I ran into this article in the New Yorker last November, and found it to be an excellent look at the forces re-shaping the auto industry in the mid-late 70s, which were of course rising energy costs, government intervention, greater environmental/social consciousness, foreign competition, and globalization. The massive wave of downsizing that GM undertook starting in 1974 for the 1977-1980 model years, culminating with the FWD X-Cars, was the biggest industrial investment in the US since WW2, totaling over $20 billion (roughly $90 billion adjusted). It propelled GM’s market share and in the process almost bankrupted Ford and Chrysler. And it reshaped the entire industry in the 1980s, for better or for worse.
This article has interviews with the key decision makers, and brings a lot of insight and perspective to what were probably the most challenging years of the industry.
The article is available on-line, here, and a lot easier to read there than for me to scan and re-post it here.
And after you’ve read it, come on back for a bit of my commentary and your comments.
It’s easy to say that the Big Three’s woes were inflicted on it by the government, especially through its CAFE regulations. But there were obviously other powerful factors too. The price of oil and consequently gasoline has been the biggest single influence in terms of being highly variable and unpredictable. When gas prices were high, Americans rushed to dump their big cars and trucks for small, efficient cars. And of course the recent period of low fuel prices has resulted in continued increase of market share for pickups and SUVs.
And since the CAFE rules now are quite different then before, manufacturers no longer need to depend on small cars to even out their fleet averages, as FCA has shown.
As a postscript to this article, although GM was riding very high in 1980 and at the time and one might likely have predicted continued success due to its massive downsizing, the opposite was about to happen. The 1980’s were the decade from hell for GM, as its market share collapsed faster than at any other time. Over ten percent of market share were shed between the years 1980 and 1987 alone. What happened?
That’s been a focus of our long-running GM’s Deadly Sin Series, but in a nutshell, GM failed to execute its massive downsizing with the level of proper development and quality. The downsized 1977 B/C bodies were a huge success in every way, although quality wasn’t exactly a standout. But from there things went rapidly downhill, culminating in the X-Car fiasco. And that was followed up by a new family of FWD upscale sedans in 1985 and coupes 1986 that largely missed the mark in terms of design, having been shrunk excessively; more than would have been necessary to meet their ambitious efficiency goals. And they arrived at a time when fuel prices had been moderating. And there were massive quality issues with certain engines, transmissions and other components.
GM was obviously overwhelmed by the hugely ambitious undertaking it set for itself; they simply couldn’t execute it properly. That implies that the decisions to do so were made in a vacuum, or simply from the hubris resulting from their decades of success. The corporation simply wasn’t up to the task. And it wouldn’t ever be again, until it died in bankruptcy.
The forces identified in this article that were reshaping the Big Three ended up essentially killing GM and Chrysler and pushing Ford to the edge of bankruptcy. No one could have possibly predicted that in 1980. But it certainly makes the title “The Downsizing Decision” prescient; GM certainly downsized itself, right out of existence.
I’m still not sure that the ’85s were “shrunk excessively” so much as they suffered from too much carryover styling where a clean break was called for, in the case of the Electra/98 and above all DeVille/Fleetwood; and styling that had already been used on a much cheaper car in the case of the Eldo/Riviera/Toronado.
The LeSabre and Olds 88, along with the late-arriving Bonneville, seemed to have gotten their look a lot more “right”, apart from ’60s holdover door handles, and sold decently well. It helped that their mechanicals were sorted from the start.
That being said, I have my doubts a Chuck Jordan-led styling studio would’ve done much better – he was still enamored with exaggeratedly long hoods and the challenge was to style a package made for space efficiency – but they might’ve had fewer features that actively repelled younger customers than the senior models ended up with.
I’ve searched extensively online and been unable to find an editorial from Car and Driver in the 2000s comparing the best selling vehicles of the 1970s to the best selling vehicles of the 1980s, 1990s, and 2000s.
When you looked at best selling VEHICLES (not cars) in the 80s there was a trend toward the downsizing of the fleet overall but as soon as the gas crisis faded into the rear view mirror by the late 80s people gravitated back toward large vehicles, which were no longer cars.
By the mid 2000s if you compared best selling vehicles of that era to the best selling vehicles of the 1970s the weight, displacement, and fuel economy were frighteningly close. (Of course this was prior to the revolution of DI, turbos, multi-speed transmissions, CVT, hybrids etc.)
To me it was a fascinating insight into the psychology of the American public.
Correct, and now, cars as small as some best sellers of early 80’s are rare. But then, Civic is larger now, but still gets good mileage.
And my current daily driver has 3 rows, weighs 4200 lbs, and has 268 hp (+ AWD) it pulls down 22-23 mpg real world on a tank mixed about 25% city 75% hwy holding a steady 65 mph.
I’m sure somebody could find a late 70s wagon that hits those stats too (minus the AWD).
The article is from 1980, yet it still reads as relevant today. Mistakes were made, but most of the problems of the American 3 are still self-inflicted. They all think alike, and all seem to have no grasp of the outside world and how it influences the market. The executives still come off as tone deaf to the realities of the market. The latest from JdN of Cadillac come to mind, with his citing a few reasons for the decline in sedan sales, including gas prices, millennials being less interested in driving dynamics than lifestyle accessories, and the state of U.S. infrastructure.
Oddly, GM, Ford, and (in conjunction with their partners Simca/Talbot, Mitsubishi, or overlords Mercedes or Fiat), Chrysler have had access to good smaller cars or had outright knowledge on how to make them here. They refused to bring over good cars that were already engineered and ready to go, or worse, made horrible changes that rendered them craptastic cheap small cars that appealed to no one.
They say the definition of insanity is doing the same thing over and over, and expecting different results. I think we see a pattern…..
I think a part of why none of the car companies really took small car manufacturing seriously is that Americans demonstrated over and over again that many of them considered “small cars” as less than real cars. The swings back and forth between big and small cars are an example of this.
However, car buyers were not entirely to blame as the car companies seemed to insist on doing a minimal job with small cars, seeing them as loss leaders. They couldn’t or wouldn’t build small cars that were capable of being sold at a premium.
An interesting read. 1975-85 is one of the most fascinating periods of automotive history that there is. One takeaway is the way GM’s internal confusion was just beginning to affect the management of the company. Committees were proliferating and replacing the older structures that had made the company work.
CAFE was not much of a factor in 1980. The 1973 oil embargo forced the automakers to address the small car market, and they did. But as noted in the article the 1975 CAFE law forced them harder.
Up to about 1981-82 CAFE (as a knee-jerk response to 1973) had the happy coincidence of turning the tiller of a slow moving ship in the direction of better fuel mileage just in time to be heading the right direction in time for the 1979-82 era of high fuel and a bad economy. The problems came when the market and CAFE diverged around 1985 and thereafter.
CAFE caused no issues at Chrysler all through the 80s because Chrysler had jettisoned almost all of the big stuff and built up a ton of CAFE credits in the early 80s. It caused no issues with the Japanese manufacturers because they never had any big stuff. It caused no issues with the Germans because they were (like the Japanese) used to high gas prices for their small stuff and sold their expensive stuff at prices that would swallow up a guzzler tax with no impact to the rich customer.
But when Chrysler went to build minivans it got them classified as trucks instead of cars in order to stay in more favorable CAFE classifications. GM’s biggest problem in the 80s and early 90s was that it had the financial ability (and the political necessity) to comply with CAFE in its cars. Ford and Chrysler led the way (probably out of necessity) in gaming the system by making trucks into mainstream family vehicles in ways unimaginable in 1970 or 75. Those trucks (like the minivan and Explorer and XJ Cherokee) became wildly profitable – and they didn’t have to practically give a small car away to sell one. Really, GM got hurt the worst by trying the hardest make a line of CAFE-compliant cars.
I do not disagree that every company in the US industry botched things a dozen ways from Sunday. But CAFE was one more hurdle put onto the track that affected the US companies much more than it did their foreign competitors and put them at even more of a disadvantage than they already found themselves in. So other than 1980-82 and 2008-10, the US market has valued big over small. I think the new version of CAFE will not be as harmful as the old one was, but it is still doing more mischief than not.
I could not disagree with you more, insofar as as a regulatory forcing lead to positive outcomes on a powerful, reluctant industry. Robert Stempel from Pontiac quoted in the article:”We’re proud at GM to be serving not only the company but the country. We like better products and a healthy atmosphere – for ourselves and for our children. It’s an especially good feeling for a lot of the younger engineers who’ve been pushing for these things for years.” I haven’t the slightest doubt that the idea of being good corporate citizens has to be stick-and-carrot forced – history shows it over and over – and that includes economy here, which, amongst much other public benefits, includes a potential for lesser reliance on overseas oil for the US (and yes, I know of the recent local oil turnaround). Don’t worry about big and small: the only reason America’s top-selling vehicle (huge by world standards) is largely aluminium and gets 25 mpg is regulatory nut-squeezing!
CAFE would have had such different consequences had there just been a single MPG target for all vehicles rather than the car/truck split. The lower fuel economy requirements for trucks of course fueled the minivan and SUV boom, as “light trucks” went from about 15% of sales to over 50%.
Quite true, and JPC impliedly makes the same points. And my comment strays too close to ideology, rightly discouraged on this site, (though ofcourse I stand by my views). I perhaps should’ve said that CAFE should’ve been a better-designed corporate nut-squeezer…
I’m fascinated by reading older articles like this – thank you for sharing it. I think it helps explain just how GM went wrong, but more than that how huge a change would have been needed for them to not make the mistakes they did. The sheer size of the organization necessitated the bureaucracy that slowed them down and diluted decision making, unless they were willing to wholly decentralize their businesses, and with decentralization comes added costs. Hubris was rampant, but with 60% of the market you can almost understand it. I give them credit for pulling off as much as they did, after reading this. This was truly trying to do a U turn with an ocean liner. Mainly they had an execution problem (along with some poorly thought through cost cutting priorities) – imagine if the X car had been reliable (either by design or by luck)? Such a different outcome would have happened, I would think. Fascinating.
Another interesting observation is, unlike today, no one in leadership ever references a decision being made in service of shareholder value/earnings. Stock price and market capitalization are far greater drivers now in public companies than in the 70s and 80s, in fear of the activist investor – Kirk Kerkorian in ’08, Einhorn more recently.
It seems like this scenario is replaying itself, particularly with Chrysler. American auto manufacturers all too often focus on the short term (what cars/trucks/SUVs will sell next year) instead of the long term. How will they be positioned to offer cars when the price of oil increases again in the US, as it almost certainly will? Chrysler offers virtually no small cars anymore (not including Fiat), despite the fact they they lead the Big 3 in the 80s with their switch to smaller platforms. Toyota and Honda, on the other hand, have spent years developing fuel efficient vehicles and electric cars for the global market.
“… oil increases again in the US, as it almost certainly will?
Not really certain, but if history repeats, then fuel prices will then come down, as they did after every “crisis” period.
There is also electrification of vehicles going on today. Instead of cramming into a Chevette, now just got a Chevy Volt/Bolt…
I knew the % of vehicles being sold classified as trucks was high for some of the manufacturers but my jaw hit the floor when I saw that Chrysler was on pace for 90% of its sales for this year to be classified as trucks.
The rest of the artists formerly known as “The Big 3” weren’t far behind.
And 38 years later, nearly 4 decades, the top 3 selling vehicles are full sized pickups. Who would have predicted that?
All the hand wringing about “why aren’t there more small cars?”, and now most buyers don’t care. Europeans are now embracing CUV’s, another “who’d have thunk it?”
It really seems the clamor for small cars has about the same real world relevance as the clamor for RWD cars by enthusiasts. Only a teeny tiny minority need what would equate to a late 70s Civic solely for it’s dimensions, and when they become available, people buy them once in one big surge and run them into the ground forever, and sales ultimately nosedive. Only when fuel cost hits crisis level do the masses consistently buy them in earnest, but with powertrain technology where it is today, it is barely even relevant to be small for the sake of smallness.
And Japanese also embraced CUVs and let’s not forget big SUV like the Nissan Armada and the Toyota Sequoia. If we had said in 1990 then Toyota will do a gas-guzzling SUV, lots of folks would had laughed on our faces.
Toyota Land Cruiser
https://en.wikipedia.org/wiki/Toyota_Land_Cruiser
And waiting in the wings, among four possible successors was Roger Smith. The Roger Smith!
As per the article, to quote, “The structure of management on the fourteenth floor has also been transformed to meet the need for adjustment to more rapid change, across a wider band of concern. Under Murphy and Estes, there are four executive vice presidents, in charge of different groups of G.M. activities. Two are traditional: the executive vice-president for finance, Roger Smith, who will, if the usual bias toward the financial side holds good, succeed Murphy at the end of this year; and the executive vice-president for North American car and truck operations, F. James McDonald, who has a good chance to succeed Estes”. “But two are new”. “Reuben Jensen, in charge of developing common components (engines, brakes, batteries,etc.) for its cars, and executive vice-president for overseas operations, Howard Kehrl.”
No comment was made about competence or the business imagination of the four.
The die was cast, Roger Smith, a product of the “incestous” business thinking prevalent on the Corporation’s fourteenth floor became Chairman, with obvious untoward consequences for the Corporation.
An interesting article especially in retrospect, highlighting the developing failures of effective leadership that were only to be worsened in the then to occur near term and well into the future, especially after the article was published.
Thank you, Paul, for more thought provocation.
The problem is always going to be that the public puts a lot more value on power and size than it costs to produce. If it costs $1 billion to develop a new small car, it costs about the same to develop a new large car or truck. Similarly, a few extra pounds of steel, plastic, and glass on a large car adds only a few bucks to the variable manufacturing cost versus a small car. In fact, making a smooth running reasonably powerful (high tech) 4 cylinder engine probably costs nearly as much as a naturally smooth low tech inline 6 or V-8. Similarly, a sophisticated chassis for a small car so that it rides and handles well probably costs the same or more as an unsophisticated (beam axle, leaf spring) chassis of a large car that rides nicely due to having a longer wheelbase. Thus the development and manufacturing cost of a small car versus large car is almost the same, yet the typical American consumer thinks the large car (or truck) is worth 2 or more times the price of the small car.
Such economics make it very clear why Detroit didn’t want to downsize, and why they historically employed unsophisticated technology on their small cars to keep costs down, and then used the cheapness/discomfort to upsell consumers on more profitable large cars. CAFE only made things worse, because as a SOP to the UAW it didn’t allow US automakers to import small cars from low cost countries and have them count towards their fleet average to offset the low MPG of the profitable large cars. As soon as fuel prices stabilized US consumers always went back to large cars and later trucks when the large cars were shrunk to meet CAFE, and Detroit had to keep making cheap small cars to hit their CAFE numbers, so we got antique Chevettes, and X-Bodies with dangerously cost cut rear brakes, J-Bodies that continued in production largely unchanged until they were old enough to vote, K-cars throughout Chrysler’s entire line, and cheapened versions of the Escort from Ford.
GM was obviously overwhelmed by the hugely ambitious undertaking it set for itself; they simply couldn’t execute it properly. That implies that the decisions to do so were made in a vacuum, or simply from the hubris resulting from their decades of success. The corporation simply wasn’t up to the task. And it wouldn’t ever be again, until it died in bankruptcy.
Since my first taking notice in the early 70s, big three management has always blamed it’s problems on the union, the government or the Japanese, either singly or two or more acting in concert. Management never, ever, made a mistake, it insisted. The big three always painted themselves as the innocent victims of external forces.
I remember when John Riccardo first approached the government about a bail out. He insisted that all Chrysler’s problems were entirely the government’s fault, so the government should give Chrysler $1B. I could hear the laffing from Kalamazoo.
In another thread, there was discussion of why cars from the late 70s and 80s lacked the durability of their predecessors. Some blamed the CAFE standard for motivating lightness. That would be the big three position, that the shoddy designs they turned out were all the government’s fault.
If fuel economy was more important that cheap, why did the big three persist with carbs, when EFI would provide both better driveability and better fuel efficiency? Carbs were cheap.
If weight was more important that cheap, why did the big three persist with big, heavy, slow running, pushrod iron engines, even bringing out new pushrod iron engines in the 80s, instead of switching to light alloy OHC designs with far superior power to weight characteristics? Pushrod iron engines are cheap.
On the other thread, someone offered Ford crowing about saving half a pound of weight by switching from a mechanical voltage regulator to an electronic one. Electronic devices are cheaper and more reliable that mechanical devices. The weight saving is just a bonus. My 67 Thunderbird had a mechanical turn signal sequencer. My 70 Cougar, built long before anyone ever heard of CAFE and wouldn’t spend a nickle to reduce weight, had an electronic sequencer.
I have my suspicions about the entire “downsizing” meme. When you make a car smaller, you reduce the amount of material in it. Reducing the amount of material makes the car cheaper, but if you hang an Olds 88 badge on it, you can still charge an Olds 88 price for it. And if anyone complains about the smaller size, blame the government.
The big three laid out huge amounts of money in 1960 to create clean sheet compact cars and clean sheet engine designs, but all they had to “blame” was a little wart of a car from Germany, so we didn’t hear the endless whining we heard 20 years later, when automakers had to do the same thing again.
imho, the big three’s response to market competition amounted to “make it cheaper, make it cheaper, then make it even cheaper”. Then they acted like the victims again, when customers walked away from them in search of better quality vehicles.
I note this too. Guys running big corporations are in it for themselves. The 1971 generation of car was simply the end of the line where size could go. Material prices were high due to the Vietnam war, so downsizing was the way to go.
Back in 1977 or so, all anyone talked about was miles per gallon. It was like a religion of sorts. Guys used to brag about how many miles they could squeeze out of a gallon of gas. It was expected that fuel prices would hit about a zillion dollars a litre.
You are correct, they blame everyone but themselves.
There had been the direct knowledge and know-how on producing smaller cars for years prior to 1959. It came from Ford of Europe, GM of Europe (Opel/Vauxhall), and Chrysler Europe (Simca/Talbot). All the engineering data, all the tooling, all the construction techniques, the whole kit and kaboodle. Hell, the GM Cadet was killed much earlier, and Ford had the Cardinal that ended up being produced as the Taunus. The unions would have built any of those models, had they been built here. At the end of the day, the unions wanted workers working on ANY model car, so long as they were working building cars here.
It certainly was the fault of the manufacturers to cave to the demands of dealers. Like a parent of a demanding teen, you can either give in to their whining or establish discipline, and guess which method they chose? Rather than stratify brands based on costs, trims, and engine choices, they gave all brands similar models with nothing really different other than the gingerbread bedecking the grilles and taillights.
Had GM kept the Sloan Ladder in place, and had they not ever put the V8 in the 1955 model, keeping Chevys as 6 cylinder cars and keeping the other brands sporty or larger, then the whole thing would have made sense. A decision to keep Chevrolet a base brand with nothing larger than a 6 would have wreaked havoc with future sports applications, but not so much if that would have passed along to the BOP brands. Ford would have probably made a go of the Ford/Mercury/Edsel/Lincoln branding with similar positioning, keeping the Fords the low cost, small engined versions and forcing buyers upmarket for power. I assume Chrysler would have done the same with Plymouth, and if they kept DeSoto along with Dodge and Chrysler, the branding would have worked to make smaller cars with small displacement engines more feasible.
The problem with “just-tell-the-dealers-that-they-can’t-have-a-small car/SUV/sports coupe” approach is that state franchise laws have been tilted in favor of dealers.
If GM management didn’t give Oldsmobile or Pontiac a small car, the risk was that the dealers would simply take on a Honda or Toyota franchise. (That is what happened here, in Harrisburg, Pa. – out of three local Honda dealers, two of them got their start when an established GM dealer picked up a Honda franchise in the 1970s).
As for keeping Chevrolet a more basic, cheaper car available only with a six-cylinder engine – again, It would have been very hard for GM to take this approach, particularly with Ford getting very aggressive in the 1950s. If GM had taken this approach, Ford would have nailed down the number-one spot by the late 1950s (even with the serious recession in 1958). For better or worse, GM had much invested in making sure that Chevrolet stayed “USA-1.”
Not only that, but it would had been also left a field for Plymouth who also introduced their own V8 in 1955, might have taken some Chevrolet customers as well.
I forgotted to mention then in Australia, their version of the 1955 Chevrolet was only available with the 6 Down Under. The V8 arrived later.
http://oldcarbrochures.org/index.php/Australia-2/GM-Holden/GM-Imports/1955-Chevrolet-Brochure/1955-Chevrolet-Aus–06-07
I am not sure I can fully agree. Back in the mid-50s, the big three competed directly with each other. GM could have afforded to keep out of a horsepower war with Plymouth against Chevy with little to no worries, as Pontiac was not a huge step up. Ford would have had more problems, but a successful Edsel would have gone a long way to make the Ford/Mercury/Edsel/Lincoln ladder work, without Ford having to add much and Mercury stepping up to the plate instead. Chrysler was not in such a position, and they were the first to fire the horsepower salvo in that war. It killed DeSoto for Chrysler but not for the same reasons as Edsel was killed by Ford. The Sloan ladder was still working up to that point, and there seemed to be a gentlemen’s agreement not to upset the apple cart prior to 1955. It seems that most Fords, Plymouths, and Chevrolets still went into driveways sporting 6-cylinders during that period, even after the SBC came into production.
I’m pretty certain that the majority of Fords sold prior to 1954 (when Ford came out with the new ohv “Y-block” V-8) were still V-8s. They were equipped with the old flathead V-8, which had given Ford a performance image. Prior to 1955, it was Ford, and not Chevrolet, that had captured the “hot rodder” and youth market. Chevrolet was thought of as a dull family car.
The Sloan brand ladder had been collapsing prior to 1955. Buick had moved downmarket with the Special, which poached a fair number of Chevrolet, Ford and Plymouth customers. That is how Buick was able to capture third place in sales for 1954, and hold it until 1957, when it was pushed out of third place by Virgil Exner’s long, low, tail-finned 1957 Plymouths.
Ford’s big 1957 Fairlane 500 was introduced partially in response to Buick’s incursions with the Special, and partially in an effort to upstage Chevrolet.
The OHV V8 was trickle down technology in the 50s, to say Chevrolet shouldn’t have been selling it is akin to saying today that because the Tesla model S is fully electric, the much cheaper model 3 should be hybrid or gasoline powered old tech. In Chrvrolet’s case the technology arrived 6 model years after Cadillac introduced it to GM, about the same span as the Tesla example in fact.
That Chevrolet eventually caught up to Cadillac in the engine department is less an act of brand overreach for Chevrolet, and more an act of complacency on Cadillac’s part, failing to continue innovation for the lower brands to aim for, and they all ended up on virtually equal to each other by the 70s In other words, the Sloan structure failed from the top down, not the bottom up.
Very fascinating read, to say the least!
This might be wading into political waters so I won’t comment for either side, just to say that when GM was king there was talk of the government breaking Chevrolet off from the rest of GM because of the laws regarding business monopolies. I wonder if it might have been in their own best longterm interest if that had happened?
It would have been a good thing. GM could have hived into truck, car and luxury divisions.
Kind of like it is now.
Don’t underestimate the talk at the time of breaking up GM – during the latter years of my dad’s time running the car dealership, that was a major topic of conversation around the dinner table. And a major worry in his eyes.
The usual expectations would be Chevrolet and a luxury brand (most likely Buick) in one company, and Pontiac (moved slightly downmarket), Oldsmobile and Cadillac in the other.
This kind of talk was especially prevalent during the mid-60’s when GM had something like 51-52% of the market alone, Ford was a distant second place, Chrysler was trying to come back from its latest disaster, American Motors was a marginal bit player and VW was the only import. Renault, Volvo, Saab, Mercedes-Benz, et. al.? Cars for weirdos in college towns.
GM was that huge. Chevrolet alone outsold American Motors and probably matched Chrysler (don’t have the figures at hand to back this up, sorry). And I remember dad saying that Chevrolet alone was half of GM’s profit. In 1965 it very much did look like GM could wipe up the other American players in a couple of model years if they really wanted to. And in that potential situation, Volkswagen had the best chance of surviving. (Because of all the weirdos.)
And then GM went and saved Uncle Sam all that trouble. Whoulda thunk?
In the early 1960s, Chevrolet alone held about 24 percent of the market – or slightly more than the entire Ford Motor Company.
According to the excellent site ateupwithmotor, in 1965 the full-size Chevrolet accounted for about 15 percent of the market. (In comparison, all of GM today holds about 18 percent.)
And with numbers like this it is awfully hard to fault GM for not being a leader in small cars. Cars like the “standard” Chevrolet was where the volume was in 1965.
And the Pontiac Catalina/Star Chief/Bonneville/Grand Prix, Oldsmobile 88/Starfire and Buick LeSabre/Wildcat shared the same basic body, so many costs were spread over a very wide production base.
That success also lulled GM management into complacency. The domestic car market didn’t stay frozen at 1965.
Blaming the government is as American, and as old, as apple pie. It’s just so convenient to blame the government. Everyone knows that they are just lazy loafers who got their jobs because of their skin colour, right?
I am really amused by government blaming, because my business failures were always 100%, completely my fault. I had to learn, over a period of decades, that for me to sell stuff to other people, I had 1) better have something they want to buy and 2) make a real effort to serve my clients well. But…when you have the government to blame, it’s all so easy.
For example, to keep my competitive edge in business, I take two hours out of my day to go to the gym and exercise. This means I have a clear head, don’t get sick often and I present well to clients. However, the government hating crowd doesn’t have to do this: all they have to do is sit in their chairs, eat crap and drink beer, and blame the government. Besides, looking good and feeling good isn’t necessary, because the government has “rigged the system” against me! I can weigh 350 lbs and cry that my health insurance costs have risen, because of the government, not because of me.
I could go on, but I find that government blaming is just for weaklings.
A fascinating New Yorker article. The one big explanation for the collapse in market share was mentioned in Paul’s article – GM’s quality was severely compromised in the downsizing efforts. Management was more obsessed with making the new vehicles cheaper as opposed to better.
The other problem was that GM management failed to realize that it needed to do more than simply downsize its vehicles. Applying the same styling philosophy and marketing emphasis (i.e., making “Broughams,” but with better gas mileage and in a front-wheel-drive format) wouldn’t necessarily work, as a new generation of buyers wanted something different than what their parents wanted. It didn’t help that the vinyl roofs, fake wire wheel covers and heavy exterior trim looked awkward when applied to the smaller vehicles.
Ford, which had its back against the wall when this article was written, gambled that buyers were ready for something really new and different, not just the same old stuff in a smaller package, and with better gas mileage. Hence, the 1983 Thunderbird and Cougar, followed by the much-maligned Tempo and Topaz, and topped out with the Taurus and Sable.
Finally, it’s not addressed by The New Yorker article, but the push to share more major components across the divisions, and the rise of imports, were the final blows to the Sloan divisional structure. If an Oldsmobile shared virtually everything but some exterior sheet metal and a dashboard with a Chevrolet…then why buy the Oldsmobile?
Especially if shopping at the BMW, Mercedes, Toyota or Volvo dealers offered buyers real variety and distinction.
GM simply wasn’t set up to compete in the market that had developed by the 1980s. And too many vested interests at the corporate and dealer level blocked the changes that needed to be made.
GM in the 80’s is where Harley-Davidson is now.
They’re making constantly improved bikes, but they still sticking with the tried-and-true: Big V-twin cruisers that the next generation of motorcycle riders has absolutely no interest in. And their well-honed image is a big turnoff to somebody who’s half my age.
It’ll be interesting to see if history repeats itself.
I think Harley Davidson is in a much different place than GM. Harley could never sell another bike and still be a very profitable company. The bike is a part of a whole lifestyle they created. Have you ever looked at Harley accessory catalogs? You can literally build a Harley with one. When you buy a Kawasaki you buy a bike, maybe a t shirt or two. With a Harley you buy the bike and a gateway to a whole lot more. You have the t shirts, the jackets, the mugs, the plush toys, the boots, the oil, the hats, and so so much more. You can be a Secord or third owner and Harley has oodles of accessories to personalize that new to you bike. New bikes are one of many revenue streams.
I agree with Syke on Harley. Millenials just aren’t buying old-school V-twin cruisers. Harley’s core market are geezers using their retirement nest-eggs and who will be dead in ten years. They’ve got the same problem Mercury had, as well as Buick, but at least GM has the Chinese market to prop up Buick.
They’ve also got another big problem: The image isn’t exactly conducive to a thirty year old. How many motorcycle riding millennials do you see wearing motorcycle gear with “Speak English or Get Out”, “Jane Fonda: American Traitor Bitch”, or “They Say Nine in Ten Women are Battered, and I’m Still Eating Mine Plain” patches?
#Metoo is a concept that kinda flies over the head of the average hard core Harley rider. It’s quite pertinent to most motorcycle riders 30-40 years younger.
And any millennials who *are* interested in an old-school V-twin Harley have their pick of used ones being offered by owners three generations older who are currently aging out of motorcycling.
The issue with HD is similar with GM more than you think. GM kept selling to the market they were comfortable with, offering them more of the same. By the time they figured out that the next generation could care less about their products, they had lost out on the chance to cater to their needs. They (GM) lost an entire generation of buyers to imports. HD is on the same path. Yes, boomers are still buying into the HD lifestyle, but not their kids. Yes, you can buy more merch for HD (probably only rivaled by Ferrari for more merch sold than actual cars or bikes in the case of HD) but without the bikes selling, that gravy train will run dry sooner than later. When your main product is no longer relevant to the people who would be your buyers, you have failed miserably. HD is well on the way to irrelevance.
I’m one of those Harley loyalists (three patch-wearing clubs in my lifetime, although Triumph is my main love). I’m also 68 years old. Just bought my last new motorcycle (a Honda Gold Wing – I’ve worked for the local Honda/Yamaha dealer for 14 years now, figured it was time I finally owned one), and while there’s still a few more Harleys in my future, they’re all going to be used, selling for $5000 or under, and will be bikes I’ve wanted to own in the past, not new models.
And the mark of a serious biker is his leather jacket is twenty years old, and he doesn’t wear all that Harley branded stuff. The only nameplate he needs is on the tank of the bike.
My first Daytona Bike Week in ten years last month was noteworthy that all the yuppie lawyers and accountants with their 2000 mile trailered Twin Cams, wearing the shiny new vests and official t-shirts are gone. It’s all the hard core again. And the youngest of them on Harleys were in their early 40’s.
The lifestyle apparel still only appeals to the aging out core demo buying the bikes. I wouldn’t be surprised if a huge percentage of accessories are being bought as last minute gifts for disinterested grandkids at the Harley store at some airports.
Really though, it’s image, both from the PC standpoint Syke mentions, which even as a critic of PC culture, I think is gross, and beyond that the old outlaw image of youthful rebellion is loooooong gone. Nobody under 40 has seen Easy Rider(I have but I’m weird) or could even name one biker gang, and for millennials my age, Harley Davidson doesn’t conjure up visions of choppers in the desert and freedom. Instead the image is greying suburban men amid a midlife crisis, with an off the shelf motorcycle bloated up with more kit than a conversion van, stereo and all, blasting away top 40 Dad rock, and blaring the throttle obnoxiously.
Really, it wouldn’t be a stretch to call one of their motorcycles 2 wheeled broughams with all the junk they all seem to come with. Compare them to the sport bikes that do appeal to younger demographics and you can see the divide clearly.
@XR7Matt
lol – but only because there is a guy in my neighborhood who fits that stereotype. His stereo is louder than his bike, but if you heard his bike you’d find that hard to believe.
I will say though that the guys riding Harleys and Indians were much nicer to me when I was riding my scooter than the guys on crotch rockets.
Don’t get me wrong, being cliched doesn’t make them bad people, it’s just funny to me that many modern day Harley riders probably wanted their milquetoast image toughened up with it, and really only end up as a parody like that.
And I agree with sport bike culture being littered with jerks. Probably just as Harley/Indian culture was when the youth were buying them(which is what cultivated the mythical image ironically)
it wouldn’t be a stretch to call one of their motorcycles (Harleys) 2 wheeled broughams.
You nailed it! That’s exactly what they are, and it explains my deep loathing for them all. Deadly pretentious.
You got it right.
What’s interesting is to go to a Harley-centric gathering nowadays, and the shiny brougham-bikes aren’t there. What are are obviously high mileage bikes that are ridden in all weather and look it.
My life (not lifestyle) has gone back to the Sixties. And the brougham bikes are turning up for sale on Craigslist.
You got my feelings on the matter right on the money. I’ve been interested in getting into motorcycles for a while, and Harley Davidson is the last brand I would be interested in getting. I find the image attached to be a turn off to me, and their bikes have little appeal, and I’m not interested in sport bikes, most of the stuff I like is big Touring/Adventure touring bikes and the retro stuff such as the Triumph Bonneville. To me, Harley Davidson is just outdated, bought by a customer base that is dwindling and selling bikes that have no interest to me whatsoever from a desirability standpoint (and keep in mind, I’m not the typical millennial in most cases). In that regard, I look at Harley Davidson the same way people my age in the 80s and 90s looked at Cadillac, products that just don’t offer what I like at that price point and appeal to a customer base that I don’t share much in common with. Unlike those Cadillacs, which have been gone long enough from the showrooms that someone my age can find them cool, separated from the baggage associated with them when they were sold brand new, Harley Davidson just doesn’t have that.
I’m sure Harley Davidson might get a comeback, maybe in 30 years time, the generation below me might find them cool and they’ll gain a sort of resurgence on the used market, much like how I find old Land Barges cool and have aspirations of owning one as a fun weekend car. But my feelings on Harley, at least for the foreseeable future, are always going to be less than glowing. (Of course, if my mother was still alive, she would probably disown me if I told her my true feelings on the matter.)
Interesting Harley analogies. I am over 60 and owned motorcycles before I bought my first car; and still have two in my garage. I grew up in a college town in California and Harleys, like most American cars, just weren’t on my radar, then or now. Even though I owned a Vega, it was a 4 speed GT to enjoy in the canyons and autocrossing, and unlike GM, Harley never came close to that style of bike. I do own a VTwin, but it’s Italian. However, as I think Syke pointed out, when I’m in the middle of nowhere in the West, on a hot or cold day, I see more Harleys than any other bike. They’re not all yuppie-ridden Broughams. And the new BMW bagger shows that that style is still aspirational for some.
Interestingly, H-D, like GM, had tried to compete with the Japanese back in the seventies. And, just like GM, failed miserably. These were the Evil Knievel days when AMF ran H-D and they very nearly ran the company into bankruptcy. The H-D heirs bought it back and changed the direction to the upscale, two-wheeled brougham-mobiles we have today with tons of merchandising to make every Harley tailored exclusively to its owner. So, in essence, H-D is now a victim of their own over-marketing success. It’s not too far off the mark to suggest that many of the new, grey-hair Harley owners have become rolling caricatures.
If you want my take on one reason why auto industry executives didn’t realize the full extent of the import explosion, look at where those men (yes, they were all men back then) physically sat. I worked in the auto industry in the mid-1980s and toured several assembly plants and design centers in the midwest.
Those executives sat in offices where, when they looked out the window at the parking lot, they saw a sea of almost-new (employee-owned) cars of their brand, sometimes as far as the eye could see. All managers above a certain level also got a company car as a perk.
Back in that time, you wouldn’t dare park a Japanese car in the company lot (in some places such as at the local union halls, the UAW had installed signs explicitly prohibiting them). The same thing held true at tier 2/3 supplier premises. So from where the domestic auto industry decision-makers sat, they didn’t see a problem! Everybody was driving their brand.
Nobody bothered to go see what people in the major coastal cities were driving (save for the stateside Japanese car company executives in LA), so they didn’t see the massive shift happening out in the marketplace, until it was too late. Even to this day, if you do a streetside tour of Detroit or other former auto industry towns, you will still see a predominance of domestic autos.
Your comment made me think of the Brock Yates piece “The Grosse Pointe Myopians”. The auto execs only wanted to see what they wanted to see.
They dismissed imports as “for weirdos”, and ignored California market, saying “they’re all fruits and nuts”.
Most execs [ex. Roger Smith] got a ‘golden parachute’ and moved on, leaving the problems to others.
Wow, that is very fascinating article!
I remember reading one article that described the 14th floor executives but couldn’t confirm whether it’s true fact or not.
Executives from different divisions were allowed the most plush of the fleet cars: Cadillac regardless of which divisions they managed. When that changed in the early 1970s with executives required to drive the corresponding vehicles (i.e. Chevrolet executives driving Chevrolet). They pushed the ‘Broughamisation’ programme that blurred the clear demarcation lines between each division. This way, Chevrolet executive didn’t have to feel ashamed of driving the basic Chevrolet home. Henceforth, the argument of ‘why should I buy an Oldsmobile when it’s essentially the Chevrolet.’
I sometimes wonder whether this was another nail in the coffin. The consumers were upset about their vehicles with engines built by other divisions rather than the corresponding division, i.e. Buick with Chevrolet 454 engine rather than Buick 455 for instance. GM didn’t mention it in the sales literature at first, which led to the lawsuit.
The biggest insult to the consumers was Thomas Murphy making the callous remark, ‘General Motors is not in the business of making cars. It is in the business of making money.’
FWIU the engine thing started with a base of buyers who moved down-just-a-little-bit in 1974/5 when the Olds Cutlass surpassed the full-size Chevy as the bestselling car in America. GM found itself with a shortage of Olds 350s and excess capacity of Chevy 350s, so they swapped ’em.
In context, Chrysler and Ford had had corporate engines all along – heck, if you ordered a 351-powered Gran Torino there was no way to specify whether you wanted a 351W or 351M, the only way to get one or the other for sure was to know the external differences, buy off the lot and have the salesman open hoods until you found what you wanted.
So GM tried to pull a fast one, got sued, and ended up putting disclaimers in the brochure for a decade or more to follow (maybe they should’ve gone with those in the first place…)
“Changed in early 70’s … executives required to drive the corresponding vehicles (i.e. Chevrolet executives driving Chevrolet). ”
Supposedly an Urban Legend. Besides, the Caprice came out in 1965, way before the early 70’s.
It’s completely baseless, but it keeps getting regurgitated on the internet.
From the article; “The basic decisions made were to produce a small Chevrolet (the Chevette) and a reduced-size Cadillac (the Seville), and to introduce into the Buick, Olds, and Pontiac lines smaller models based on the Chevrolet Monza”
Suspicion confirmed and contradicted; I always pegged the H-body Starfire and Skyhawk as last-minute badge jobs to give Olds and Buick dealers something to sell post-OPEC ’73, but I’d always thought the Sunbird was part of the program from the start.
The Sunbird had very distinct front styling compared to the Skyhawk and Starfire which were almost exactly like the Monza. This may have been possible though because the Sunbird entered production a year after the other three.
Interesting article, but asked the wrong questions, made the wrong assumptions and written for readers already driving foreign cars, or no cars at all.
The author was just as wrong as those he interviewed.
^ Sounds exactly what GM Execs would say, and look how that worked out?
Interesting article, and interesting comments from the CC community. But perhaps more interesting to me is that the New Yorker’s graphic design and typography hasn’t changed in decades. They’re less flexible than the auto industry.
I noticed the type face as well–it looks exactly the same as today. I can’t think of another publication that has retained its look for so long. However, in this case I think it may be a blessing. Rather than chasing the fads of graphic design (today’s Car and Driver is a victim), there is something reassuring about the classic style–it sets The New Yorker apart and conveys the magazine’s timeless quality and substance.
Fascinating stuff. The first thing that gets attention is the sheer quality of the article, something that the collapse of the journo business model means is rarely seen now.
The second is the the myopia. Examples. Estes says blithely that the Corvair was a “victim of bad publicity”, which, as we’ve seen repeatedly on this site, is factually unsupported. It was a victim of bad engineering and cost-cutting. Gerstenberg just as blithely asserts that (by 1980) GM was making “cars that are competitive with what they [overseas] make.” Um, not remotely true. You can sort-of tell these folks really thought these things true. Presumably no-one to say otherwise.
The best quote is from the unamed official in Washington on hearing the authors notes thus far: “That doesn’t sound like industry, it sounds like government.” At it’s bureaucratic worst.
I wonder if you could post “The Grosse Point Myopians? It’s a piece I’ve long wanted to read, but can’t find online.
A terrific post, and lots of insightful comments above too, I should add.
The first thing that gets attention is the sheer quality of the article, something that the collapse of the journo business model means is rarely seen now.
The New Yorker is every bit as good today as it was then, if not better. That’s what they specialize in: deeply researched articles. It’s a must read if one really wants to understand our world better, and not just from sound bites and opinions.
The New Yorker did what other press outlets were afraid to do and broke the Harvey Weinstein story wide open. They are definitely still earning their keep.
The great pang of loss is that I was once able to open the broadsheet (The Age) in little ol’ Melbourne, Australia, and see near-equal in-depth pieces for local and Aus region issues. Hell, even the Murdoch opposition tabloid used to be journalism, condensed for brevity. No more.
The sole remaining paper in the entire country with any ability for depth is The Australian, a broadsheet young Rupert opened in 1964, which despite the title, has a tiny readership and has lost money every year for him since it opened. He keeps it for supposed political influence (his sons will knock it off the day he dies), and very sadly, it has become so ideological in recent years that what remains is pretty much uni-directional propaganda.
So damn true, PN, that one can get entrapped in lesser information, and forget how to find and read the real stuff, such as The New Yorker. The old article here is a well-written assemblage of carefully obtained facts, with minor observations as to physical circumstances as relevant, and a conclusion that is not a diatribe but a distillation of what was observed. And you’re right GN, not only did they break the Weinstein story, it was meticulous.
These aren’t just the sighs of a not-young person wishing for older times, but real worry at the current gap in accountability which the new models have not nearly replaced.
Be sure to check back Friday, as there may just be an article you are looking for from the April 1968 issue of Car and Driver….
Shall do!
Thanks for digging up the article. If you love GM today, you might want to skip my post.
I come from a GM family, but I lost faith in GM in the early 90s, with one awful FWD product after another. I began driving imports, as I do like smaller cars and what we now call “crossovers.” As John DeLorean (who, admittedly, had an anti-GM bias) noted in his book about GM, the Vega could have been the best car of the 70s. Instead, committee infighting, insufficient testing of the body-priming system, and cheapskate penny-pinching on items like a coolant-overflow tank and fender liners led to disaster. That’s GM.
Recently the Ford Focus caught my eye, but as for the General…nope. They continue to make tinny, cheap small cars. I had a Cruze for nearly a month as a rental, up in Canada. It was dreadful compared to a rental Focus I’d had just a few weeks before. The Ford pretty much sold me on the Focus platform; I’d rank it as better than a contemporary Honda Civic or Jetta (two designed messed up by cheapened redesigns within the last decade). I also had a Chevy Crossover briefly in 2014 as a rental. Fit and finish were dreadful compared to our 2004 (!) C-RV.
Then there was Saturn…a brilliant design cheaply made (glue should not seep through upholstery to stain your door panels; interior parts should not break and fall off). We had a nice-looking ’95 SL-2 for seven years, and at 80K the engine had to be rebuilt. Though the dealer did that for the cost of the deductible on the warranty and the service manager diagnosed the issue via a lifter noise beforehand and promised a new engine if needed, he could not fix was was essentially more of the same awful GM engineering. Another family Saturn did the same, and meanwhile GM starved that marque of new ideas until almost the very end, when the new sedan (Aura?) and Sky convertible showed what they should have done right away.
Though I own a 4WD 2003 Silverado I got used from an estate sale, a work truck that works fairly well, I’ll never, ever buy a new GM vehicle again. And that’s not the fault of CAFE standards, insurance rates, or foreign competition in the 70s. It’s the fault of a stupid company too big and too greedy for its own good.
It seems to me that 20 billion in 1980’s money would have bought a lot of R&D for smaller engine choices that developed both power and fuel mileage without all the brutal down sizing. The Riviera and Eldorado of 1986 were particulary shameful but the 1980 through 1985 downsizing of the same vehicles were beautiful.