahoes and Suburbans.)
If Donner had been a faithful student and successor to the Sloan vision of G.M., he still might have consolidated the assembly plants as he did with G.M.A.D. to replace
Fisher Body, but Donner might also have given John F. Gordon (as good an engineer as Ed Cole)h more of a say in letting the car guys define the company’s key products. Picking up on last week’s post about the weakness of the Buickb division after 1955, especially between 1958 and 1967, the consolidation of Oldsmobile and Buick made sense with Buick being the surviving brand for the full-size car, the Toronado becoming the new Riviera and the name Cutlass applied to the intermediate. I think we all forget that Sloan had no problem with shuttering brands and divisions over the years, especially when the companion brands were no longer were needed to cover the “price gaps”. For example, to this day, why did Chevrolet make big trucks when light-duty made sense for Chevy dealers and heavy-duty big truck should have been G.M.C.’s bailiwick, instead of the badge-engineering which waters down both brands of trucks? Of course, both Chevy and G.M.C. gave up the true heavy-duty trucks that were once available as late as the early 1990s.
I think the rap against Robert Stempel was unfair, but the near-bankruptcy of G.M. in 1991 was the wreckage inherited from the legacy of Roger B. Smith. Frankly, G.M.’s leadership under Proctor & Gamble’s John Smale was not great and did not prune G.M. down to addressing the problems of too many brands, too many over-lapped models and cars (I think the light-duty trucks were very good between 1987 into the new century.) that were barely competitive with the imports. Smale’s emphasis on branding / marketing, while very hip, did not address the root of the need to address the problem that finally came to a head when Steve Rattner (rightly or wrongly) forced General Motors in the spring of 2009, to jettison Pontiac, Saturn, Richard Wagoner (a big mistake in my opinion) and a significant number of its dealers. Mary Barra’s dealer E.V. upgrade requirements will prune the dealer network even further. The survivors will be Honda, Toyota, Hyundai-Kia, Volvo, Stellantis, VW Group, Renault and Daimler-Benz, maybe Ford and maybe G.M. It’s a different world from where we’ve come from!
One thing that jumps out from the 1961-90 Market Share graph is GM’s 12 point drop between 1962 and 1970. They did manage to recover somewhat but geez, what a wake-up call that must have been.
Given the huge influx of strong competitors in the 1970s and 80s, I wonder what GM’s best case market share scenario could have realistically looked like. In 1980, Ford and Chrysler arguably had no where to go but up, but GM had gotten a jump on them and was hanging in there.
It appears that GM’s Body engineers were doing a decent job but Powertrain was not up to the task and Design had gotten lazy and set in there ways, and not just with the exterior. GM’s 1980s interiors were a continuation of the 1970s. Ford got the memo, the ’86 Taurus being tight and well-executed inside and out.
Paul you ask an important question. GM ended up being the weakest link among the Big Three even though it was by far the biggest and wealthiest. It wouldn’t have taken all that much for things to have turned out differently, e.g., Chrysler dying if it had not received a bailout. Or Ford not bouncing back in the second half of the 1980s.
I would imagine that a variety of factors worked against GM in a drip, drip, drip fashion: the interiors, the powertrains, the reliability issues, the decaying brand identities, the market’s shift to more practical designs such as minivans.
My sense is that the problems with the X-cars may have been a pivotal moment because they brought to light that GM could produce a good-looking small car but that it nevertheless wasn’t competitive with the likes of a Toyota or Honda when it came to all-around customer satisfaction.
This period of GM Design has an important factor to recognize. Bill Mitchell had retired and, against his recommendation, his successor was Irv Ribycki. It was Howard Kerl that drove that decision as he hated Bill Mitchell and had a dislike of Mitchell’s choice, Chuck Jordan. Ribycki was exactly what Kerl wanted, a dutiful bureaucrat that would follow along with the program. Too bad that this was the opposite of what GM needed – someone that would fight for the sanctity of design. Result: the absolute look alike cars created from extreme standardization and the decimation of GM as the industry leader of design.
GM had more problems than Design but that sure was a contributing element.
Howard H. Kehrl (1923-2013) was a major force on the 14th Floor at G.M., becoming Vice Chairman to Roger B. Smith in 1985. Kehrl had an engineering background, but but became close to the financial guys in New York and wound up having more power at G.M. than its president, F. James McDonald (1922-2010), all because of Roger Bonham Smith. Badge-engineering was okay to Smith, even after the disastrous Fortune magazine cover of G.M.’s 1982 intermediates.
This is directed to everyone, not just Mr Duvall. Given that the GM cars, especially the X cars were built on the same lines with the same unit body (shell? cage?) how much freedom did the individual brands exterior sheet metal?
Regarding GM’s market share drop in the 1960s, remember that Chrysler Corporation hit rock bottom (before the 1979-80 brush with bankruptcy) in 1961-62. Also remember that GM was hit hard by a very lengthy strike in 1970, just as the 1971 model year began.
Wacky styling, inept marketing (particularly regarding the market position of the big Dodges) and quality problems drove Chrysler’s market share to a low in 1962. Chrysler began recovering in 1963, and by 1968 its market share was almost double the 1962 figure. I’m sure some of that came out of GM’s hide.
First I would like to comment on how long overdue this post is. The one thing to consider is how history repeats itself. Every US industry has followed the same path since our country began. Times are constantly changing. An excellent example of this would be the railroads. When the railroads began to grow, they didn’t just grow, they were a major contributing factor to the growth of America. Of course they were the first to become a transportation provider. However they are responsible for so much more. From expanding the settlement of our country, to creating the US timezones. The railroads dominated the transportation industry, because there was no competition. They became the background of America. When cars, trucks and airplanes entered the field, they all chipped away of the railroads dominance. Call it evolution, but it happens in every industry, and it always will. The railroads had to reinvent its self to survive and that took years.
The US Big Three created the global auto industry, with GM having the largest share of the market. For decades the five GM brands controlled every aspect of the industry making GM huge and successful. GM had such deep pockets, they could survive any changes to their profitability without a need to change it’s business strategy. They were GM, they didn’t really care, because they didn’t have to. Even when the GM brands were doing well, if you look closely at the 5 brands, they were all very similar. From the styling of each brand to the door handles, they were all the same. I always wondered if the people buying the cars could see how similar they were. I could, it was a ticking bomb that would one day explode. It took the 73 oil crisis to open the Big Three’s eyes. Of course American cars could have been much more efficient, but efficiency wasn’t a priority to the American car buying public.
In Detroit’s defense, they built the cars we wanted. Then the oil crisis changed what we wanted. I believe the crisis changed everything, not just the auto industry, and we have never fully recovered. The Big Three are still important players, but things will never be the same, and it was allowed to happen, and now it has. There needs to be a better way for businesses to expect the industry evolutions that happen and not be blind sided by the changes that challenge their survival. It’s happening right now in our retail industry. As more retailers switch to an online presence, it stands to reason that will effect our traditional brick and mortar businesses. Retail stores are closing everyday. Instead of filling bankruptcy, they must transition to e business.
The next transition that is coming with huge implications was started by the pandemic, ushering in the work from home strategy. If that continues to be our new work culture, not only will business continuity and in office interactions will decrease and that will effect business success. There needs to be employee interaction for the business to thrive. And that’s just the tip of the iceberg. If the work from home culture continues, what will become of the office space in our cities office buildings? With no one in the buildings the local restaurants and businesses that rely on those people to survive will soon fail. Our cities will become ghost towns and local economy’s will disappear.
Shouldn’t we do something to stop all that? I’m now retired, but during the 90s I was with IBM US Sales and Marketing, many of us had the option to work from home, I tried it, but I didn’t like it. My position required the interactions with my co-workers, I could see how business would suffer by not being in the office. Plus it was more enjoyable being my coworkers. We must find a way to stop allowing our businesses to fail by being proactive about the protection of our business before they fail. And one more point that’s critical of our US auto industry. GET RID OF THE UNIONS! they are a parasite that’s killing the success of our future.
Just as a side-note, the problem with the railroads after 1946 was that the infrastructure was worn-out by World War II (The Standard of the World Railroad, the Pennsylvania first lost money in 1946. Both state and the federal government would not allow the railroads to abandon trackage that was appropriate and had no revenue potential, and the I.C.C. was slow approving mergers and allowing the railroads to exit money-losing passenger service. (Most railroads quickly dieselized to eliminate the huge maintenance costs of steam locomotives, and new streamlined modern passenger cars rolled out of Budd and Pullman-Standard between 1946 and 1954, in the face of declining rail passenger patronage. By 1957, all of the railroads in the East were losing money, becoming delinquent on state taxes and allowing their rail infrastructure to defer maintenance, until by 1972, the Penn-Central, the Erie-Lackawanna, the New Haven, the Central of New Jersey and other bridge lines were bankrupt. In 1974, the Rock Island slipped into the red, followed by the Milwaukee Road. Even the mighty Southern Pacific was on the brink. It took the creation of Amtrak (June 1st, 1971) and in 1976, the Consolidated Rail Corporation (ConRail) to rationalize the national rail system, although many of the 1980s abandonments of rail trackage (elimination of key segments of double track) and facilities was too drastic as the nation grew and as surface transportation became congested with not enough highway lanes and too many trucks. Remember, we, the taxpayers, built the infrastructure for Eisenhower’s 1956 Interstate System and massively expanded and built new airports and expanded runways after Korea. (And the Army Corps of Engineers expanded the nation’s navigable waterways for increased barge traffic.)
Someone wrote “Get rid of the unions.”
I’d love to hear how this would be accomplished.
I’m all ears, champ.
I don’t go along with your last proposal, but this isn’t the forum for us to discuss that. It reminds me of a semi-competitor of yours, Kodak. Their business model since day 1 was sell the cameras cheaply, and make the money on accessories. Then came the digital revolution. Kodak’s EasyShare was sort of a proto Facebook with their own line of excellent printers and user friendliness that this luddite still thinks is unmatched. They came late to the scene though, and I think adaptors looked at it as too little too late from a legacy company. I don’t know where hybrid /PIE technology and popularity will go. I think Ford has the right idea by using Rivian as a somewhat-subsidiary. This is where Olds would have been handy for GM as they were traditionally GMs new tech beta tester. Since every GM dealer sells pretty much everything now, an Olds line of electrics would be perfect.
Just out of curiosity, when did VW and the Japanese imports start to offer larger cars in a big way? Also, how did Chevy’s sales fare in comparison to BOPs?
V.W. started bringing Passats over in 1973 under the name of the V.W. Dasher. The upscale version of the Dasher became the Audi 80 and Audi 100 in 1970 ! The Toyota Crown was available on a limited basis beginning in 1958. It became the Toyota Corona II between 1968 and 1972. The second-generation Corona arrived in 1973, but it was only marginally bigger than the Corolla. (My late wife bought a new Corona coupe in the summer of 1973.) The bigger mid-size Cressida came to the U.S. in response to the first Accord in 1976.
One can only chip away at this topic. Powertrains were an issue — or the lack thereoff. Notably a smooth nonvibrating 4 cylinder engine.
Brand identity. Keep the 5 brands — what the hell. It was very problematic to not field a FWD Caprice. Disarray followed. What was the “real” Chevrolet? Another ex. Buick folded the Park Avenue/LeSabre into the Lucerne. They needed at that point to hold fast to their legacy models. Project confidence.
Quality/heritage. Keep Fisher Body to leverage against “German engineering”. Build “import fighters” like Oldsmobile at high-quality export factories in Canada. Keep the iconic door handles — forever.
Design. GM 10s were horrendous. Bring in Pininfarina to completely rework. N Body. Odd coupe shape worked nicely with Trans Am design. You could foresee that Buick and Olds versions were design duds. Phase out “Euro” models. The Japanese did not have Euro variants — the “Euro” was baked in.
There is a big picture here that was totally missed by GM. Easy to see with twenty twenty hindsight, but I was making these observations in real time — 30 years ago.
In hindsight, GM’s decline was inevitable for many reasons, but I wish GM’s investments had been more efficient. I admire how financially strapped Chrysler developed so many derivatives of the K platform in the 80’s. GM could have done its downsizing more efficiently. I also wish that instead of developing the 1986 E/K platform, GM had developed the RWD Sigma platform more earlier for smaller upscale Cadillacs, Buicks, and Oldsmobiles that would have competed better with the European luxury cars.
“William Maceri says..” Being a planehead, I can draw a corollary between the slow decline of GM until the eventual restructure of the 2000s and the ongoing decline of Boeing. They made a product that, like Cadillac, was the ‘standard of the world’. From seaplanes to airliners to bombers, Boeing was always near the top of your shopping list. Then the beancounters took over who then willingly underwent a self-own takeover by ‘buying’ McD and letting the people who so weakened McD stay around. This naturally tightened the stranglehold the suits had on engineering and safety – hence the news of the past few months. I suspect we are going to see a near reorg or see an actual one within two, three years.
Looking at the chart from the 60s to the 90s, it seems that everyone (except poor AMC, who almost coulda, almost possibly might have become America’s Subaru, but AMC snatched defeat from the jaws of victory while already doing well where 4WD was needed) was back where they were after three tumultuous decades, so the imports rode in on the needing to be recalled coattails of GM. Everyone thank GM, kids!
And now the medias like the tv networks (CBS, ABC, NBC, Fox) and the Hollywood studios seem to face the same music then GM, IBM and Boeing faced. Looks like history doesn’t repeat itself but it often rhymes as Mark Twain might have said.
A general query – could anyone out there recommend the best book on the decline of the American auto industry? I’ve read the John DeLorean and Brock Yates’ books, but would like something more recent. Any suggestions appreciated. Thank you, John G in Minneapolis
John, good question — thank you for asking. James (see comment below) mentioned some books well worth reading (here is a background piece on Maryann Keller).
Another book that’s on the older side — 1986 — is David Halberstam’s The Reckoning. There are quite a few breezy insider books out there but they tend to not have a whole lot of substance, e.g., Richard Johnson’s Six Men Who Built the Modern Auto Industry (2005) and Bryce Hoffman’s American Icon: Alan Mulally and the Fight to Save Ford Motor Company (2012).
I’m sure there are some others, particularly rooted more in the academic literature, that I haven’t come across. I hope Indie Auto readers will share what they have read. Perhaps there’s a need for a new book that addresses the decline of the auto industry from a contemporary perspective.
Two books, both by Maryann Keller:
1989 Rude Awakening: The Rise, Fall and Struggle to Recover at General Motors;
1993, Collision: GM, Toyota, and Volkswagen and the Race to Own the Twenty-first
Century.
Being large may well have been a factor in GM’s decline during the 1980s, but I would argue that more importantly from the 1960s through the 1990s, GM suffered from a different groupthink: the groupthink of management consultants, and in particular McKinsey & Co., who were the architects of two major reorganizations (1965 and 1984) both of which disrupted but failed to improve the organization’s performance by imposing orthodox organizational theories on entities that had been successful through heterodox adaptations, trial and error. Ford and Chrysler, by contrast, relied on internal industry experts in their renewal efforts.
Didn’t McKinsey encourage Chrysler to expand its international footprint — which proved to be a disastrous move?
I believe that is correct.
When GM downsized, it spent a ton of money…but paradoxically, tried to do it as cheaply as possible in some ways. For example, it switched all of its mainstream passenger cars to a unit-body, front-wheel-drive layout with transverse-mounted engines. This, however, wasn’t necessarily what each segment needed. One could argue that the Cadillac De Ville, for example, should have retained a rear-wheel-drive format, even if it did switch to unit-body construction. And moving the 1986 Seville and Eldorado/Toronado/Riviera to a transverse-mounted engine was not what those cars needed.
One minor note to the article – the front-wheel-drive X-cars debuted in April 1979, not the fall of 1979. They were big news at the time. The principal of our high school bought the first X-car in our town – a Chevrolet Citation five-door hatchback to replace a full-size 1975 Chevrolet station wagon. This was in May 1979.