“I think if DOJ had cleaved GM into two companies (i.e., Chevrolet and GM), we would today have a more vibrant, competitive American automotive industry. Today, we have two domestic players in an industry that is the Big Six.
Recall that Chevrolet ‘ate’ GM with Billy Durant’s takeover from Mssrs. Storrow and Nash to launch Billy’s second tenure (until DuPont and Sloan got him fired). The point is that Chevrolet always thought of itself as being above GM, so happy to go their own way.
An earlier point on this thread is that Chevy wouldn’t have the product span to compete across the board, but by the mid-sixties, I would argue that Chevy had too much span, everything from 4 cylinder Chevy II’s to luxury cars bearing the bow tie (and trucks).
Finally, GM’s 55% market share ensured complacency and decline, in terms of innovation and quality. A break up would have forced them to be more nimble and market-aware. Also disagree with some of the above AT&T comments. If the break up had not occurred, we’d still all be using rotary dial phones so that Ma Bell could amortize the investment.”
— Ninemauin, Hemmings (2020)
RE:SOURCES
- Ninemauin; 2020. Comment in “Open Diff: What if the feds had succeeded in breaking up General Motors?” Hemmings. Posted June 4.
Chevrolet could have been split from the rest of General Motors before the 1959 styling revamp where Fisher Body essentially made all the divisions use one core body shell utilizing the Buick door and a cowl / windshield assembly for the 1959-1960 models (except of course the Corvette and the trucks). A revamped Pontiac could have easily been developed as the entry level G.M. car to distinguish itself from using the Chevrolet body styling cues like rooflines, etc. In fact, 1959 would been the best year for splitting the company given the styling distinction between the full-size Chevrolet and the clean wide-track Pontiac. Would an entry-level Pontiac have a new O.H.V. six-cylinder engine in the now five division “new” G.M. of Pontiac, Oldsmobile Buick, Cadillac and G.M.C.? This would likely mean Pontiac going slightly down-market which I believe the Pontiac team of Bunkie Knudsen, Pete Estes and John DeLorean could have handled. G.M.C. was in the process of designing a totally new range of truck engines including a V-6 and Pontiac did not need Chevrolet’s Powerglide since it had access to HydraMatic. Ed Cole could have become President of an independent Chevrolet car and truck company and with his 1960 Corvair, X-frame full-size Biscayne, Bel Air and Impala, plus the Corvette, could have easily survived as a separate entity. But after the Frederic G. Donner-mandate for John Gordon consolidate and convert Fisher Body into the General Motors Assembly Division, as the 1960s progressed, separating Chevrolet from the rest of G.M. would become much more difficult.
GM divisions competed with each other within the corporation until the Roger Smith era. While this led to a lot of extra coverage between the divisions it also provided more identity to each division, and gave customers a reason to choose between them. An Oldsmobile was quite different from a Chevy.
I feel that the photos of the Eldo convertible with the eroded bumper panel fillers is a cheap shot. That car is almost fifty years old, what plastic can survive that long when exposed to the elements? I had a ’77 Caddy and those panels lasted well past the ten year mark. Luckily they are available now in fiberglass. Look how straight that Caddy’s sheetmetal is.
Jose, the photo was designed to visually reflect the main point of the quote — that the lack of antitrust action fueled corporate decay.
Since we’re talking about graphics, it may be helpful to know that I can’t afford to buy stock photos. Aside from what I can pull from ads and brochures, what you see at Indie Auto is what photos I am able to take.
I suppose I could have used a photo of a beat-up 1970 Oldsmobile Toronado, but it’s been run quite a bit already . . . and the other day I found this Eldorado. That car strikes me as a useful symbol of how far GM has fallen since the 1970s.
If any readers find that overly negative, know that the prime goal of this website is to explore why the U.S. auto industry experienced one of the most dramatic industrial collapses of the last century (go here for further discussion).
Two Thumbs Up!, Steve.
You publish a great blog; thought provoking and insightful while still being entertaining.
Thank you, Mr. Dale. I’ll be here all week; don’t forget to tip your waitress!
I agree that overall, that the industry and the public would have been better served if GM had been broken up. The government would not have wanted the industry jeopardized with the move, so it might appear that the better time to do it would have been in the mid-60s when Chevrolet had good “span” in the market.
l wonder how this would have affected American Motors (the fate of the auto division at Studebaker was already sealed by its board by late 1963) ?
The resulting industry/government arguments, media coverage, the likely blessing of Wall Street (I think) and competitive efforts by the GM divisions would have had a possible positive effect on the sales of the GM family brands after the “re-positioning”.
A real opportunity was missed.
Stewdi, to your question on American Motors, my guess is that the automaker would have had somewhat more margin for error but would still have lost its independence under Roy D. Chapin Jr. In other words, bad management could still kill an automaker, particularly if it was smaller.
I believe that a breakup of General Motors in the US would have had far reaching implications beyond American borders. I wonder if there had been any consideration, for example, of how a breakup that involved spinning off Chevrolet into an independent company, would affect GM of Canada, most notably the Pontiac brand, and also the structure of the Canadian dealer network, which was divided into Chevrolet/Oldsmobile and Pontiac/Buick/GMC franchises.
Canadian Pontiacs used Chevrolet architecture and running gear, and often bodies. Had Chevrolet been allowed to become its own company, the impact on Pontiac in Canada, where the brand was often GM’s top seller in this country, would have been huge. Pontiac’s market position in Canada was very different than it was in the US for many decades. A breakup would have had GM of Canada scrambling to fill the void for an entry level brand to compete with Chevrolet, not to mention Ford.
Then there is the question of how, or if, the Canadian dealer network should be reorganized or consolidated. Had a breakup happened in the 1960s, I can see that also affecting Chevrolet and Chevrolet-branded cars built and/or exported to overseas markets such as Argentina. In particular, I’m thinking of the Chevy II based ‘Chevrolet 400’, produced from 1962-1974 in that country. Loss of Chevrolet would have required filling the void in other countries with GM brands such as Opel or Vauxhall. Loss of Chevrolet-based and branded trucks would have also been a major complication in non-North American markets. What are your thoughts, fellow commentators?
CJ, I agree that a breakup would have had far-reaching implications beyond American borders. This would have been a complex undertaking that almost inevitably would have had messy aspects, particularly in the early days after the breakup began to be implemented.
There would also have been the possibility that those who made the decisions on which assets were given to each company weren’t knowledgeable enough about the auto industry to avoid unintended problems. That’s why I find George Romney’s proposal interesting — he left it to the automakers to decide how they would split up (go here for further discussion).
In having this discussion I think it can help to pay attention to our habits of mind. In other words, why do we land on a certain viewpoint? Are there underlying assumptions behind that viewpoint?
For example, I don’t think it needed to be a policy goal to break up GM in such a way that each side still had a full line of cars and trucks in the U.S., let alone in other countries. Indeed, one value of a breakup was that it could have reduced the pressure on smaller automakers — in the U.S. and elsewhere — to try to compete against GM model for model. I would suggest that a key reason why Chrysler in particular suffered from so many booms and busts was because it vainly tried to be a “full-line” automaker (go here for further discussion).
I think you raise valid points. There would have been lots of tails to such a break-up. And I don’t think it would have spurred innovation because the same uncreative people would be running the show. The U.S. car industry in this period had four different sized companies ranging from small to extra large. But they all ended up making cars with the same quality, content and reach. The problem wasn’t size, it was mentality. Smallness, like largeness, guaranteed nothing.
Paul, the movement in the U.S. to break up oligopolies and monopolies goes back more than a century. It consists of a pretty substantial body of knowledge and argumentation that is to a degree embedded in federal antitrust law and court decisions. I have yet to come across anyone who has argued that breaking up a dominant company “guaranteed” a healthy industry. The point is to create a more level playing field.
Of course, you can disagree with that policy approach. But know that robust anti-trust action against GM generated meaningful intellectual and political support in the postwar period. I think that authors such as Critchlow and Cray did a decent job of discussing this topic.
Steve, I looked at the two links that you provided but have not read the books, so cannot comment on them.
There is a body of historical evidence that suggests that bigness in the auto industry generally led to lower prices for the consumer, and smallness generally led to higher prices.
Given this, perhaps you can help us understand your thinking about the appropriateness of applying anti-trust legislation to say, Ford in 1920 when its U.S. market share had reached 50%. What would have been the purpose and where would the courts or legislators have begun? There was one platform, few body styles, one paint color and a huge plant paying workers an industry-leading $5 a day. Touch any of those elements and prices would have increases and/or wages would have decreased.
Should such action be taken for Apple and Samsung today?
If leveling the playing field was a key element of anti-trust legislation, couldn’t one make the argument that Ford, Chrysler and AMC should have been forced to merge in the 1950s to match GM, rather than GM being broken up? George Mason was trying to do just that on a smaller scale in the early 1950s so surely, he saw merit. And Sloan was doing it the 1920s to catch Ford, and it led to the public benefitting from not only competitive prices but increased product choice. Who had the resources to put an air-cooled engine in the back of an all-new compact car in 1959 to respond to VW? Not AMC.
There is an inherent assumption in anti-trust logic that breaking up a monopoly will lead to increased consumer value. What is rarely, if ever mentioned is that it might just as likely lead to the opposite. Historically, the auto industry has sorted out the merits of size and product variety for itself, and the industry has been anything but stagnant. Smaller cars for example, were always given their day in the court of public opinion. And smaller companies were given their chance to disrupt. In the end, the marketplace broke GM up, as it rightfully should.
One can make an argument that if the government where to have involved itself in anything in the 1950s, it should have been to force Nash, Hudson, Packard and Studebaker to merge. They all wanted to, it was only personal ego that held them back.
Speaking of AMC and Corvair, here’s a 100-inch wheelbase Monza work-up that is smaller than American in every dimension. (Mecum, AACA) Rear legroom would have been severely compromised given the wheelbase loss of eight inches but three small kids could have still fit.
Paul, you hit it. As far as Canada and other foreign markets go, much would depend on how those foreign corporations are structured and how the breakup would affect them. BTW, Chevy/Olds dealerships were common in rural Wisconsin where I grew up in the fifties and sixties. From what I recall Pontiac Canada offered a more or less full US Pontiac line plus a sheet metal engineered Chevy called the Laurentian, I think. Give that to Chevrolet/Canada.
My father was the Johnstown, PA Chevrolet dealer 1950-1965 (first Motor Sales Corporation, later Hallman’s Chevrolet), and my first fifteen years of life were spent virtually living the the dealership. During the early Sixties, the talk of splitting GM into two competing corporations “so the other manufacturers have a chance at competing” was a large subject of conversation at the Paczolt dinner table. Dad was seriously worried about this happening.
In the conversations I remember, the usual feeling is that GM would be split into two companies on a Chevrolet/Cadillac and Pontiac/Oldsmobile/Buick/GMC axis. GM1 would have been an easy split, as both Chevrolet and Cadillac would have just continued as they’d been doing with a probable need to come up with a new marque to fill in the gap in between. GM2 would have taken a bit of work: Pontiac would have downmarketed itself a bit to be their ‘Chevrolet’ while Buick would have had to go upmarket to replace Cadillac. Oldsmobile would have filled out the middle, while GMC would have handled the truck end.
In retrospect, this would have probably been a much better situation for the American car industry. Four more equal manufacturers (plus AMC) would have taken out the huge advantage old GM had (just off the top of my head, I believe the market share at the time was something like 53/24/14 percent – 29/24/24/14 is such a more level playing field). It certainly would have made competition a lot more even, and negated a bit the reach of that 800lb gorilla named Chevrolet.
Would thunk that within 20 years GM itself would save the government all the worrying about uncompetitiveness all by itself?