Curbside Classic commentator Steve (2014) has offered one of the more thoughtful merger scenarios for Packard. He concluded that Hudson would have been the best choice.
Let’s take a look at Steve’s analysis and compare it to our own overview of each merger option. How does Hudson rank? Note that we will leave for another day a discussion about a so-called “grand merger” of three or four independents.
Perhaps the most important advantage of a merger with Hudson was that it could have solved a problem that ended up costing Packard dearly. The automaker was about to lose its body supplier. According to Steve (who is not me), Hudson had its own body plant — and it was closer to Packard’s final-assembly plant than the one used by its existing supplier, Briggs.
Also see ‘Did Chrysler’s 1953 purchase of Briggs kill Hudson?’
In addition, Hudson could have provided Packard with an already established junior brand with its own dealer network. This scenario might have had a greater chance of success than Packard’s plan to spin off its entry-level Clipper series into a separate brand. That was a key part of CEO James Nance’s goal of reestablishing Packard in the luxury car field.
A Hudson merger could have also helped helped Packard achieve more viable economies of scale. If all of the new company’s cars were assembled at Packard’s East Grand Avenue plant, that could have boosted total output above breakeven point. Or, at the very least, producing both Packards and Hudsons in the same plant could have “cut the disastrous losses” of 1954, Steve (2014) suggested.
Why Studebaker was a terrible merger partner
Steve (2014) noted that none of the above-listed synergies could have happened with Studebaker “because the two product lines were too far apart in size and price for production to be consolidated on one platform, in one plant.”
Nance tried to create more synergies by developing a new platform that Studebaker and Packard would share. However, the price tag was a whopping $50 million — which financiers refused to loan to Nance (Hamlin, 2002).
Even with a shared platform, Studebaker-Packard’s economies of scale would still have been shaky unless all passenger-car production was consolidated in one plant. Whether that was doable is unclear. Packard’s new-for-1955 assembly plant on Connor Avenue was relatively small, so it may not have had the capacity to add Studebaker production.
Meanwhile, Studebaker’s main plant in South Bend was designed to build compact cars. Reconfiguring the plant for Nance’s planned line of full-sized cars could have been costly. Presumably those expenses were built into the $50 million loan figure. Did financiers consider such an investment too risky given the aging South Bend plant’s inefficient layout and labor-management conflict?
Absent a shared platform, a merger with Studebaker did very little to increase Packard’s economies of scale. To make matters worse, Studebaker was arguably in the poorest financial shape of the independent automakers. Nance made a variety of mistakes, but tying up with Studebaker would prove to be his biggest one.
Why Nash was also not a good merger choice
Nash-Kelvinator has been pointed to as a better merger partner than Studebaker. This makes some sense. The Nash could have functioned as Packard’s junior brand, and Packard could have shared its full-sized platform. Perhaps just as significantly, Nash was arguably a better-run company than Studebaker — and was not losing as much money.
The downside of a merger with Nash was that the two companies were not very compatible. All Nashes were unit-body construction, in contrast to Packard’s separate body-on-frame construction. This presumably meant that Packard’s East Grand plant would have had to be reconfigured to continue assembling a Nash-based Packard. In addition, the cost of transporting the bodies from Wisconsin to Detroit was high, although a Packard study concluded that it was manageable (Hamlin and Heinmuller, 2002).
Also see ‘Five (arguably) unresolved mysteries of postwar independent automakers’
That line of thinking ignores a larger problem: The combined company’s total production would still have been low enough that consolidating production could eventually prove to be necessary. That meant assembling Packards in Kenosha on the same line as big Nashes. Would that have undercut what remained of Packard’s cachet?
Another issue was that the Nash body was so unique looking that it would have been hard to differentiate a second brand. Packard could have thus ended up suffering a similar fate as Hudson, which saw its sales plummet once shifted onto the Nash body in 1955.
Perhaps the biggest long-term downside of a Nash merger was that the company generated most of its sales from compacts rather than big cars. At best, that meant the automaker needed to split its meager resources in order to keep two distinct platforms competitive. At worst, it meant that Nash-Packard eventually could have had to abandon the full-sized field. The latter happened after Nash merged with Hudson and its new CEO George Romney quite rightly bet that the compact Rambler was its most viable path forward.
Also see ‘Packard brochure tells the story of a dying legend’
Nance likely would have instead focused on full-sized cars if he had become CEO of a combined Nash-Packard. However, he was not in line for the top spot — which was reportedly the reason why Packard spurned merger talks with Nash (Ward, 1995).
What about a merger with Kaiser or Willys?
Kaiser was arguably the worst potential merger partner. It was a relatively new automaker, so it had the least well-established dealer network and brand reputation. In addition, its Willow Run assembly plant was arguably far too big even for all Kaiser-Packard production (Steve, 2014). Perhaps most importantly, Kaiser’s leadership team had a track record of incompetent micromanagement.
In contrast, a merger with Willys had some plausibility. This would have helped Packard diversify into the truck field and strengthen its international presence. In addition, the compact Aero would have given Packard an entry in the low-priced field. That car could have found a decent following once the Rambler went upmarket in 1956.
Also see ‘1933-42 Willys offered a better template for an import beater’
Another important factor in Willys’ favor was that it generated modest but steady profits (Foster, 1998). So unlike Studebaker, Willys wouldn’t have been a serious financial drain. In addition, Packard would have been the top dog. And unlike with Nash, there would have been no danger of Packard being turned into a badge-engineered afterthought.
Hudson wasn’t as good of a choice as Willys
All of this suggests to me that Willys would have been the best merger partner, followed by Hudson. The other automakers had too many weaknesses.
Why wasn’t Hudson the best choice? Getting that automaker’s body plant was a potential plus, but I wonder whether it would have penciled out over Packard building its own. A similar situation may have held for acquiring Hudson’s dealer network. The practical aspects of absorbing a dying automaker could have ended up being more costly and management-consuming than a go-it-alone strategy.
Also see ‘Comments about ‘grand merger’ of independents show value of dialogue’
Perhaps Packard management would have considered the added cost and hassles worthwhile because they desperately wanted a junior brand. Fair enough. However, a Willys merger could have made more sense if Packard instead wanted to diversify.
The luxury of hindsight suggests that Willys would have been the better bet. That is partly based on the long-term growth trajectory of Jeep four-wheel-drive vehicles. However, I would also question the wisdom of Packard adding a junior brand.
Packard wasn’t big enough to offer a junior brand
The challenge of a two-brand strategy is powerfully illustrated by the merger of Nash and Hudson into American Motors. Hudson sales immediately collapsed after its full-sized line was shifted to a Nash platform in 1955. One can criticize how AMC handled Hudson, but even in a best-case scenario how could the brand have survived?
Also see ‘Did the 1956 Packard Executive represent a strategic shift?’
Now let’s imagine Hudson being shifted to a Packard body. Why would the brand have been much more successful than at American Motors? Even if the Hudson had been given a unique front and rear design, the overall shape would have still looked like a Packard. More significantly, the new Hudson would not have maintained its predecessor’s key functional qualities, such as a low center of gravity, unit-body construction and unusually aerodynamic styling.
What then would have been the unique value proposition of a Packard-based Hudson besides being lower priced and slightly sportier? If you couldn’t change the car’s fundamental Packardness, why not just call it one?
Nance learned that lesson the hard way in 1956, when he made the Clipper a separate brand. Customers rebelled by demanding that a Packard emblem be put back on the car (Ward, 1995).
Also see ‘Photo gallery of a 1953 Hudson Hornet 4-door sedan’
In short, Packard’s best hope for survival may have been to stay the course in offering one brand that largely competed in the premium-priced field. A tie-up with Willys could have been more helpful than getting entangled with a dying Hudson. Any other scenario was arguably more problematic than going it alone.
NOTES:
Production figures are from the Standard Catalog of American Cars, 1946-1975 (Gunnell, 2002).
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Foster, Patrick R.; 1998. The Story of Jeep. Krause Publications, Iola, WI.
- Gunnell, John; 2002. Standard Catalog of American Cars, 1946-1975. Revised 4th Ed. Krause Publications, Iola, WI.
- Hamlin, George; 2002. “The Last of the Marque: The Fifty-Seventh and the Fifty-Eight Series 1957-1958.” In Kimes, Beverly Rae, ed., pp. 622-635. Packard: A History of the Motor Car and the Company. Automobile Quarterly Publications.
- Hamlin, George and Dwight Heinmuller; 2002b. “America’s New Choice in Fine Cars: The Twenty-Sixth and the Fifty-Fourth Series 1953-54.” In Kimes, Beverly Rae, ed., pp. 562–581. Packard: A History of the Motor Car and the Company. Automobile Quarterly Publications.
- Steve; 2014. Commentator in “Curbside Classic: 1956 Packard Patrician – Please Proceed to The Lifeboats.” Curbside Classic. Posted 11:14 p.m., Oct. 24.
- Ward, James A.; 1995. The Fall of the Packard Motor Car Company. Stanford University Press, Stanford, CA.
ADVERTISING & BROCHURES:
- oldcaradvertising.com: Nash (1955)
- oldcarbrochures.org: Hudson (1953, 1955); Packard (1954); Willys (1953)
Willys? The Toledo factory was I think the oldest of the car manufacturers even then. If Packard had no use for the downsizing Nash, why would it want the Aero Willys? The Jeep Wagoneer, arguably the first SUV as we understand it today, was a decade in the future and a while after that to catch on and dominate the auto market. The Jeep at that time was strictly a commercial type vehicle, and neither Packard or Jeep had a real function in the other’s factories or showrooms. I don’t see any real synergy. In any of these proposed and factual independent mergers, one car will have to be a badge engineered version of the other, or there are no real economies of scale. The 1954 Hudson showed the unit platform could be adopted to a more modern body, and a Phudson could certainly be no worse than the 55 Packard reskinning, which to me looked rather dowdy compared to its competitors. Photochoppers anyone?
If Packard bought Willys, production could have been consolidated in the Detroit plant. But even if that didn’t happen, Willys managed to earn a consistent profit despite its old facilities. That was Willys’ most important potential value to Packard. The strategy would have been somewhat similar to Studebaker’s diversification efforts in the early-60s.
I agree that the Aero didn’t fit neatly into the mix. Yet it had the potential to do well in the second half of the 1950s if it could have been kept in US production. And given how badly the premium-priced market did during that same time period, the Aero could have plausibly saved Packard.
All that said, I suspect that the best option (at least as of 1953-54) was to avoid mergers and instead focus on partnerships in developing key components such as engines and transmissions. Nance started down that road with AMC but it sounds like he charged too much to make the arrangement financially sustainable.
Willys was making a profit, but Packard was drowning in red ink. Such a merger would probably just make the books look good enough for Packard to go ahead on the planned 1958 Predictor look. I can’t see it getting into production any earlier than the 58 model year. However, let’s have a bit of fun. Packard was playing with sports car prototypes, such as the grotesque Panther and that thing that looked like a flower car. How about something on an Aero platform with the Packard drivetrain, and either a 2 seat or 2+2 configuration?
I think both the question of whether and what independents should have merged or whether they should have pooled resources is missing the reality of the mid-1950s market. There was no room for a 4th large automaker in an era of larger required capital investments and greater economies of scale. As it was Chrysler was struggling to remain in the big 3. To me, the more interesting question is whether selling themselves to Ford or Chrysler would have been a more value accretive exit from the business. Chrysler buying Packard might have made more sense than trying to turn Imperial into its own brand, particularly in terms of access to a unique dealer network. Perhaps 1955 could have seen the launch of the Packard Imperial. Ford buying Hudson might have made more sense than creating the Edsel division, particularly given Hudson’s image would seem to have lent itself to the gap between Mercury and Lincoln that initially prompted the E car program. It could also have accelerated the launch so it didn’t happen during a recession year. I don’t mean to suggest that either of those transactions would ultimately have turned out better for Chrysler or Ford, just that they would have made commercial sense in the day given the opportunity to save some costs over the alternative of creating new divisions in an already very competitive market.
As for Nash or Kaiser, a Ford or Chrysler acquisition of either of those brands wouldn’t make much sense, but Chrysler was short on production capacity to challenge Chevrolet and Ford with Plymouth having miscalculated by underinvesting during the seller’s market. It might have made some sense to buy Nash and/or Kaiser’s car manufacturing operations to expand capacity, indeed Kaiser’s Willow Run facility, as noted, was the most modern in the industry. This might have created an opportunity to build out a unique Plymouth dealer network as well. And Kelvinator might have survived on its own as a home appliance business.
Studebaker and Willys are hard to place given their factories weren’t set up to produce full size cars, and were already outdated. Buying either could have given Ford or Chrysler a jump on launching their own compacts by a few years, though the market for compact cars didn’t look good in the mid-1950s. Willys might well have survived on its own by focusing on utility vehicles and eschewing cars. Studebaker though was probably just a lost cause.
You make some reasonable arguments. I would guess that Chrysler and Ford didn’t acquire any independent brands primarily because of “not invented here” syndrome. Of course, that attitude would likely have been clothed in analysis about how Packard or Hudson were too far gone to be revitalized. If so, there would have been some justification for that argument. Even so, Ford’s ill-fated assault on the premium-priced class was so poorly thought out on multiple levels that it’s hard to see how they could have done any worse than buying Hudson instead.
Packard posed a challenge to whomever might have bought it because the brand had a split personality. Even though it was once known for its luxury cars, after the war it was known as a premium-priced brand. So if Chrysler purchased Packard, they would have had to recast the brand’s image. Interestingly, Packard might have better suited what Ford needed, which was an upper-premium brand. Trying to move the Mercury upmarket failed miserably.
One thing we do know from history is that an independent could survive in the post-war era if it didn’t try to compete directly against the Big Three. AMC under Romney showed that; so did Kaiser-Willys.
I had always heard and read that Ward Canaday was shopping for a way for Willys-Jeep to find a way to survive in the 1950s, even prior to the introduction of the Aero-Willys. The any of the mergers should have occurred prior to 1950. By then, the fates were sealed, looking back in retrospect.
While Packard was losing money in 1954 so was virtually every other car maker not named Ford or GM, in the wake of the cut-throat price war the two waged that year. And of the big four independents, only Packard and Nash had solid balance sheets. So you could argue they should have merged, but I also agree that would wind up with Packards being made in Kenosha.
I believe Packard’s best option was merging with Chrysler at the end of WWII. Both had strong balance sheets, and the Crown Imperial limousines were Chrysler’s only true Lincoln or Cadillac competitors. As long as Chrysler made Chrysler-brand 8 passenger sedans – through 1954, they could have offered the CI as up-trimmed dealer sop, and let Packard focus on the luxury market. They could even build a new assembly plant at the proving grounds in Utica, to supplement the engine plant they did build. At some point they would have merged the platforms – probably in 1955, but maybe sooner. If you look at the front of Exner’s ’55 Imperial, you can easily imagine an extended Packard grille replacing the Imp’s twins.
Oh, and the Briggs purchase would be a non-issue!
One thing that seems to be left out in these discussions of the dealer networks. I would like to know how many dealers each of the makes had, which with production figures would give an idea of the dealer’s health. I’m 70 years old and I remember the mom and pop dealers with 50-75 feet of building frontage and maybe an outdoor lot of similar size. You’re talking at best something with the footprint of a stand alone Walgreen’s. A lot were even smaller. This worked fine earlier, but by the mid 50s cars had considerably larger option sheets with multiple drivetrain choices and in all the colors of the rainbow. Come to the 60s, and all but the luxury cars came in compact, midsize, and full size ranges, with maybe a ponycar or or personal luxury car tossed in the mix. Could these small dealers afford the expansion? The independent sales are dropping because the dealers can’t move the cars and must be hurting themselves. If S-P can’t get loans from the major merchant banks, how do you the local Studebaker dealer would fare with Old Man Potter? I don’t know if this is the proper venue for such an article, but I’d love to see those numbers.
Kim, I have thumbed through my books today and thus far have only found some cursory information about dealer networks. Charles K. Hyde wrote that when American Motors was formed, Nash had 1,600 dealers and Hudson had 2,000. That compared to the Chrysler Corporation’s 10,500 dealers. Given that Nash was selling considerably better than Hudson in the first half of the 1950s, I would guess that Nash’s dealers tended to be larger. All of which raises the question: Did it turn out to be cost-effective for Nash to absorb Hudson, e.g., was access to its dealer network worth it?
I’d be happy to write more about dealer networks if I can find better information. I vaguely recall this topic being covered in an auto history book in my collection but I haven’t yet come across it.
One irony about Hudson’s death is that one of its largest dealers argued that the Jet should be taller. Unfortunately, Hudson’s CEO agreed. I suspect that even the most beautiful Jet would have still killed the automaker, but making the Jet ugly hardly helped.
Your point is well taken about whether mom-and-pop dealers would have survived the post-war period. It may have partly depended upon the strategy of the automaker. I assume that the biggest reason why Romney whittled AMC’s lineup to an unusually small range of cars was to increase economies of scale at the factory, but that may have also benefitted dealers. During VW’s heyday its dealers were quite profitable despite both a narrow line of cars as well as relatively few options, color choices, etc. Honda later picked up on that approach to a certain degree.
So in the end, it would seem to at least partially come down to the question: Did the independent automaker — and its dealers — try to mimic the Big Three or come up with an iconoclastic strategy that maximized the advantages of being small and minimized the disadvantages?
I know the dealer you refer to. It was Courtesy Hudson in Chicago. I have read here and there that they were selling 20% of Hudson’s production at the end. I find this hard to believe, maybe he was also a Hudson distributor? Anyway, the story goes, he persuaded Hudson to make their cars more Ford like. See the Jet, it looks like a mini 53 Ford, and the Fordish appearance of the 54 full size Hudsons.
Regarding the VW dealerss, VW, like Jeep, had a unique product line unavailable elsewhere. Circa 1960, the only real players on the compact import scene wer VW, Renault, and the BIg 3 captive imports. When VW came to Green Bay circa 1960. VWs reputation preceded them, and the dealership was in a new (or heavily remodeled) building that resembled modern dealerships. I have no idea what the first generation VW dealerships were like, but this was clearly a well-funded operation ready to take on all oomers, or at least this is what I remembered as an 8 year old.
Nice article, Steve. Applaud your efforts in building and sustaining this site.
Short of continuing alone, I think Hudson might have been the best option, with timing, temperament, talent, and the total package being the keys.
Timing:
Edward Barit, President of Hudson, approached Nance sometime in the fall of 1953, desperate to merge due to the failure of his Jet. Then in October, Nance learned that Conner Ave. had been purchased by Chrysler. Soon thereafter, Tex Colbert told Nance that he would let Packard build cars only through 1954. Anything after that would need to be negotiated. The clock was now ticking.
The other timing element was that Contour needed to go, preferably after the 1954 MY and definitely after 1955. No Hudson version. No starry eyes. No cathedrals. No wrapped windshields. No more good money after bad. There were too many competitive advances during this time period.
Temperament:
Mason was a shrewd negotiator and, I get the impression, as power-hungry as Nance. Neither was willing to play second-fiddle, both believing that they were the superior leader. Perhaps if Nance could have convinced Mason to spend mostly Nash’s money on an all-new, lower body akin to the ’55 Nash Ambassador by Pinin Farina, and let Nance run the large car business, it might have worked.
Talent:
Short of that, it was Hudson that had impressive body engineering knowledge, manufacturing infrastructure and a headstart on a lower car, all of which would have been key to Packard-Hudson’s survival. The Italia X-161 prototype sedan demonstrated what was possible, and the final car would have only gotten better had Teague led the design and more money been spent on chassis geometry changes to the basic Monobilt underbody. The rear track needed to widen and the rear overhang needed to lengthen.
The Total Package:
A new round of fund-raising necessary for an early 1955 launch of all-new step-down unibody cars, the marriage of The Master Engine Builder and master body-builder would have been the hottest news in town and a key selling point to investors. Nance and Barit’s teams would have needed to pull together a lot of material in a very short period of time. If accepted, a merger and vehicle development would have quickly followed. If not, Nance would have needed to focus on a ’56 launch of an all-new lower Conner-built car and hope that the new V8 installed in the carryover ’54 car sold well enough in ’55 to help fund the effort. A tall order indeed.
“Photochoppers anyone?”… I wish there was an option to upload!