Maryann Keller was one of the most astute automotive analysts of the last half century. A short passage in her 1993 book, Collision, arguably sums up as well as anyone the primary reason why General Motors went into sharp decline:
“Human beings on the whole are resistant to change — an irony when you consider that change has always been one of the most consistent features of life. As a corporation, GM developed a finely tuned behavior of self-protection. In spite of all evidence to the contrary, it maintained a conviction that the cars that made it great were the cars that would continue to keep it great. There was, from the 1950s on, an almost pathological resistance to the glaring shifts in American life and values — and how these changes might translate into automobile purchases. Serious market research and long-range planning were practically nonexistent, although it was not for lack of committees. ‘The worst news you could hear was that a task force had been assigned to study the problem. Task forces were the black hole at GM.
Although General Motors was a global car company, it never occurred to the leadership that other companies, from Europe or Japan, might grow into global car companies, too. It has been said that the eye cannot see what the mind does not believe. On the Fourteenth Floor of the General Motors building, where executives were cushioned from the influences of the outside world, they remained blind to the change that was occurring in society. Foreign competition was viewed as a nagging tic, not a major assault. The fiction was reinforced every day inside the bunker as General Motors kept building its big, gas-guzzling cars.”
— Maryann Keller, Collision (1993)
RE:SOURCES
- Keller, Maryann; 1993. Collision: GM, Toyota, Volkswagen and the Race to Own the 21st Century. Doubleday, New York, NY: p. 116-117.
ADVERTISING & BROCHURES
- oldcaradvertising.com: General Motors (1967)
Also see ‘Bigger didn’t prove to be better for General Motors in late-70s and 80s‘
As of 1970, Detroit had perfected the 350 V8 full size sedan. Small,fuel efficient cars they had not perfected. Somebody- not Donald Trump- thought it was a good idea to open up the 10 million a yr U.S. car market to the Japanese, who had perfected the small fuel efficient car. In turn, we got access to the 1 million a yr Japanese market. Turns out, the Japanese do not buy full size V8 cars, or any foreign cars for that matter. That is their hide-bound culture. The consequence was the near decimation of GM, saved only by the 25% tariff on trucks- the chicken tax. The Europeans negotiated a 7 yr delay before the Japanese onslaught, something that might have helped GM a little. Something that might have helped more: GM buying Toyota.
How early could the US have negotiated an earlier VER agreement with Japan prior to 1981 as was the case between Japan and various European countries from the mid-1970s?
The Japanese didn’t force GM to develop and introduce the problematic Chevrolet Vega.
In 1970, GM had some serious home-court advantages. Chevrolet had a large, national dealer network that extended even to many small towns. Chevrolet itself was the “go to” brand for many buyers, and there was still a large contingent of buyers who were wary of buying a foreign car (due largely to concerns over parts and service issues).
GM, and GM alone, squandered those advantages.
As someone once said, “Those whom the gods would destroy, they first give 40 years of success.” Which describes the trajectory of GM.
One thing to keep in mind – during its heyday, GM wasn’t just viewed as the template for how to run a successful automobile manufacturer. The organizational and management principles developed and implemented by Alfred P. Sloan were applied to other businesses and even government bureaucracies.
GM was viewed as the model for how large organizations – whether businesses in the private sector, or bureaucracies in the public sector – were to be properly organized and administered.
Part of this was in reaction to the reign of Henry Ford I. He was initially viewed as a genius, but he then spent the decade leading up to World War II running his company into the ground. Under the Sloan system of management, the whims or obsessions of one person would not necessarily ruin the company. Of course, the Sloan system had its limitations, but those didn’t become apparent until later.