Over the last few days we’ve had a mini-seminar on Packard’s decline in the comment thread of the story, “1956 Packard booklet hints at how James Nance got too big for his britches.” Geeber took the time to write a lengthy comment that responds to a link to some essays by Ralph Kalal.
The Ralph Kalal articles are interesting, but he ignores the 1910s and 1920s, which were crucial decades in Packard’s history, and are important to understanding the company’s mindset.
Prior to 1930, the main struggle in the luxury market was not between Cadillac and Packard. It was between Packard and Pierce-Arrow. Packard trumped the latter with the introduction of the Twin Six in 1915, which was the first volume-production V-12. Packard’s V-12 was viewed as a tour de force, and moved the company ahead of Pierce-Arrow in image, which clung to its outmoded sixes for far too long.
But Packard also moved down market with the Single Six, which was introduced in 1921. It wasn’t immediately successful, but a quick facelift and the introduction of a longer wheelbase version (along with an economic recovery that began in late 1921) quickly boosted sales. Pierce-Arrow tried to meet this challenge, but never really did. By 1929, it was forced to sell out to Studebaker, as it lacked the funds to develop the desperately needed new models. (The sale to Studebaker gave it the resources to do so, and the resulting Pierce-Arrows initially boosted the company’s sales to record levels. But then Studebaker went into receivership, and had to sell Pierce-Arrow to raise some quick cash. On its own again, the company could not survive.)
Packard sales were quite impressive prior to 1930 for a luxury marque, and a large part of those sales were generated by the less expensive models, which competed in what we would today call the “near luxury” market.
Packard had thus pursued a dual strategy before 1935 – it relied on lower price cars to generate the sales that paid the bills (and kept the dealer body robust), but simultaneously produced true luxury cars that bolstered its reputation, and thus sold quite a few Single Sixes.
It seems as though Packard had briefly abandoned this approach by 1930, when it sold only luxury models. With introduction of the 120, Packard was only reverting to the strategy it had pursued during the 1920s. That was probably why Macauley didn’t immediately phase out the senior models, even if they did lose money. He realized that the prestige and image of the senior models sold those junior Packards – much as the Twin Six and then the Single Eight sold plenty of Single Sixes in the 1920s.
Also note that Packard dominated the upper reaches of the market even in the late 1930s. Packard’s V-12, for example, outsold the Cadillac V-12 and V-16 combined. Packard was the most popular choice for wealthy customers who wanted a custom body. Abruptly walking away from this market, as Kalal suggests, would not necessarily have been a wise choice – unless there something immediately available to fill that void.
Another factor to consider is that, during the 1920s, there was DOWNWARD pressure on auto prices. Henry Ford I kept cutting prices on the Model T, and other manufacturers were adopting mass production techniques, both of which put downward pressure on prices. Customers were not cross-shopping Ford Model Ts with Packard Single Sixes, but Ford’s price cuts were triggering price cuts in market segments higher up the food chain, so that dynamic was bound to affect Packard and other luxury car manufacturers. A business strategy that was based on building expensive cars without regard to cost, and then tacking an extra amount to the final price to ensure a profit, wasn’t going to succeed for long in that type of market – even without the onset of a severe economic contraction. Note that Pierce-Arrow and McFarlan were in trouble even before the Great Crash of 1929.
Postwar, Packard tried to follow the strategy it had pursued in the 1920s and between 1935-42. The problem was that the cars simply were not competitive with the class-leading offerings from Buick, Cadillac and Oldsmobile. By 1951, Packard was yesterday’s news – a company relying on past glories to peddle what was a perfectly acceptable, but nothing special, product. Meanwhile, Oldsmobile and Cadillac had advanced, world-class drivetrains, and all three GM marques had Harley Earl styling, which fit perfectly with the optimistic postwar mood. The buyers would not be the old-money people who had bought Packards, but the younger, more energetic class of self-made professionals who had won World War II, and who wanted hardtops, high-compression V-8s and flashy styling.
Unfortunately, Nance did not have enough time and money to turn this around, and he botched key decisions (moving all production to the Conner Avenue plant).
— Geeber
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Thank you! I have wondered if Packard should have kept its commercial truck business, which it phased out in the 1920s. If I recall correctly, commercial truck sales did not vary as much from year-to-year as car sales did in the 1930s and even the 1950s. A strong truck business could have also brought Packard additional defense contracts during World War II, and perhaps beyond.
If I had to pick the main error Packard management made, it would be the decision to completely outsource its body production to Briggs. That put the company at the mercy of an outside supplier for a major component. After Briggs was sold to Chrysler, and Packard faced the loss of its body supplier, it did not have the money to bring production of its bodies back to East Grand Boulevard. The decisions made by Nance in response to that loss played a large role in sinking the company.