Jack Mueller’s book on Kaiser-Frazer weighrd in on the question of why General Motors did not end up selling the automaker its Rocket V8 engine. He pointed to evidence that the Oldsmobile Division initially showed an interest in doing so but negotiations fell through when the start of the Korean war resulted in government restrictions on automotive output for civilian use.
“One of the early restrictions was a ban ‘for the duration’ on plant construction that was intended to produce civilian goods only. As things sat, there was enough capacity to supply Oldsmobile’s needs, but not enough to sell the product on the outside.
GM could go through with the expansion program, but critical production machine tools would not be available through normal channels. Good used items could fill the bill, but they would be costly, perhaps even more costly than new equipment. Building materials was another tough spot. General Motors would have to pay substantially more than first estimated to go through with the expansion in 1951.” (2005, p. 108)
Meuller added that the only way to cover the extra costs was to increase the price on the engines. “As desperate for a V-8 as Kaiser-Frazer was, they had to be able to sell the cars at a profit. The deal was put on hold” (2005, p. 108). So Kaiser walked away because of a price hike?
Did Olds really not have enough production capacity?
Mueller’s narrative sounds like a logical series of events, but I would question his contention that GM was motivated to help keep Kaiser alive because “if the independents fell by the wayside, the government would start looking at GM as a potential monopoly” (2005, p. 207).
To the degree that this was the case, I suspect it was more likely during the Truman administration than later when Eisenhower was elected president. GM did not show a whole lot of restraint in 1954, when its Chevrolet Division engaged in a knock-down, drag-out price war with Ford that arguably played a crucial role in undercutting the viability of remaining independents.
Also see ‘The redesigned 1951 Kaiser was not quite anatomically correct’
I also wonder whether Oldsmobile needed more production capacity in order to sell V8 engines to Kaiser. In 1950 its output of V8 models was roughly 375,000 units. Over the next four years the brand built well below that number: 1951 (roughly 286,000), 1952 (213,000), 1953 (334,462) and 1954 (354,000). Only in 1955 did production soar to more than 583,000 units.
Meanwhile, Mueller stated that the initial Kaiser purchase order called for up to 45,000 V8s beginning in the spring of 1952 (2005, p. 207). By that point Oldsmobile’s sales were low enough that it could have easily absorbed that amount with lots of room to spare. In addition, Kaiser’s sales had fallen off to the degree that it was questionable whether it would have used up its quota.
Would a V8 engine have saved Kaiser?
Offering a V8 might have softened Kaiser’s decline, but Studebaker’s experience suggests that it would not have been a panacea. That automaker introduced its own V8 in 1951 yet saw a 69-percent decline in production by 1954.
Kaiser likely would have seen a steeper fall given its weaker dealer network and older product line. Indeed, as Mueller documented in his book, the automaker’s financial situation was deteriorating rapidly. It’s not surprising that Kaiser was the first independent to seek a merger.
So in the end, I don’t think a lack of a V8 was one of the biggest factors in Kaiser’s decline. However, I would still question GM’s rationale for reportedly jacking up the price tag on a Rocket V8.
It’s possible that GM was stuck on production projections that were overly optimistic. However, I could also see upper management deciding that they didn’t want to give Kaiser a leg up. In other words, I am not categorically rejecting Mueller’s argument but think that it could be fleshed out some more — and perhaps given some caveats.
NOTES:
Production figures are from the auto editors of Consumer Guide (2006), Gunnell (2002) and Langworth (1975).
RE:SOURCES
- Auto editors of Consumer Guide; 2006. Encyclopedia of American Cars. Publications International, Lincolnwood, Ill.
- Gunnell, John; 2002. Standard Catalog of American Cars, 1946-1975. Revised 4th Ed. Krause Publications, Iola, WI.
- Langworth, Richard M.; 1975. Kaiser-Frazer: The Last Onslaught on Detroit. Princeton Publishing, Princeton, NJ.
- Mueller, Jack; 2005. Built To Better The Best: The Kaiser-Frazer Corporation History. M.T. Publishing Company, Evansville, Indiana.
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