Automotive History – The Joke’s On U.S.- The Short, Wild Ride Of The Yugo In America

(first posted 10/10/2011)     Every once in a while, a visionary, iconoclastic automotive pioneer bursts on the scene and, bucking the long odds and naysaying “conventional wisdom”, delivers a disruptive new line of cars. Frequently, that new model sets the status quo on its ear and forever changes the way we think about (and react to) our transportation needs. Those brave revolutionaries almost single handedly redefine their market segment and leave an indelible mark on the industry itself. Today’s story, though, has nothing to do with anybody like that. Our narrative today is of a modern P.T. Barnum and the circus freak show that he brought to America in the twilight of the Reagan years. The man is Malcom Bricklin. The car is the Yugo.

It’s well nigh impossible to understand the Yugo episode without understanding the guiding hand behind what is generally considered to be the worst car ever offered for sale in the U.S. Malcom Bricklin had been knocking around the car industry for over a quarter century when he spotted a Yugo 45 on a London street in 1984. Unfortunately, Bricklin was smitten by the car’s simple mediocrity and, just like a cartoon character with outsized dollar signs for eyes, he began the process for bringing the homely little car to the states. At that time, Bricklin was probably best known for the eponymous car that he launched amidst much fanfare in 1974.

The Bricklin SV-1 was remembered for several interesting features: lurid (“safety”) colors , no cigarette lighter (Bricklin was a rabid non-smoker) , and most importantly, the ability to vacuum piles of money from the gullible government of New Brunswick, Canada. With an estimated cost of $16,000 each to build against a selling price of around $5K, Bricklin’s SV-1 was a blast furnace that no amount of subsidy could fully quench.The maritime province had sunk over four and a half million taxpayer dollars into the scheme since its beginning, and slow sales (along with numerous engineering problems) cost no small number of politicians their jobs. The New Brunswick government pulled the plug in September of 1975 and the Bricklin was finished.

But before Bricklin made a virtue of safety, he all but made a mockery of same just a half decade before. In 1968, Bricklin thought that what America needed was an air cooled two cylinder car that could make zero to sixty in thirty seven agonizing seconds. Thus American drivers were introduced to the second worst car ever sold- the tiny, dangerously underpowered 360 from Subaru.

To say that the 360 was unsuited to American driving norms is to wildly overpraise the car. With just 25 horsepower (at a cacophonous 5500 RPM), the elfin 360 was the type of cynical exercise that would define Bricklin’s career in the car business. Introduced at an offer price of just under $1300 , the little Subaru made much of its over 60 MPG fuel economy and low cost of ownership. The car was a modest success with just under 8000 sold in the first year, but when the 360 was pilloried by Consumer Reports as being “unacceptable” because of its numerous safety issues, the bottom dropped out of the venture and the last few cars sat on dealers lots for years before they were practically given away.

As noted, Bricklin first noticed the subcompact Yugo on the streets of London and within a couple of months, he had set up his first meet and greet with the management at Zastava . His shaky little import business was marketing Bertone X/19’s after Fiat said arrivederci in 1982, but the end of that venture was in sight. With no new product in the pipeline, Bricklin would either have to find another car to flog or get an honest job, so there was a mutual meshing of interests when he arranged a visit to the Red Banner Factory in Yugoslavia that turned out the new apple of his eye in 1984.

What he saw was an operation that turned out a car designed (and abandoned) by Fiat years before. The Yugo was based on a mash up of models 127 and 128 built under license by a wildly unproductive workforce in an obsolete factory with assembly quality that made real mid 70’s Fiats look hand built. At first glance, the car looked up to date- Front wheel drive, rack and pinion steering, decent mileage. But the little Yugo turned out to be a lot less than the sum of its parts. Quality (or a lack of same) would ensure that the car could not survive in a competitive marketplace. The running gear would be the 1.1 Litre straight four that Zastava had learned to build from Fiat and the transmission would be a truly nasty four speed manual. An automatic wouldn’t fit in the Yugo engine bay, so the only thing shiftless about the Yugo would be the Zastava workers that routinely drank on the job. Lack of an automatic would hamper the car during all but the final year in the states. But Bricklin assured his erstwhile investors that the car could be made ready for the U.S. market with some minor tweaks.

459 tweaks (and 18 months) later, the Yugo was almost ready for launch. Bricklin had formed Yugo of America to import the car and as was his custom, financial shenanigans were part of the mix. Bricklin used franchise fees to run the company (a major accounting no-no) while the car was being modified for safety and emissions certification in the U.S. and dealerships were sold, territories assigned. With the pullout of Fiat, Renault and the British makes just a few years before, there was a general sense that room existed in the market for any european nameplate that could build a reasonably priced car that returned good fuel economy and high build quality.

Well, as they say, two out of three ain’t bad. The Yugo’s bait was a stunningly low MSRP of just $3990. This was almost $1100 lower than the cheapest Chevy Sprint and lower than even the Hyundai Excel. The Yugo became the default entry level car for people that knew the price of everything but the value of nothing. Even though the price was a come on (dealers larded as many options onto the car as they could get away with, see below), America was hooked. When the Yugo GV was finally offered for sale in September 1985, (as an ’86 model) , initial orders looked promising. But after a slow start because of supply problems, the car began selling in volume during year two. Maybe Bricklin had caught lightning in a bottle.

Or maybe not. As the pride of Serbo-Croatia hit the streets of America, reports of slipshod assembly began flooding back to the company’s Upper Saddle River , New Jersey headquarters. Substandard seatbelt anchors, collapsing seats, hard starting, no starting, the list was endless. It’s hard to pinpoint a weak spot on a Yugo because every system in the car was so badly designed and assembled that the whole car was a no contact accident. Warranty claims were dreadful. Sales quickly slowed when word of the myriad problems began to circulate in the media. Bricklin’s old nemesis Consumer Reports weighed in on the cars many shortcomings in its February 1986 issue and refused to recommend it at any price. Motor Trend reported that their hand picked press ringer broke down during testing.

Just as quickly as the Yugo ascended to number two in european import sales, the car plummeted back to earth and never rose again. By May of 1988, Malcom Bricklin needed a lifeboat and he found it on Wall Street. A minor investment bank salvaged Bricklins investment in the venture in a complicated deal that settled some of his stale old debts and sent him far away from Yugo America. Bricklin wisely took the first offer and netted about $20 million for his trouble.

The car itself staggered on until early 1992, with steadily declining sales and a dealer network that was slowly (and then quickly) going bankrupt. Sales ended in the U.S. that year when a recall was ordered by the feds over emissions issues related to faulty carburetors.

There are lots of related legacies connected with America’s brief, mad affair with the Yugo. Before we wrap, let’s sort them out.

Zastava– Zastava made Yugos even after they stopped selling in America. By third world standards, the Yugo was not a terribly bad car and sales continued even after its mother country began breaking up in the early 90’s. The last Yugo that we would recognize rolled off the assembly line in November 2008.

Yugoslavia– The “Land Of The Southern Slavs” went to war with itself in late 1991 and essentially spent the next 17 years shooting, ethnically cleansing and generally behaving like it had before World War I. After the death of Marshal Tito in 1980, long simmering Balkan feuds became a way of life and continue there to this day. Only with the threat of armed intervention by Nato and the UN is an uneasy peace maintained.

Yugo America– The importer of the eponymous car that had been the talk of the industry just a few years earlier filed for chapter 7 bankruptcy liquidation in 1991. Since Yugo America was basically just a collection of cheap office furniture and unanswered phones, creditors received essentially nothing for their interests in the company. Unpaid claims included some warranty work done by dealers on Yugos before sales collapsed.

Malcom Bricklin– The twice bankrupt Bricklin has resurfaced periodically over the years, always pushing the latest crack brained scheme to sell a car that would occupy the place that his Yugo once did- the bottom rung of the American market. His last notable brush with the automotive world (in 2004) involved a vague alliance with (uh-oh) Chinese auto maker Chery. Amidst mutual finger pointing, the deal collapsed in July 2008 as the erstwhile partners took turns suing one another in federal court. Bricklin is still nominally involved with a venture called Visionary Vehicles and appears on its website today.The end of his Yugo adventure left him short of funds to repay an impressive list of creditors, investors and employees and even the IRS took its pound of flesh later on. He lost his house, his fortune…And the dozens of Yugo GV’s that he received as part of his settlement with his bankers.

So we come to the end of the Yugo saga in America. I would venture to guess that there are fewer than 500 running condition Yugos still on the road in the U.S. (most of which “need a little TLC”) Anybody that ever owned one of these little mobile gulags will tell you that there was nothing loveable, cute or endearing about them. They were an object lesson in the old adage that you get what you pay for. It’s unfortunate that the vast majority of Yugo owners didn’t even get that.