When should U.S. automakers have begun producing a domestic subcompact?

41 Comments

1. 1967 sounds good with 20/20 hindsight but the European wages and domestic market offering additional volume allowed for lower prices than US made subcompacts could offer. The interesting thing is GM kept Opel as a captive import through Buick dealers at this time. Remember this was a “Goot Cherman auto” at a time when British and Italian cheap cars were getting a bad rep, and French cars were just strange. Yet, from what I remember Opels were afterthoughts at the dealers, and really wasn’t marketed that much.

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   • Are you arguing that the U.S. labor cost disadvantage was prohibitively greater in, say, 1967 than it was in 1971, when the Vega and Pinto were introduced?

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     • Perhaps not the best examples to choose.

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     • Actually, the answer is yes. The German Mark was substanitally revalued in the 1970/1971 era. Previously it was 4 DM to the $.

       As for the Opel being sold by Buick dealers, probably not the right sales channel. My belief is that there were a number of the dealers (majority) that viewed this as why? They sold large traditional upper range American cars that made them more money. In the service department these were metric cars that required different training.

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       • Good point. To my mind, it would depend what aspect of the imports you want to emphasize. For the frisky zippiness of imports, Pontiac would be the chain to sell them through. But whether Pontiac or Buick, I’d have thought they needed a compact first. Get them established in that segment, then take a step down.

2. G.M., Ford, Chrysler and A.M.C. (under Roy Abernathy) all domestically rejected smaller cars (sub-compacts). All four invested heavily in new compacts (Nova, Maverick, Duster-Demon and Hornet) for 1968-1970, so why design a new car ? Chrysler brought in imported Crickets and Dodge Colts to compete with the Vaguely and the Pinto, so the sub-compact car for Chevrolet and Ford began in earnest in 1967 or 1968. Ford built the Pinto with much of its European parts bin. Ed Cole designed his Vaguely 2300 from scratch. If Ford had put the Cardinal in production in a rear-drive sedan form in 1962, the issues with the Pinto might have been avoided. It took until 1964 and Bunkie Knudsen to fix the swing-axle issues with the Corvair. How G.M. allowed Cole to go ahead with an aluminum block engine that was unproven is beyond me. I guess Cole did not want to tool up his Vaguely with a cast-iron engine to meet an overall car weight target. My sad sense is that G.M. did not think much of its Vauxhall, Opel and Holden subsidiaries, even though the cars were featured annually in the stockholder’s reports. The importation of the 1968 Toyota sedan and the Datsun 1600 roadster were what began the trend that had to be countered.

   But I strongly disagree that Japanese cars improved that much by the mid-1970s: Most of the engines in Toyotas and Datsuns were still not bullet-proof for U.S. interstates and the cars were as rust prone as the Vaguelys and 1957 MoPars with even thinner sheet metal. (Remember the first Honda Accords had recalls because of rust !)

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   • We did get some Vauxhall models in Canada but the Firenza left us a bad taste.
     https://www.hotcars.com/this-lemon-caused-vauxhall-to-be-driven-out-of-north-america/
     https://www.curbsideclassic.com/blog/cohort-sighting-1971-vauxhall-firenza-viva-canada/

     In South Africa however, the Vauhxall Firenza got a different story where it was sold as a Chevrolet model and a aftermarket specialist put a Small Block Chevy who was used in the Trans-Am Race series under the hood of the Firenza.
     https://www.carthrottle.com/news/chevrolet-firenza-can-am-tiny-muscle-car-z28-heart

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3. What throws a spanner in the works of the containment theory is, in my opinion, the rise of Japanese cars.

   If the containment theory offered the correct view of the situation, Japan should have been stopped dead in its tracks, as in 1964 its 16,023 exports were dwarfed not just by West Germany (364,683), but also by the UK (77,548) and even France (39,352).

   Yet in a volatile market buyer habits and potential containment are both less important than having the superior product – just seven years later the 667,307 VWs/Opels/Capris import figure and 683,587 Pintos/Vegas/Gremlins production figure were both eclipsed by 703,672 Japanese imports, showing that the presence of far more established competitors couldn’t stop a rising exporter.

   Suppose the US subcompacts had arrived four or five years earlier – would it really have stopped the Japanese from offering their quality products, which by that time had them already beating French and going head to head with British exports? How would a strong late 60s American subcompact industry not succumb to the same fate as the strong late 60s German subcompact industry?

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   • The basic challenge with counterfactuals is that we can’t run a bunch of lab experiments to test competing hypotheses. All we can do is work with the available facts and stress test our logic chains — and acknowledge that some of us may come to divergent conclusions.

     If I’m reading you correctly, implicit in your argument is that the Japanese were essentially unstoppable because they offered superior products. Over the long run that may have been the case. However, I suspect that Detroit could have at least slowed down their ascendency if they had taken the subcompact market more seriously earlier than they did.

     Integral to my argument is that scale matters. When foreign automakers were collectively selling less than 500,000 units per year that resulted in a much weaker infrastructure than when sales tripled to 1.5 million in 1971. And once the major imports built that basic infrastructure they were going to be much more difficult to fight, let alone dislodge. If both Ford and GM had come out with subcompacts in 1963-65, foreign automakers might not have achieved the same sales levels, which would have translated into fewer resources to invest in new products, marketing and dealer networks. Success begets success.

     The Japanese did not start off as invincible. David Halberstam’s book, The Reckoning, is so interesting to me partly because he does a good job of showing how Nissan’s development in the U.S. was loaded with contingencies.

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     • While everyone has their issues, I think the Japanese makers had enough tenacity, quality and domestic political backing that the Americans’ moment of entrance wouldn’t have stopped them, rather just changed the trajectory. We’re looking at unyielding growth from 1964 to 1971 here – an average of 72% a year, including more than 100% in 1966 and in 1968.

       Even if we assume that what caused Japanese import sales to stabilize at around 700k from 1971 to 1975 were the Ford, GM and AMC subcompacts, the introduction of the American small car was just a temporary setback – in 1976 alone sales increased by 62%, from 696k to 1.129m, and over the next four years an import market that only increased by 1.8% a year in total saw the Japanese makes grow by 15.2% on average.

       That made them, in fact, the almost exact opposite of the European automakers, who saw their sales contract by an average of 15% in the 1976-80 period – much worse than the domestics’ 6.8%. You can see that the Japanese industry was more of a superpredator, rather than your average overseas competitor.

       As for the resources – the US sales organization was flexible enough to grow at either 15,000 or 1,500,000 cars a year, while the Japanese cars developed rapidly based mainly on domestic, rather than foreign revenues. Export sales didn’t exceed 10% until 1965, accounted for less than a quarter of total production until 1971, and only surpassed JDM sales in 1976 – which means that such world beaters as the T40/T50 Corona, the E10 and E20 Corolla, the 510 or the 240Z were funded predominately by Japanese buyers.

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       • One thing that exemplifies how the American market was not the be-all and end-all of the Japanese industry is the existence of multiple non-kei nameplates that enjoyed solid development with little to no American sales – prominent examples are the Nissan Laurel/Skyline and Cedric/Gloria, as well as the Toyota Crown.

       • That’s one take but I think it’s debatable. For example, I question that the Japanese automakers were as infinitely scalable in the U.S. as you seem to suggest.

         I get the impression that you are insistent upon putting the Japanese up on a pedestal. I’d agree that they represented a much more potent challenge to U.S. automakers than the Europeans, but at least a portion of their initial success depended upon recruiting professional refugees from the American automakers. Brock Yates does a good job of explaining this dynamic.

         I’m not suggesting that if Detroit had come out with subcompacts much earlier that it have been the one neat trick which stopped the Japanese in their tracks. For one thing, the quality of Detroit’s products would have mattered. Here is where what Yates called “Detroit mind” came in. If GM and Ford executives didn’t understand what motivated imported car buyers (particularly on the coasts), they weren’t going to be as successful in winning them over. A big reason why U.S. automakers failed to do so was arguably because their management culture could get so ossified that it turned off younger and more innovative talent.

         At least in theory that was a solvable problem.

       • The Japanese may have used former Big Three to succeed against the Big Three on their home turf, but what Brock Yates doesn’t mention in his US-focused book is that the Japanese also succeeded in places where the Detroit Mind was a foreign concept and the kind of car that they exported was just a car in general, not a “subcompact” or “economy car”.

         Southeast Asia? In 1970 Datsun became Malaysia’s #1 car brand, and a year later Toyota joined it as #2 – by the time the 80s started, the whole Top 5 was Japanese. In the Philippines Toyota was even more successful, capturing a quarter of the market by 1970. The figure I found for Thailand is one from a bit later, but also one more shocking – in 1978 91% of cars sold there came from Japanese brands.

         Or, for another non-Detroit-Mind place, Scandinavia. By 1975 there were two Japanese Top 5 finishers in Norway (Toyota Corolla at #3, Mazda 929 at #5), and in Finland, for which I also found brand charts, Toyota was already the #3 brand in 1970, climbing up to #2 for 1971 and finally leading the sales charts in 1973 – with Corolla as the #1 model that year.

         I am putting the Japanese on a pedestal not because they were showing their power against the Americans, but because they were doing so against virtually the entire motordom.

       • I don’t publish Indie Auto with the idea that I’m going to change the minds of people with deeply-held views. So when I debate folks in the comment threads, I’m not trying to “win” an argument — my goal is to help deepen the dialogue by fleshing out its factual and analytical contours. When the conversation starts to get repetitive I will step away.

         Your argument strikes me as having a white/black quality that washes out nuance — and human agency. You also seem willing to cherry pick data, e.g., so what if the Japanese did well in countries lacking a domestic auto industry. Yes, the Japanese were exceptionally aggressive exporters — but that doesn’t mean U.S. automakers couldn’t have done a better job of competing against them.

4. The article focuses on imported and domestic subcompacts, but the market share figures given are for the sales of ALL imported vehicles,

   Imports, even in the 1970s, encompassed much more than economy subcompacts. Audi, BMW, Jaguar, Mercedes-Benz, Saab and Volvo were all rising in popularity, and none of them sold inexpensive economy cars. Imports at that time also included the British sports cars – MG and Triumph.

   Some marques had expanded beyond the subcompact segment. Datsun offered the 240/260/280-Z, while VW offered the Dasher, which was the prototype for the family sedan of the 1990s. The Dasher did not compete directly with the Gremlin, Pinto and Vega. (That was the job of first the Beetle, and then the Rabbit.)

   When looking at the domestic market share, consider a few things. A big one is that a major player – Chrysler Corporation – was completely AWOL until early 1978, when the Dodge Omni and Plymouth Horizon debuted. The domestic market share for subcompacts was undoubtedly reduced because Chrysler did not field an entry until the 1ate 1970s.

   Second, I’m not sure that the reason for the failure of the U.S. entries to stem the tide of rising import sales (which, after 1974, was primarily the Japanese manufacturers) was problems with the Vega and Pinto.

   The Vega’s sales peaked in 1974. It wasn’t until 1975 that Consumer Reports specifically warned readers away from the Vega due to the engine problems. While Vega sales did decline after 1974, so did sales of the Gremlin and Pinto. In 1976, GM introduced the Chevette, which did not have reliability issues. The Chevette undoubtedly hurt sales of the Vega, as it offered buyers a brand-new car that was also more practical than the Vega. Even if the Vega’s engine had been trouble-free, it sales still would have been hurt by the debut of the fresher, more practical Chevette.

   The Chevette sold reasonably well at first, but sales took off in 1978, when GM added a five-door hatchback, increased the horsepower and added more standard equipment. Sales were strong through 1981, when a combination of age and more modern competitors began reducing Chevette sales.

   The Vega’s reputation did not prevent people from buying Chevettes.

   Over at Ford, Pinto sales also peaked in 1974. But the Mother Jones article that started the entire gas-tank controversy did not appear until 1978 – after Pinto sales had already started to decline. Pinto sales simply continued to decline – there is no indication that the article and ensuing controversy decimated Pinto sales. (Incidentally, that article wildly overstated the number of Pinto deaths due to fires. The NTSHA test that supposedly “proved” the Pinto was dangerous was altered to achieve the desired result. And an examination of the car’s safety record shows that it was actually one of the safer small cars of that era.)

   The problem here was that Ford let the Pinto get stale. If Ford had restyled and refined the Pinto for 1976 – giving it a more practical body that resembled the second-generation European Escort – sales would have undoubtedly held up much better.

   It’s the same with the AMC Gremlin. Sales peaked in 1974, and then tailed off rapidly. The problem was, again, that the car was stale. Imagine, if instead of blowing its money on the Matador coupe and Pacer, AMC had brought out what became the 1979 Spirit for 1975 as a “downsized” Javelin. (The show car that provided the template for the Spirit – the Gremlin G-II – existed in 1974). Then AMC could have restyled and refined the Gremlin. While it would not have been the most up-to-date entry, sales would not have declined so rapidly if the car had been kept fresh.

   Meanwhile, the Civic gained steam in 1974-75, and VW debuted the all-new Rabbit in 1975.

   AMC, GM and Ford did have momentum in the early 1970s. The problem was that Ford and AMC let their entries get stale in the face of vigorous competition from the Japanese and VW. Meanwhile, Chrysler didn’t even field an entry until 1978.

   The initial promotional material for the Gremlin, Pinto and Vega clearly shows that they all had targeted the VW Beetle. The expectation was that the cars would not need to be changed much to remain competitive – that was, after all, the formula used by VW with great success in the 1960s.

   The problem was that the Beetle was on the downward swing by 1971, as the Japanese entered the market. They forced VW to abandon the Beetle and bring out the Rabbit. There was no way the American entries were going to remain competitive over an 8-10 year life cycle without major changes, given how aggressive the Japanese were in the 1970s. That was the major problem, and the root of Detroit’s downfall in this segment.

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   • My article focused on whether Detroit should have come out with subcompacts before 1971. You didn’t directly respond to that, but instead wrote a comment almost as long as my piece that focuses largely on imports from 1971 onward. That’s an interesting topic but parenthetical to what I was trying to address.

     The closest that you come to responding my argument is to say that American automakers “did have momentum in the early 1970s” but that they “let their entries get stale.” I agree with your second point but would suggest that it is grading on a curve to argue that Detroit initially had “momentum.” In 1971 import sales actually went up 22 percent, surpassing 1.5 million. That was a very different dynamic than in 1960, when U.S. compacts immediately undercut import sales and it took a number of years for them to rebound.

     You complain that I didn’t break down import sales by market segment. If I had consistent data I would have included it. However, given the time period I was primarily focusing on — 1963-70 — my sense is that the sales of non-subcompacts were not a very important factor. For example, in 1969 imports sold more than one million cars in the U.S. but, at least according to one report, Volvo racked up roughly 36,000 in sales and Mercedes-Benz another 22,000. That’s only 5.5 percent of total volume.

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     • I wasn’t complaining about the lack of a break down of import sales by segment. I was simply pointing out that, by the early 1970s, the import market encompassed more than subcompacts.

       Import sales may have risen in 1971, but VW’s sales didn’t. VW sales peaked at 569,969 in 1970, and then declined to 522,657 in 1971. The decline continued through 1974 – which was the year that the effects of the Arab Oil Embargo powered sales of the Gremlin, Pinto and Vega to their peak. VW sales actually fell to 334,515 in 1974 from 476,295 in 1973. VW was the direct competitor to the domestic subcompacts. It sales began to fall when the domestic competitors arrived on the market.

       VW’s experience is instructive, because through the mid-1960s it essentially was the imported market. Out of 609,000 imports sold in 1966, for example, 411,956 of them were VWs. VW thus beat AMC in total volume that year (and would do so through the early 1970s). Annual volume at that level required a large, well-stocked dealer body. VW thus had an extensive infrastructure in this country, and that still didn’t stop it from being steamrolled by the Japanese in the 1970s. VWs were common sights in the small towns around where I lived – while Japanese vehicles remained rare until the early 1990s.

       I have read The Reckoning, and my takeaway was that the Japanese were quick studies who learned from their mistakes and were prepared to settle in for the long haul. Even if Ford and GM had subcompacts on the market in 1965, would the end result would have been any different? If the Japanese were able to roll over a well-established VW, I have no doubt they would have rolled over any subcompact Ford and Chevrolet that wasn’t kept up to date.

       The question for me, therefore, is what incentive would there have been for GM and Ford to keep a subcompact – which, even then, was a low-margin vehicle – up-to-date against rapidly improving Japanese competition? They weren’t willing to do it in the 1980s, even with CAFE standards and buyers more concerned about fuel economy than they had been in the 1960s. Because the only way they could have stayed ahead of the Japanese would have been to update their vehicles as regularly as the Japanese did.

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       • Your core question a critical one. The reason I continually hammer on U.S. automakers emphasizing bigger, glitzier and more powerful vehicles is that I think this has long been their Achilles’ heel. It’s also why I find postwar-era iconoclasts such as McNamara, Romney and DeLorean so interesting — to varying degrees they challenged the dominant paradigm (and had at least some success in doing so).

       • The thing is that bigness, glitz and power are neither to be rejected nor to be fully embraced – sometimes they can hurt your case, as seen with the medium priced makes of the late 50s, but sometimes they help you stay in power.

         For example, currently that emphasis is leading American brands to have a stranglehold on the fullsize truck and SUV segments – and when Toyota made the 2022 Tundra bigger, more expressive and more powerful, it became the only half-ton truck whose sales increased in 2022, and the fastest-growing one in 2023, proving the point that the fullsize truck buyer likes the Detroit Mind.

         Similarly, in 2023 the much-maligned Silverado HD did better against the Super Duty (210k to 257k sales) than the Silverado 1500 did against the F-150 (412k to 623k sales).

   • Standard equipment, now then you mention it, it remind me of this old Toyota ad featuring the later actor Frank Bonner well known for his role of Herb Tarlek in WKRP in Cincinnati where the salesman points out the standard equipment.
     https://www.youtube.com/watch?v=-jBMEPXzY4Y

     Kind of ironic to see Frank Bonner starring also in a GM ad.
     https://www.youtube.com/watch?v=H3BRwTghiGQ

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   • I’ve decided to put MS Excel to work by calculating the breakdown of the import market in 1964, 1968, 1972, 1976 and 1980, dividing the brands into three classes – economy (Japanese, Ford, Opel, VW, Fiat, Cricket, MG, Triumph, Austin(-Healey), Morris, Rootes, Simca, Renault), medium priced (Audi, BMW, Lancia, Alfa Romeo, Rover, Volvo, Saab, Peugeot, Citroen) and luxury (Porsche, Mercedes, De Tomaso, Jaguar, Lotus).

     The 1962 to 1976 figures show a rather steady picture of the economy segment losing its market share – 90.16% in 1964, 89.46% in 1968, 88.09% in 1972, 86.82% in 1976 – to a rapidly growing medium priced import field (6.3% in 1964, 8.81% in 1976) and a less dynamic luxury one (3.54% in 1964, 4.37% in 1976).

     However, the recession in 1980 wiped most of the medium priced gains, sending it back to 7.11% (about as much as in 1968), and the luxury field went all the way down to 2.73%, rebounding the low priced imports to the same 90.16% that the segment held back in 1964. And unlike the medium priced import market, which did grow in absolute terms from 132k to 168k, between 1976 and 1980 luxury import sales fell slightly from 65,563 to 64,599.

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   • Chrysler’s senior management, with John J. Riccardo C.E.O. (1975-1978) was in a tailspin and had been ever since the departure of Lynn Townsend (even though it was past his time to leave in 1974). Riccardo had a true lack of resources with which to work. Most of his time was occupied with trying to manage the sales bank, Chrysler’s cash-flow and the bankers. Chrysler had been in trouble since 1967 when its big car quality hit the skids, followed by the late roll-out of the E-body pony cars. At least the Valiant / Dart and the B-bodies keep ship afloat. Actually, one of the few things Chrysler got right was the addition of the Duster / Demon body style for the 1970 model year. The other thing Chrysler got right was to base its Omnirzon off of the Simca 1308 with 1.7-litre VW fourbangers !

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5. One element that would have been in the Cardinal/Redwing’s favour had it been introduced in North America earlier and is something one suspects the Japanese capitalised on, would have to be the availability of a 4-door bodystyle unlike the Pinto, Vega and Gremlin.

   Chrysler is an interesting one because they had three options via the Plymouth Cricket and Simca 1118/1204, both of which they axed rather prematurely before the 1973 fuel crisis as well as the Mitsubishi Colt.

   Chrysler could have also benefited from selling a US adapted version of the 180 that was basically an enlarged Avenger that unusually was only sold in Europe as a unhappy compromise between the UK and French divisions, when rather than being an American in Europe it could have ultimately done better as an American back from Europe.

   With a US 180 powered either with the Rootes V6, Simca 180 4-cylinder (seen in Peugeot 505 Turbo) or fitted their Slant-Six (if not also stillborn Slant-Four development) on basis of related Centura in Australia being fitted with Hemi-6.

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   • The Plymouth Cricket and Simca 1118/1204 had serious reliability issues. The quality and reliability of British, French and Italian cars were simply not good enough to ensure real, long-term success in the American market.

     What many people forget is that, in the U.S., the Japanese first vanquished the low-cost European marques. Even VW was on the ropes in the U.S. by the late 1980s.

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     • In the case of the Cricket alias Hillman Avenger, it was also built in Argentina as the Dodge 1500 and when VW acquired Chrysler’s South America operations, it built the Dodge-VW 1500 until the early 1990s. https://en.wikipedia.org/wiki/Hillman_Avenger#Argentina
       https://www.curbsideclassic.com/curbside-classics-european/ebay-classic-1973-hillman-avenger-1500-super-estate-after-optimism-exile/

       We could wonder what if the Cricket was build in North America? Also Chrysler Canada keeped a bit longer the Cricket name for a short time as a rebadged Dodge Colt after 1973.

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       • Chrysler UK’s intention was to upscale the C-Segment sized B-Car (Cricket/Avenger) to the E-Segment C-Car (180/Centura) featuring an Avenger-based V6, with scope to underpin a larger F-Segment D-Car to replace the Humber Super Snipe/Imperial.

         Meanwhile during the C6 project that became the 1100 based Simca Alpine/Solara for the D-Segment, Chrysler UK’s initial RWD proposal was to make use of an Avenger Estate platform featuring Brazilian block Avenger engines up to 2-litres for something approximately Ford Cortina & Opel Ascona B sized (analogous to the Pinto and Vega).

         Before Chrysler UK’s C6 proposal lost out to Simca’s 1100 based proposal, they mentioned a curious fact that the Avenger estate platform was easily capable of being adapted to FWD with a MacPherson strut front and dead beam rear axle suspension setup.

         Chrysler UK had their issues and fatal flaws, not helped of course by Chrysler HQ’s own dire straits. However Chrysler as a whole could have had an earlier conventional RWD equivalent of the later Omni based FWD K platform.

         It is very likely Chrysler UK had North America in mind and what they were proposing is something Chrysler HQ could have easily built in North America, whereas the French division was more parochial and Eurocentric with less applicability for North America at the time beyond FWD as well as an unwillingness to take on a 6-cylinder engine.

6. The typical Detroit product cycle is what would have rendered the 60s subcompacts negligible. I don’t think it would have made any difference by 1980 for the Japanese. They needed to go to as aggressive a redesign cycle as possible, because if you have a 4 year remodel cycle and the Japanese have a 3 year one, by year 9, you’re already a generation behind with your year old remodel and at year 12 you’ll be TWO generations behind when new models are introduced! 1982 Chevette vs Datsun Pulsar anyone? Detroit would have remodeled subcompacts as often as they remodeled the Valiant, Falcon and Nova. Heck, the Hornet had vacuum powered wipers. Even IF The Big 4 had fielded period realistic highway capable subcompacts, they would still have let them wither on the vine like the Corvair and Opel. And the Grosse Pointe bosses wouldn’t have sent any help, either.

   Even if you an import with good dealer infrastructure and a reasonably reliable product like VW, they were still selling the same chassis and body, vastly updated, but still the same, in 1977 as Ben Pon sold in 1949 doing grey imports. They should have axed the Beetle by 1965 for the Fastback and Squareback, but their cash cow nearly killed them here. No one I know in my family owns a VW.

   Updating your product regularly so people want it is the key.

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   • Still, it’s interesting to note then the Japanese keeped some older models longer in other markets. For example, in Mexico the Nissan Tsuru was the Sentra sold in Canada and the United States from 1991 to 1994 and was once the favorite car of taxi drivers in Mexico until 2017. https://www.curbsideclassic.com/curbside-classics-asian/curbside-classic-1991-2017-nissan-tsuru-hasta-luego-muchacho/

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   • I think the regular updates to Japanese cars also represented a significant challenge to Volkswagen’s marketing model.

     For years Doyle Dane Bernbach had been convincing Americans that to get a quality economical car, you needed an unconventional pre-war designs without major updates. Yet then the Japanese came in, bearing economical high quality cars built on a conventional water-cooled FR layout and covered with contemporary flair-filled styling that wouldn’t look out of place within GM or Ford. Furthermore, the Far East brands started to redesign their products on a cycle that challenged the Big Three with how rapid it was.

     It’s no wonder that the late 60s and the 70s saw VW drop from being THE economy import brand, still outselling the #2 Opel ten to one in 1966, to a mere #4 in 1980 after Toyota, Datsun and Honda.

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     • My family always had a VW as our first or second car since like ’62 with a used Beetle while in Europe on TDY until the ’80 Rabbit L 4 speed, the first -new- VW they’d ever owned which then became the -last- VW they ever owned. The guy who bought it from us at 100,000 said that a headbolt was missing and that’s why it had been using coolant since new. He could see the coolant tracks on the headgasket, too. Of course the VW dealer could not find the problem despite repeated visits. That was the water issue. I won’t bore you with the electrical issue(s) we had like learning to gently kick the fusebox to make the left headlight come back on. They never owned a VW again. Dodge did a relative dirty with their new Volare’. I don’t buy Dodge either tho I nibbled one time at a Neon SCR before spitting out the hook. Same with VW. I chose a Nissan Sentra Spec V over a Golf hot hatch. People remember. You really, really have to assess the risk of expensive repairs while still paying a 6 year note.

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7. Chrysler’s senior management, with John J. Riccardo C.E.O. (1975-1978) was in a tailspin and had been ever since the departure of Lynn Townsend (even though it was past his time to leave in 1974). Riccardo had a true lack of resources with which to work. Most of his time was occupied with trying to manage the sales bank, Chrysler’s cash-flow and the bankers. Chrysler had been in trouble since 1967 when its big car quality hit the skids, followed by the late roll-out of the E-body pony cars. At least the Valiant / Dart and the B-bodies keep ship afloat. Actually, one of the few things Chrysler got right was the addition of the Duster / Demon body style for the 1970 model year. The other thing Chrysler got right was to base its Omnirzon off of the Simca 1308 with 1.7-litre VW fourbangers !

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8. I would agree with Randall Stephens’ assessment of this situation as it unfolded. I think Doyle, Dane & Bernbach did a great job of selling the obsolete VW Beetle not only to consumers, but to the Detroit Three as well. To a certain degree this makes sense. All throughout the 50’s & 60’s, the Beetle had become the de-facto choice in small economy cars. Were I a Detroit executive looking at the graphs in 1963-1968, I would think that a two-door small four cylinder car with minimal changes throughout it’s lifespan would be what the market desired.

   The Japanese, who had a true “export or die” philosophy saw an opening with their second wave of imports to the US. Astutely realizing that not everyone wanted a 1930’s-era car and after having been thoroughly drubbed in their initial exposure to the US market, started building cars that were much more familiar to North Americans than the quirky Beetle. It didn’t hurt that the Yen was rather cheap during the 60’s-70’s, too.

   All of the Detroit Three had Japanese car companies that they had either partnered with or owned some portion of that they could have imported subcompacts very quickly had the desire been there. To some degree, this did happen. GM had Opel, Ford brought over several different European models in the 50’s & 60’s and Chrysler had a few Simcas and Hillmans. None of them really were effective against the Beetle,except maybe the Opel. Had GM partnered Opel with Pontiac instead of Buick, I’d bet it might have done better. But eventually the Deutschmark got too expensive anyway and the Isuzu was subbed in for the Manta…

   Additionally, there was a lot of hubris (aka not invented here) which seemed to keep the Detroit Three from utilizing their European divisions more effectively. Also, with a general animosity toward products from former enemies, one can see why there may have been hesitation to do so. Growing up in steel country, it could be a very bad day (or night) for folks who would leave their shiny new Datsun parked overnight on the street. It would be unrecognizable in the morning.

   Detroit did what they thought was what the consumer wanted, a North American version of the Beetle. What they did not consider was the idea that something else may spark the consumers’ imagination.

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9. I think the most salient question is would Detroit have been able to compete effectively with the Beetle in the mid to late ’60s without unduly cannibalizing sales of its own compacts. I tend to doubt it. For one thing, labor costs in West Germany were materially lower, an effect that was amplified by the fixed exchange rate under the Bretton Woods system. For another, Detroit’s development process at the time was effectively a form of beta testing, where early years of a new product were best avoided until the engineering matured. Why buy an immature product when the Beetle was the most mature and reliable product there was? Third, a significant part of the Beetle’s appeal was its affinity with the countercultural zeitgeist among the young. It would have been very hard, if not impossible, for Detroit to market effectively to that consumer while at the same time selling mainstream products to squares and supplying equipment for the Vietnam war effort.

   If the question were instead whether Detroit could have made a better Corona, yes Detroit would have been less disadvantaged in this last regard. But still there would be the problems of relative labor costs, particularly given the very significant labor productivity advantage yielded by just in time manufacturing processes. Perhaps if Detroit had built a subcompact in a Maquiladora factory in Mexico in the late ’60s it could have made the economics work. But would the consumer have been prepared then to buy a Mexican made car?

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10. Fascinating.
    Here in Australia Japanese cars really got going in the 1961-65 period. But here they were entering into an already-popular market segment, rather than adding to a small segment and helping it grow, as in the US. Within less than ten years they had pretty much wiped out the small British cars, which I would put down to quality, reliability and value. At the time, they were the only sensible choice, as Leyland had imploded and the various European small cars seemed a poor value in comparison.
    Big Three dealers here were accustomed to buyers coming into the showroom for a smaller car, so there wouldn’t have been the same degree of pressure to move a buyer ‘up’ to a more profitable car.
    But for the US, how small is ‘small’; how ‘sub’ is subcompact – in a sixties context?
    From what you’ve said above, I reckon the time to act would have been about 1966-67. Trends in the market toward small cars would have been obvious, though the Mustang phenomenon might have masked them somewhat. So what were the options, back then,, if they wanted some product, stat?
    Ford could have tapped Germany for the Taunus/Cardinal, or Britain for the Cortina, both well-established popular cars with the bugs ironed out. GM could have taken the Opel and given it to a more appropriate dealer chain. Vauxhall would have been ever so thankful for the extra business, though from what Stéphane says above, that would not have been a good idea. Chrysler was tied to Simca and the Rootes group; I’m not familar with late sixties Simcas, though the Hillman Hunter (not the smaller Avenger/Cricket, which didn’t exist yet) would have made for a thoroughly conventional and rugged subcompact.
    To leave it for another ten years or so after introducing the compacts, while said compacts grew bigger, makes it see like they hoped smaller cars would just go away. Maybe that was the idea?

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11. I was just a little boy, but I remember Ford sold the Cortina in the U.S. in the late 60’s before the Pinto debuted in the fall of 1970, but I believe I have read the Cortina was not reliable or robust enough for the U.S. market. If the Cardinal had been manufactured or sold in the U.S., I would think the V6 or a larger displacement V4 would have had to been optional.

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12. I cannot understand why GM would have given Buick the distribution of Opel. If not Chevrolet then at least Pontiac. To really solve the problem they could have set up another new dealer network.

    In the mid 1960s it would have made a lot of sense to bring in the European products to handle the subcompact segment. Just select their larger engines. The German Mark had a favorable exchange rate then which made their cost structure favorable to US production. Later in the 1970s when the Mark was revalued it would have needed to be revisited but that would have been unknown in the mid 1960s.

    Amazingly Chrysler did a good job of understanding using imports when they tied up with Mitsubishi.

    I would not be so confident that the Ford Cardinal would have been a good solution for the US. For the US market it should have the larger size motors and front wheel drives had a lot of development work needed to get that to avoid their torque steer issues. The early versions of the Taurus apparently handled quite poorly and also suffered with NVH that might not have been accepted well in the US.

    To make a 1966 product would have meant making definitive product planning 5 years earlier, 1960/61. What would that Detroit executive have seen at that time? Corvair, Falcon and Valiant were doing pretty good in combating the import surge. There were a mish mash of assorted European small cars with varying degrees of acceptance. It would be a while until VW established themselves as the marketplace winner with dependability and service support.

    Probably the greatest mistake is that Detroit could not actually implement the development world car platforms. Maybe a question should be about the tolerance factors of the different manufacturing plants (this is a reason why the Cadillac Seville could not be done using the Opel Diplomat platform – US could not work to the German tolerances). Then there is the Not Invented Here syndrome.

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    • GM’s first response to the import invasion of the late 1950s was captive imports – Pontiac dealers sold Vauxhalls, while Buick dealers sold Opels. (Apparently Oldsmobile dealers were out of luck, or Oldsmobile didn’t want a captive import.)

      Vauxhalls then went away – it’s my understanding their build quality and reliability were inferior to those of the Opels. It was probably easy to allow Buick dealers to continue selling Opels, instead of having the Opels transferred to Pontiac dealers.

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      • Interesting. I did not know about the Pontiac/Vauxhall arrangement.

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    • The key major problem with the big Opels is that over the 60s and the 70s their platform became a niche product destined to die, not unlike other big cars from non-luxury brands (Vauxhall Cresta/Viscount, Ford Zephyr/Zodiac/Executive, Austin 3-Litre, Fiat 130).

      The 1953-58, 1958-59 and 1959-63 generations of the Kapitan achieved average annual production figures of 30,000+ units. Yet while extended to three different models (Kapitan, Admiral, Diplomat), plus given V8 and coupe options, the 1964-68 version of the big Opel only reached 89,277 units in 4.5 years of production.

      Then it got even worse. 8.5 years of production of the 1969-77 Kapitan/Admiral/Diplomat only yielded 61,569 cars, with nearly exery year bringing a drop – 17,777 in 1969, 11,690 in 1970, 7,560 in 1971… The only years with increases were 1972 (7,950 sold) and 1975 (3,114 sold after the oil shock-driven drop to 1,754 in 1974).

      The calendar years of 1976 and 1977 that had Opel make 2,910 and 2,524 KADs were also years in which Cadillac produced 43,772 and 45,060 Sevilles. Using the Opel platform would have brought virtually zero of the X-Body’s economies of scale, while simultaneously generating substantial costs of introducing a German design to US manufacturing.

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      • There are multiple reports that the Opel Diplomat B was the orignal platform considered for what would becomethe Seville. It was already more technically sophisticated than the X body with a De Dion rear suspension, 4 wheel disc brakes. It was conceived to be a competitor to the S class MB in the home market.

        The assorted stories cite that the reason the use of its platform by Cadillac was that it could not be produced in the US facilities because the US was unable to hold the tighter German production tolerances.

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        • I never said that the Diplomat wasn’t considered as a basis for the Seville, that it wasn’t sophisticated, or that it wasn’t an S-Class competitor.

          What I said is that beyond the production tolerances argument there was a huge disadvantage of using the large Opel as a basis for the small Cadillac – the fact that it was a dead man walking of the European auto market, with sales so low that it would have brought virtually no economies of scale compared to the X-Body. To put things in perspective, from 1974 onwards Rolls-Royce was making more Silver Shadows than Opel was making Admirals/Diplomats.

          http://www.oldtimerwebseiten.com/Fahrzeugsammlung/Opel/Statistik/KAD%20B/KADSTAT2.pdf
          https://www.rrsilvershadow.com/EMod/Aantjr.htm