Our “Story Ideas Bank” sometimes morphs into debates about specific historical events. George Denzinger recently weighed in on the death of Oldsmobile. This is a thoughtful analysis so I am elevating it to the front page.
In my opinion there were a couple of reasons why General Motors didn’t realize Oldsmobile was in trouble: 1) Things had been going swimmingly up until a couple of years previous. I am sure they felt they could get it right. 2) Dealer agreements. When the end finally did come, it took quite a few cubic dollars to make the dealer body happy. I think dealer agreements were the main reason why most consolidations are so slow in coming.
In some regards, the launching of the Aurora was the last best gasp GM had to rescue Oldsmobile, but it wasn’t comprehensive enough to change attitudes. By the mid-1990’s the Japanese luxury makes had consolidated their marketing power (in a rather short amount of time, too) with their lower lines eating in the space where Buick, Oldsmobile, Lincoln and Chrysler existed. The older part of my cohort (Baby Boomers) were not remotely interested in the re-booted Cutlasses that were being offered. When a Lexus or Infiniti cost a bit more but came with the “luxury” car cachet, why get a lumpen Olds or Buick or . . . ?
Also see ‘Consultants led General Motors astray by calling for less brand autonomy’
Also, the multiple full-line car divisions were become obsolete, but no one seemed to be aware of it. What could you get at Oldsmobile that you couldn’t get at Chevrolet at that time? In fact, many Chevy sales films (for the sales staff) were about how to sell AGAINST other GM divisions! What genius thought this was a good idea? How would this work if you had a multi-line GM dealership? Cannibalize sales from one marque to another? Would the more expensive brand ever win?
If I recall correctly, the 1992 “re-organization” was rather more serious than we knew until some time after it had happened. Like those spinning plate jugglers on the old TV variety shows, I’m sure just keeping the plates spinning was all they could do to keep the enterprise going. I thought it was a shame for them to shut down Oldsmobile in 2004; it had been the oldest continuous automotive manufacturer in the United States at that time.
I had hoped that GM would have mimicked the Lexus sales model, i.e., flagship (Aurora) and mid-priced models (Intrigue, mabye Alero?) with a SUV (Bravada). Ditch the Silhouette and the 88 and 98. By the mid-90s no one remembered those model designations as they hadn’t relevant at least as late as the late-70s. But, they were mired in an old sales model with a line up that hadn’t been working in years. Rest in peace, Oldsmobile.
— George Denzinger
ADVERTISING & BROCHURES:
- oldcarbrochures.org: Oldsmobile (1998)
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What happened to Oldsmobile was the same thing that later happened to Pontiac, and the same thing that had happened to almost all of the British motor industry in the 1970s and 80s…the rampant badge-engineering that was forced upon once-great brands by MBA’s and accountants, who cared nothing about brand equity, but only about spending as little money as possible. A prime example was the substitution of Olds’ own engines in the late 70s with the cheaper Chevrolet engines; GM knew what they were doing was wrong because they never said anything about it until mechanics started realizing that parts for the Olds engines weren’t fitting the Chevy engines…
“Oldest continuous automotive manufacturer in the United States.” Why not capitalize on the prestige of the Oldsmobile name. Infinity had no history. Instead, GM drops all the Oldsmobile styling cues on the Aurora, up to and including the name Oldsmobile itself. A better sales model: flagship(98),mid-priced models(88,Cutlass).Then double down on what worked in the past: Oldsmobile as the sporty Buick.
Welcome to Indie Auto, Al. You make a good point about capitalizing on Oldsmobile’s legacy. Chrysler’s revival of the 300 nameplate illustrates one way to do it.
I remember there was a kerfuffle at that time about the engine switch. However, engines were getting more complex and expensive due to the need for reduced emissions and better mileage. To me, it’s amazing that each division would make engines within a few cubic inches of displacement of each other.
What I recall from the early to mid ’80s was media about the weakness of Buick. Perhaps GM corporate missed the weakness at Oldsmobile because the focus was on fixing another division. Which, by the ’90s it had pretty effectively done. Perhaps at Olds’ expense.
The problem with Olds, Buick, and to a lesser extent Pontiac was by the late 60s the lines were on multiple platform and each brand had to have a car in each platform, sometimes to a bizarre degree with Buick and Pontiac each having two wheelbases on their B bodies. It would be nice to cut back on badge engineering but the dealers would howl. With the brougham era arriving, as many stated what does an Olds 88 or Le Sabre have that a Caprice does not? There was no longer any need for a longer wheelbase to improve a ride and ISTM that by the 90s the idea of a car as a status symbol was fading.
I wonder whether the dialectic around badge engineering is itself a case of industry groupthink. There may be evidence to suggest that one can profitably maintain multiple brands with shared engineering. Hyundai and Kia do this globally in what is effectively the same market class. And in Europe, VAG has some overlap among VW, Skoda and SEAT, while Stellantis has a lot of overlap among Peugeot, Citroen, FIAT and Opel (though it’s perhaps an open question of how successfully).
I rather wonder whether Oldsmobile’s fate was sealed by having the weakest styling among the GM brands during the 1990s. Buick sold an awful lot of cars during that decade despite the weaknesses of GM’s engineering as compared to foreign competition.
I would break down that question a bit. When I think about badge engineering I think of the first-generation Chrysler K-cars, where only minor stylistic changes were made, such as with grilles, taillights, etc. You can’t develop much brand DNA with so little differentiation. Plymouth was arguably a moribund brand because its entire line consisted of badge-engineered cars. What was the point of keeping that brand alive besides preserving a dual dealer network that was arguably too unwieldy for the automaker’s level of sales?
The brand strategy of the K-cars strikes me as in a different league than the way Kia and Hyundai have positioned their products. Although they can be similar in price and size, at least they look significantly different. That doesn’t necessarily mean that a dual-brand strategy was the most cost effective. Could it be that if Kia had not come to American shores that Hyundai might have sold as well as both brands? Of course, we’ll never know because we can’t run a lab experiment, but I think it is a legitimate question.
That caveat aside, let’s consider Hyundai/Kia a success story. One lesson one could draw is that automakers are more likely to be successful with a multi-brand lineup if they make meaningful investments in differentiation. Those automakers who haven’t done so invariably end up with redundant brands that needed to be killed.
Regarding Oldsmobile’s styling in the 1990s, was it the weakest or was its target market the problem? By that point Buick arguably had a more clearly defined market niche. In addition, my understanding is that Buick wasn’t killed during the big GM reorg partly because of its strength in China.
I remember Oldsmobile selling 1 million cars per year frequently between 1976 and 1985. I think the Diesel engine debacle hurt Oldsmobile. I think many highly educated upper middle class consumers started moving to Toyota and Honda after the Accord and Camry increased in size. I think the 1977 B/C and 1978 A body downsizings were highly successful, but Oldsmobile sales collapsed after the 1985 C, 1986 H, and 1988 W bodies debuted. I remember reading an interview with John Rock in one of the magazines, maybe Automobile, where he did want Oldsmobile to emulate Lexus, but I don’t think the Aurora, Intrigue, and Alero turned out well enough. I also think Chevrolet’s moving upscale, starting with the 1958 Impala, the movement of Chevrolet to the B body platform in 1959, and then the Caprice debuting in 1965 also hurt over the long run. I think there just was no place for the medium brands, and I doubt many would miss Buick and Chrysler if those brands were also discontinued.
I’m not sure where Chrysler is now in the heirarchy. With a minivan- A MINIVAN! and a sedan that looked cool in the Bush administration I think they stay in production because it would be too embarrassing to kill what was once their flagship name. I think the only reason Skoda and SEAT survive is they are national brands. For some reason Stellantis keeps adding brands when it snould be cleaning house. Per Steve, the thing about Olds is it was given unique products like the Aurora, a mid=size convertible and IIRC a unique compact that looked like a first generation Saturn. By the standards of the time GM did try.
I would agree that investing in product differentiation is important to a successful strategy of fielding multiple brands in overlapping markets. But even so, there are counter examples. GM’s three current full size SUVs look rather alike and yet still individually dominate their class let alone collectively.
I think the Chrysler K car is not a fair example in any event as clearly Chrysler was trying to brand both products together and market them together, something it did to an even greater extent with the Neon. Avoiding the cost and friction of dealing with legacy dealer networks is clearly not a good enough reason to maintain segment overlapping brands.
But if you can gain incremental sales on the investment in platform and powertrain at a reasonable cost by offering the consumer more choice, the economics could make sense.
I get how one could argue that the minivan’s corporate branding was more important than whether it was called a Plymouth, Dodge or a Chrysler. After all, minivans typically haven’t had much stylistic differentiation. However, what Chrysler was doing in the second-half of the 1970s and throughout the 1980s went well beyond isolated examples of badge engineering. With only a few exceptions, almost very car they made was badge engineered to death.
I used the K-car as but one example, but if you need others, here you go: The 1975 Plymouth Fury/Dodge Coronet, the 1976 Plymouth Volare/Dodge Aspen, the 1977 Chrysler LeBaron/Dodge Diplomat, the 1978 Plymouth Horizon/Dodge Omni, the 1979 Chrysler Newport/Dodge St. Regis, the 1980 Plymouth Horizon TC3/Dodge Omni 024 hatchback, the 1981 Chrysler Cordoba/Dodge Mirada. . . .
Only in the mid-80s did management begin to ease up a bit on badge engineering, but by then they had already decimated the value of their brands. That strikes me as marketing malpractice, particularly when the financial crisis of 1979 gave them the opportunity to phase out the dual dealer arrangement that had been propping up the moribund Plymouth.
The OP includes some strawmen. GM absolutely realized that Oldsmobile was in trouble and that having so many overlapping makes was a problem. They just couldn’t figure out what to do about it given their cost and dealership structures. The root of the problem was that they initially had so many single-line dealers, so everyone needed one of everything as the number of product categories grew from essentially one to somewhere around a dozen from 1960 to 1995.
The solution, which arrived far too late, was to have each dealer carry multiple makes. Once Pontiac, Buick, and GMC were all in one store, each make could focus on models that actually fit its brand image without leaving dealers without suitable products each time the market shifted.
People often forget (or never realized) what happened in the 1980s. Oldsmobile and Buick experienced record sales in the mid-80s because the price premiums they charged relative to Chevrolet had decreased to a fraction of what they had been, partly because increasing parts sharing through the 1970s and into the 1980s meant they cost little more to make than a Chevrolet. People then found it worthwhile to spend a little more to get what had been a considerably more prestigious brand. But since the products were then decontented to make them profitable at prices just a bit higher than Chevrolet’s, the images of the brands suffered, and their sales collapsed in the 1990s.
At the root of all of this was a pervasive cynicism throughout Detroit concerning the ROI of putting more money into a product. It was felt that the typical consumer neither noticed nor would pay for significant additional quality of components or materials, so Detroit did not spend the money to make the mid-priced brands significantly better cars. Instead they left it for the Germans and (to a lesser extent) the Japanese to prove that you could actually charge much more for a car with more expensive engines, suspensions, and materials.
NOVEMBER 24, 2023 AT 8:55 PM
So last week, I acquired a 1991 full-line dealer sales catalogue for the Oldsmobile “Division” of General Motors. Nine platforms and “The Oldsmobile Edge”…should have been the formula for success for the cars that had been the Number One domestic make (1,157,990) in 1986, right ? Wrong !!!!! Like every other G.M. division (except perhaps for Saturn), what was an Oldsmobile ? For 1991, one could have a Ninety Eight, a Toronado or Toronado Trofeo, an Eighty Eight Royale, a Cutlass Supreme, a Cutlass Ciera or Cutlass Cruiser, a Cutlass Calais, a Custom Cruiser, a Silhouette (“The Cadillac of Minivans”*) and the Bravada (with two-door and four-door variations and a book of available trim and feature options)! Poor John Rock…even he could not fix the division ! John Smale and Ron Zarrella did very little to right the ship after the 1992 boardroom coup. Even though the entire Oldsmobile line-up for 1991 had very clean styling down the line, in my opinion, every division overlapped each other with vehicles that were essentially badge-engineered variants except for Saturns and the Corvette. In 1990, total Olds sales were 489,492, decreasing in 1991. No wonder G.M. was in a cash-flow pinch in 1991-1992: Too many models and too many similar cars all at the same price. My question is why didn’t G.M. realize by 1989 that less (much less) was more ?
*-Quote from the character “Martin Weir”, protrayed by Danny DeVito in the 1995 movie, “Get Shorty”.
What they did to try to right the ship was write some big checks. The Alero, Intrigue, and Aurora weren’t cheap to develop. But the products weren’t thoroughly excellent enough to bring in new customers.
The peak 1986 sales came at the cost of Chevrolet’s sales and of Oldsmobile’s brand equity. No matter which way you cut it they were not sustainable. A make couldn’t sell 1m cars a year without near-Chevrolet pricing. And if you have near-Chevrolet pricing you can only afford a near-Chevrolet product and end up with a near-Chevrolet image. Only people who remember what you used to be then buy the cars…until they die.
On the “why didn’t they realize,” they did realize. But you couldn’t take a model away from dealers without them screaming. When gas prices are high, every dealer needs a small car. When the economy is weak, everyone needs an affordable car. When When SUVs or minivans are hot, every dealer needs one of those. And so on.
The ended up with the solution–multi-line dealers serviced by a combined sales organization–but it took them too long to get there. They probably had to wait until a brand was nearly dead before this rationalization was financially feasible.
Hello Michael, it’s been a while since we’ve corresponded. I grew up in a very small Ohio town, we had single line dealers around for decades. In the early 80’s when I moved to the greater Cleveland area, there were quite a few established multi line dealers, many combining domestic and foreign brands together. However, not all of the dealers (especially in smaller population areas) could or would go multi-line, at least in the same corporation. What was the point? There was so much duplication (even then) there was no advantage to getting another 12 MPG V8 compact car. Many domestic dealers wanted a Japanese franchise when we were at the worst parts of the 70’s fuel crises.
As with many issues I’ve noticed with GM, so much of it rests on placating the dealer body. The mistakes made in the 1960’s -70’s-80’s seemingly came home to roost in the 1990’s and 2000’s. I can’t imagine some of these small town operations “kowtowing” to Detroit’s demands for better facilities and increased customer service. Each state’s dealer franchise laws don’t seem to help corporate’s bargaining power. Ask Tesla dealers in Michigan. Oh wait… You can’t… They’re illegal here.
I’m not solely blaming the dealer body for ALL of Oldsmobile’s troubles, but I seriously believe they have a lot more to do with them than the UAW, for example. Like I had mentioned in my previous missive, I’m sure they believed they (GM) thought they could market their way out of it.
Maybe multi-line in the 90’s may have been a good idea, but by then the era of the mega-dealer had arrived. I worked for one back then, they had dealerships in four states in the Deep South. They sold everything and it was all sold on price. It was a race to the bottom and no one was spared. I don’t care what your message was, it was either being undercut or oversold by these dealer groups. Pitting Ford against Nissan against Buick against VW was a lousy game for the manufacturers, but at least the mega dealer was going to come out of it with a sale…
But, back to corporate strategy, not dealer strategy. Somewhere around the 2008 Great Financial Crisis (GFC), the powers that be at Chrysler decided to consolidate all of it’s dealers to full line dealers. Everyone would get Chrysler, Dodge and Jeep lines. no stand-alone dealers, etc. The GFC and bankruptcy helped to cut the deadweight out of the retail chain and force some franchisees to either merge or get out of the new car business completely. In order for Oldsmobile to do something similar in the 90’s without the assistance of a GFC type of event or corporate bankruptcy to help it along, was highly unlikely.
I think that Olds in the 90’s had the same problem as Chrysler in the 2010’s; the product was not compelling and marketing was giving out mixed messages. A similar situation to Toyota’s Scion division, each new model they rolled out were not as well received and sold worse than previous models. Except that Scion had not been around at the invention of the automobile and did not have a heritage of innovation that Oldsmobile (or Chrysler for that matter) did. It seemed to be only a marketing vehicle (Pun intended).
Nice hearing from you again, Michael.
Thanks again, Steve for “promoting” one of my posts. It’s greatly appreciated.