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Death of a Marque
OLDSMOBILE, GONE AFTER 107 YEARS
April 2001 | Volume 52, Issue 2
The curved-dash Oldsmobile sold for $650, and by 1905 the company was selling 6,500 of them a year, an astonishing number by the standards of the day. But Samuel Smith and Olds disagreed about policy. Smith wanted to concentrate on luxury cars and Olds wanted to run with the success of the curved-dash Oldsmobile. Olds left the company that produced the car named for him, resigning in 1904. Olds had been right, though, for the company did not prosper in the luxury-car market. In 1908 William C. Durant, the founder of General Motors, made the Oldsmobile one of his many acquisitions. Ransom Olds went on to build the Reo, a car named for his initials that was manufactured into the 1930s, and never again had anything to do with the Oldsmobile.
Durant acquired a total of 13 automakers in the formation of General Motors, but only the names Buick, Cadillac, Oakland, and Oldsmobile survived the reorganization of his company that bankers forced on him in 1911. By the 1920s, Alfred P. Sloan, Jr., was running General Motors, and his now-legendary marketing concept turned it into one of the great capitalist success stories of all time.
First, he made Chevrolet a competitor to the Ford Model T, not by imitating it but by going it one better. Chevrolet, while slightly more expensive, offered frills (options, in other words), such as different colors. Sloan understood, as Henry Ford did not, that automobiles had become much more than simple transportation.
Second, Sloan developed a carefully crafted hierarchy of increasingly expensive and luxurious brand names for people to use to display their success as they moved up the economic ladder. At the bottom was Chevrolet; then came Pontiac, Oldsmobile, Buick, and finally, at the top, Cadillac. The success of this marketing concept can be measured by the fact that the word Cadillac in the American lexicon still means the ultimate in luxury. Another measure of its success, of course, was that by the 1950s General Motors had 55 percent of the American automobile market.
SAVE FOR LOOKS, THERE WAS LITTLE TO DISTINGUISH AMERICAN CARS OF 1973 FROM THOSE OF 1953.
The three decades after the Second World War were the glory days of the old American automobile industry. Foreign competition was minimal, the domestic economy was flourishing, and the big-three auto companies were effectively a cartel led by GM. But cartels, like their more integrated cousins monopolies, tend to get fat, dumb, and lazy, because they can afford to be. Although the American automobile industry had led the world in innovation in its early days, it became stultified after the war. Automatic transmission, which had first appeared in the 1940 Oldsmobile, was the last major innovation. Except in appearance, there was little to distinguish the cars of 1973 from those of 1953.
Thus the twin shocks of the oil shortage and the Japanese-auto invasion of the early 1970s caught General Motors, Ford, and Chrysler off-guard. In seeking to meet the new challenges of the marketplace and new fashions in automobiles, such as the minivan and the SUV, the old marketing concept developed by Alfred Sloan broke down at GM. But no overarching concept for the entire company replaced it. Instead, each division of General Motors, jealous of its autonomy, fought independently to hold market share.
It was, so to speak, no way to run a railroad, and Oldsmobile simply lost out in this internecine commercial warfare. In the late eighties, seeking a new image, it began the “This is not your father’s Oldsmobile” campaign. It was a disaster, alienating the brand’s loyal supporters—the older generation that had been buying Oldsmobiles for 50 years—while merely amusing the younger generation.
General Motors has seen its American market share drop from nearly 50 percent in the early seventies to 27 percent today, as it has struggled to remake itself in the modern, global, highly competitive automobile marketplace. In its latest attempt, its president explained, “we [are] reluctantly parting with some of our proud past, as we rethink and improve the way we do everything at General Motors.” The particular part of its proud past he had in mind, of course, was the merry Oldsmobile.