OLD, STEEL

December 12, 2000: The end of Oldsmobile

December 12, 2019

On December 12, 2000, GM announced the end of Oldsmobile. The oldest automobile brand in the U.S.produced more than 35 million vehicles over its lifespan. The last Oldsmobile rolled off the assembly line on April 29, 2004.

It all began In 1897, when Ransom E. Olds, an engineer from Ohio, founded the Olds Motor Vehicle Company in Lansing, MI. In 1901, the new automaker debuted its first vehicle – Curved Dash Olds. It was advertised as the “lowest price reliable automobile made”, the “Best thing on wheels”, and drivers could get their hands on its steering wheel for $650 (an equivalent of about $19,000 today).

In 1908, the company joined the General Motors (GM) family, becoming its top brand. For most of its life, Oldsmobile was truly a revolutionary marque. In the 1920s, it became the first brand to use chrome-plated trim instead of nickel. In the 1940s, it pioneered the first fully automatic transmission for mass-market vehicles, and enthusiasts received the chance to take the revolutionary “Rocket V8” engine for a spin. Then followed the front-wheel-drive Toronado, and Cutlass, the best-selling car in North America in the 1970s.

But something when wrong, and the popularity of the brand began to slide. Was it due to poor executive decisions? Or Oldsmobile just couldn’t keep up with the foreign competition in terms of quality and value?

What’s your take on Oldsmobile?

{snip}

The Death Of Oldsmobile

originally published - January, 2001



When General Motors announced that they were pulling the plug on Oldsmobile, they were killing an icon. Olds is the oldest surviving car brand in the U.S. - Ransom E. Olds offered his first automobile to the public in 1897. ... Oldsmobile used to be GM's innovation brand: in the 1920s, Oldsmobile was the first car to use chrome-plated trim instead of nickel. ... In 1938, the first fully automatic transmission was introduced on an Olds. The first high compression overhead valve V-8 was to be found in a 1949 Oldsmobile Rocket 88, available in all models, including Oldsmobile's new pillarless hardtop coupe. In 1966, Olds introduced the radical, front-wheel-drive Toronado. In 1974, Oldsmobile was the first U.S. manufacturer to offer air bags as an option. ... Sales peaked in 1985 at 1.2 million cars per year. At one time, the Olds Cutlass was the most popular model of all U.S. cars. In 2000, Oldsmobile sold less than 300,000 cars. So, in December 2000, GM imposed the death sentence.

Why did Olds die? One Wall Street analyst said (of Olds' demise), "GM doesn't have too many divisions. They have too little imagination." Jerry Flint, a noted auto analyst who writes for Forbes, cited indistinguishable styling, uninspired engineering, inexperienced leadership as reasons for Olds marketplace failure. Says Flint, "Oldsmobile has had 6 managers in 13 years - is that any kind of continuity? And the last one had no experience in the car business - her last job was heading up brand management for Alpo dog food."

Here's what happened. In the fifties and sixties (when each GM brand had its own strong identity), Olds was the 'executive innovator'. Oldsmobiles always had the latest bells and whistles and were owned by engineering managers and other prosperous individualists. Doctors drove Buicks; tech people drove Oldsmobiles. In the seventies, as GM lost its way, Oldsmobile became a sort of upscale Chevy. It even had a Chevy engine - no more tech innovation. ... In the 80s, GM's various brands all started to look alike - it was hard to tell an Olds from a Buick or Pontiac - no more 'Rocket 88' swoopy styling - just another 'badge-engineered' GM product. In the 1990s, even the iconic rocket emblem was discarded. Stripped of its individual looks, innovation and personality, Olds found its sales dropping. ... New management decided to reposition itself as a 'Honda alternative'. Huh?!! Honda buyers are brand-loyal consumers who appreciate quality and value. With Olds' lack of brand-identity, not-so-good marks in quality control and relatively high depreciation, this was a hopeless cause from the get-go. And Oldsmobile became a doomed brand. (My observation is that today's tech-savvy car people are now buying Acuras, Audis and BMWs.)

{snip}

General Motors continues to have problems, but I'll leave those for some future discussion. The intent of this article is to apply the lesson from Oldsmobile to your own small business. Olds simply forgot why people bought from them and abandoned the very values which made them attractive. Small businesses sometimes make the same mistake. They build a successful business based on offering customers a certain level of service and then abandon their proven concept at the first sign of trouble. Yes, businesses do need to evolve as markets and customers change. But the key word is 'evolve' - moving with deliberate reserve without losing the core identity or values which made the business successful in the first place. ... There are still 'executive innovators' and they still buy automobiles - they just don't buy Oldsmobiles. The Olds brand no longer appeals to these people - the tech people didn't change; the car did. So Oldsmobile production was discontinued by GM. ... As a business owner, remember the lesson from gigantic General Motors: Don't abandon your core market - or you might end up as doomed as Oldsmobile.

{snip}

GM to Junk Oldsmobile

By Frank Swoboda
December 13, 2000

General Motors Corp. yesterday pulled the plug on Oldsmobile, consigning the nation's oldest automotive brand to the scrap heap of history along with such names as Hudson, Nash, Studebaker and Packard.

The decision to phase out the Oldsmobile division over the next few years was part of a major restructuring by the world's largest carmaker to trim production both at home and in Europe to meet slumping demand and return the company to overall profitability.

To accomplish its goal, GM said it will cut its salaried workforce in North America and Europe by 10 percent, trim production in the United States by 14 percent in the first quarter of next year and close one of its plants in England as part of a much broader plan to return its European operations to profitability.

The result, GM President Rick Wagoner announced yesterday, will be a substantial reduction in fourth-quarter earnings. He said the company now expects consolidated fourth-quarter net income of $550 million to $600 million, and per-share earnings of $1.10 to $1.20. Before yesterday's announcement, analysts had predicted earnings of $1.70 per share for the fourth quarter.

{snip}