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.)
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.
2004 Update: The last Oldsmobile, a burgundy-looking (officially described as metallic cherry red) Alero sedan, rolled off an assembly line on April 29, 2004 in Lansing, Michigan - the same city where the brand was born. It is on display in Lansing's R.E. Olds Transportation Museum.
Meanwhile, General Motors has invested over $5 billion in the Saturn plant. Add in all of the product development and marketing expenses for Saturn and the total investment-to-date figure is probably closer to $10 billion. GM continues to throw money at Saturn. Yet, this 13-year-old GM brand has never earned a profit. USA Today reported, "Today, Saturn sells less with three models than it did in its peak year, 1994, when it had just one car to offer."
One has to wonder what would have happened if GM had invested all that money in Oldsmobile instead of Saturn. With proper design, serious quality control upgrades and a return to its 'position' as a stylish, technically-innovative performance car, Oldsmobile might well have stemmed the tide of luxury and near-luxury imports, offering a serious alternative to Acura, Audi and BMW. And made a profit for General Motors.
But, now that GM has euthanized the Oldsmobile brand, we'll never know.
PS: I've only owned one Oldsmobile in my lifetime. Read about it here.
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If I have slandered any brands of automobiles, either expressly or inadvertently, they're most likely crap cars and deserve it. Automobile manufacturers should be aware that they always have the option of trying to change my mind by providing me with vehicles to test drive.
If I have slandered any people or corporations in this blog, either expressly or inadvertently, they should buy me strong drinks (and an expensive meal) and try to prove to me that they're not the jerks I've portrayed them to be. If you're buying, I'm willing to listen.
Don't be shy - try a bribe. It might help.