The 40 Year Decline of the American Automobile Industry: Some of the Wrong Products of the 2000s Leading Up to the 2007-9 GM and Chrysler Bankruptcies

The 2001 Pontiac Aztec -- One of the most maligned vehicles of its day. But it met all internal organizational goals in its development!

The 2007 Pontiac Solstice. A vehicle with hydroformed body parts, but when all is said and done, a parts bin car. Poor rear visibility when the top was up. A slush-bus of  transmission. A Bob Lutz project that failed. Pontiac Davison’s last gasp before death.

Jeep Compass. An Ugly Duckling.

Chrysler Sebring. I rented one of these cars -- a convertible -- when at a conference. It was a poorly handling pig with all kinds of issues. But when in sunny San Diego with the top down, who cares!

The Chevy Aveo -- a Koren crap car if there ever was one.

The Chevy HHR. I rented on of these in Austin, Texas, once. I sort of liked the ugly bugger.

The Plymouth Prowler. A bizarre cartoon car. It certainly will gain the attention from folks around you, but the statement it makes is far from complimentary.

The Great Recession, the G.M. and Chrysler Bankruptcies of 2007-2009, and Recovery

            The Great Recession, with its foreclosures, personal bankruptcies, lost jobs, and closed automobile assembly factories, started with a slowing of auto sales after a banner year in 2005, during which almost 17.5 cars and light trucks were sold (see table). Afterwards, a foreboding trend reappeared, one that the American industry had experienced during the late 1950s, the late 1970s, and early 1980s – the remarkable rise in the sale of “pure” imports. These vehicles were not cars made at the transplants, and they increased significantly from 19.7 percent in 2005 to 26.1 percent in 2008.⁷²Concurrently, credit tightened. Since some 90% of all automobile purchases were made with loans – that development also contributed to a marked decline in U.S. production. $4.00 per gallon gasoline prices also caused a drop in consumer confidence. It turned out to be a perfect economic storm directed at a fragile industry. In 2007, prior to the steep downturn, union pension and healthcare costs as well as post-employment benefits were addressed with the formation of a voluntary trust employee benefits association that also provided for a lower entry wage of $14.20 per hour for up to 20% of the UAW workforce. But it was too little a cost-saving measure, too late. 

By the end of 2008 the Detroit Three were running out of cash and G.M. and Chrysler faced imminent bankruptcy. The outgoing Bush administration, led by Treasury Secretary Hank Paulson, responded with a Troubled Asset Relief Program (TARP) loan. A stopgap, it kept the threatened firms alive, and acted as an important bridge between the outgoing Bush and incoming Obama administrations. In the meantime, massive job losses followed. Employment at automobile assembly plants dropped from 185,800 to 123,400 and in parts plants from 607,710 to 413, 500. By 2009 only 10.6 million American-made units were sold, and recovery to 2005 levels did not occur until 2015.

After President Obama took office, a taskforce at the Department of Treasury was created with bankers Steven Rattner and Ron Bloom emerging as its leaders. Congress proved as ineffectual as auto industry leaders in reaching a compromise agreement. Conservatives wanted the industry – and especially organized labor – to pay a price for a government bailout, while liberal legislators favored a more lenient approach given the huge economic and social ramifications if the industry were to fail. In the end, both G.M. and Chrysler went through managed bankruptcies. G.M. was forced into bankruptcy with a 61% taxpayer ownership. G.M. also had a new chairman and four new board members who were appointed by the federal government. To allay consumer fears, the government backed warranties and President Obama created the Cash–for-Clunkers program to stimulate demand. Ed Whitacre, formerly at AT&T, was persuaded to come out of retirement to head G.M., followed 9 months later by Dan Akerson, formerly CEO at Nextel and then the Carlyle Group. Ford, securing a credit line during the first half of 2008, avoided government intervention in their business operations, and since 2011 has recovered nicely with annual profits ranging between $6.2 and $8.3 billion. Chrysler recovered but now is under the control of the Italian car company, Fiat.  

G.M. has endured several crises since 2009, including one involving a faulty ignition switch. It thrives, in part because of its operations in China, where its Buicks are preferred as desirable vehicles, along with Audis and Porsches. Geographically, the post-Great Recession U.S. automotive industry now has two areas of concentration within the I-65 and I-75 corridor. Above US 30, cutting east to west between Ohio, Indiana, and Illinois, the auto assembly scene is dominated by the Detroit Three and suppliers; below it are the transplants with their headquarters in Japan, Korea, and Germany. 

From the perspective of organized labor, the UAW is no longer what it once was, neither in the sense of its power during the 1950s nor its obvious weaknesses after the mid-1970s. In 2015 industry analysts Joel Cutcher-Gershenfeld, Dan Brooks, and Martin Mulloy concluded, “The UAW transitioned from a union that primarily threatens to withhold labor to one that primarily enables work. Union brings expertise to discussions of quality, safety, productive and preventative maintenance, workforce development, and team based operations.”⁷³ In sum, the UAW has experienced a new role and resurgence by finding purpose in a new business environment.  

The Historical Archives at Mercedes-Benz

Mercedes-Benz Classic archives in Fellbach. Commission book with orders from Emil Jellinek from 1902. (Photo signature in the Mercedes-Benz archives: A92F1148)

Mercedes-Benz Classic archives in Fellbach. Documents on the 1955 Mille Miglia, which Mercedes-Benz wins overwhelmingly – the overall victory is taken by Stirling Moss and Denis Jenkinson with the 300 SLR (W 196 S) in the best time ever achieved at the Mille Miglia. (Photo signature in the Mercedes-Benz archives: D335303

Mercedes-Benz Classic archives in Fellbach. Collective volume of the automotive journal “Motor”, 1914 issue, from the archive library. (Photo signature in the Mercedes-Benz archives: D335282)

History must be alive and tangible – this is what the archives and the collection of Mercedes-Benz Classic with their services stand for in particular. The archives are the memory of the worldʼs oldest car manufacturer and offer – digitally as well as on site – important services for the company itself as well as for users from science, media and other fields. The tradition of todayʼs archives goes back 85 years: on 9 December 1936, the then Daimler-Benz AG publishes its Administrative Order No. 1145, which instructs engineer Max Rauck to “collect and examine our historical literature and photographic material for the purpose of establishing and managing an historical archive”.

For many years now, Mercedes-Benz Classic has maintained one of the largest business archives in Europe, and one of the most rich in tradition. In addition to the considerable holdings of classical archival materials, digital media have long been of great importance. These facilitate research via fast and worldwide access and make the archive holdings perfectly utilisable for todayʼs uses – whether as text documents, photos, films or sound files. The corporate institution has been engaged in digital indexing for a quarter of a century: “Classic M@RS: the digital archive” began some 25 years ago and, constantly keeping pace with advances in information technology, continues to set database standards.

Historical competence for the company

The archive holdings also form an important basis for the work of the Mercedes-Benz Museum. This is because they create the context for the presentation of cars from the Mercedes-Benz Classic collection of more than 1,100 vehicles and other exhibits. The sources are also essential for the historical communication of Mercedes-Benz Classic and for the work of the Classic Center: communication uses sources such as price lists, brochures, posters and press kits, but also Board minutes and technical logs, for example, to bring the history of a vehicle model series to life in the context of its time. Historical photographs, illustrations, artifacts and films from the archives also serve to let the fascinating stories in the long history of the Group shine. The products of this multimedia historical work include, for example, the DVD series “Magic Moments” on the motorsport history of Mercedes-Benz.

The Classic Center draws on the knowledge contained in the archives for authentic restorations and repairs, among other things, as well as for its expert opinions. These document the individual history of particularly high-quality Mercedes-Benz classics. The expert reports are recognised in the market for classic cars as documents with a high degree of significance regarding the originality and authenticity of vehicles from the brand with the three-pointed star. The documents include information from the data cards, which make it possible to trace the original state of delivery for almost every Mercedes-Benz car produced since 1946. For vehicles built before the Second World War, there is corresponding information in the commission books.

History in constant change

Based on their sources, the experts answer around 1,600 enquiries on product and company history each year from academia and the media as well as from other groups of people interested in classic cars. In the process, there is always new information. Because 85 years after its foundation, the archives of Mercedes-Benz Classic are constantly changing.

The ongoing indexing of the holdings contributes to this: last year, for example, signed autograph cards of famous racing drivers from Rudolf Caracciola and Hermann Lang to Luigi Fagioli, Louis Chiron and Manfred von Brauchitsch were newly recorded. Previously unknown photographs of the racing driver Sir Stirling Moss, who died in 2020, and his contemporary Juan Manuel Fangio are also among the archival material currently being made accessible. In the current year 2021, the organisational adjustment of the archives is pending due to the division of Daimler AG into Mercedes-Benz AG and Daimler Trucks AG.

High value from the beginning until today

The order signed by the companyʼs Board of Management makes the high value of the new facility 85 years ago very clear: the archivist is to be supported by “all agencies of our company”, also by “pointing out material still available in their field of work and procuring access to it”. There is an important historical occasion for the date of the archiveʼs foundation, as in 1936 Mercedes-Benz celebrated the 50th anniversary of the invention of the car in 1886 by Carl Benz. Daimler-Benz AG itself, created in 1926 by the merger of Daimler-Motoren-Gesellschaft with Benz & Cie. in 1926, was only ten years old at the time. The new archive will provide sources which help document the pioneering roles of Carl Benz and Gottlieb Daimler as automotive inventors as well as the development of the company and its products since 1886. The responsibility for the archive is given to the Exhibitions Department.

In the year the archive was founded, the company also set the course for todayʼs Mercedes-Benz Museum and the Mercedes-Benz Classic collection: the existing stocks of historic vehicles and engines are collected and presented in newly created rooms at the Untertürkheim plant. In 1938, the first “Guide to the Untertürkheim Museum of Daimler-Benz AG” was published. The current Museum in Stuttgart-Untertürkheim, the archives in nearby Fellbach and the collection depots are physically separate. However, close cooperation links the institutions.

One of the most important business archives in Europe

From its foundation until today, the former Mercedes-Benz Archive has developed into one of the largest private business archives in Europe, and one of the most rich in tradition. The holdings in the corporate, product and media archives include documents from the company and product history, which take up around 17 kilometres of shelf space. Other archival materials are housed in special cabinets as well as in display cases.

In addition, there are more than 4.5 million photos, over 10,000 film documents and the large archive library. Highlights include, for example, the first car driving licence in world history and early patent specifications as well as commission books dating back to the early days of the company. Holdings on outstanding historical personalities such as Mercédès Jellinek, who gave her name to the Mercedes brand, add further highlights.

The Mercedes-Benz Classic collection comprises more than 1,100 vehicles from the entire history of the company. These cars, ranging from series-production passenger cars to racing cars, can be experienced in the permanent exhibition and special exhibitions of the Mercedes-Benz Museum, among other places, as well as time and again in driving action at international classic automotive events.

Social responsibility

The establishment and operation of the Mercedes-Benz Classic archives is also social responsibility in action for the company. As the worldʼs oldest car manufacturer has been preserving key documents of mobility, industrial and social history since 1886 for future generations. In 2011, Carl Benzʼs patent for his pioneering “vehicle with gas engine operation” was included in the Memory of the World of the United Nations Educational, Scientific and Cultural Organization (Unesco). Here, the patent of 1886 ranks right next to testimonies such as the Gutenberg Bible, the Nibelungenlied and the Magna Carta.

The first steps towards building an archive were taken in 1933. At that time, Dr Wilhelm Kissel, member of the Board of Management of Daimler-Benz AG since 1926 and later Chairman of the Board of Management from 1937 to 1942, ordered the collection of historical material. The advertising centre in Untertürkheim was to take care of the storage. Three years later, the decision was made to establish an archive in the true sense of the word. As examples, the then Daimler-Benz AG also uses company archives of other renowned companies that have been documenting their history in this way since the beginning of the 20th century – e.g. Krupp (since 1905) and Siemens (since 1907).

The archive holdings are initially stored on the ground floor of the canteen building at the Untertürkheim plant from 1936. After the temporary closure of the Historical Department during the Second World War in 1942, the documents are housed in rented rooms at the J. F. Schreiber company in Esslingen. On 30 April 1944, parts of the historical archive are relocated to the “Karl” ore gallery near Geislingen/Steige, among other places, for additional protection against the effects of war. Parts of the vehicle collection are also housed in mine tunnels. The archival holdings are returned to Untertürkheim in 1948. At that time, the archive – since 1 January 1947 – was once again under the control of the Exhibitions Department, which was headed by Paul Siebertz from 1947 to 1953. In November 1953, the archive is attached to the companyʼs main secretariat.

The path of history into the future

In January 1953, Dr Friedrich Schildberger joined Daimler-Benz AG as an employee of the archive, and then took over its management after Siebertzʼs death in February 1954. Schildberger, a historian of technology, presents neutral, technology-orientated, factual arguments, and asserts a scientific claim. In 1954, the archive is placed under the management of Dr Hanns Martin Schleyerʼs Central Administration Division. In 1957, the archive and the Museum were finally merged organisationally.

Since then, the archives of Mercedes-Benz Classic have been developing continuously and together with the company. Among other things, eyewitness interviews with retired executives were conducted from 1979 onwards. To mark the centenary of the car in 1986, the documentary “Daimler-Benz AG in the years 1933 to 1945” is shown. With the scientific investigation of its own history during National Socialism, Daimler-Benz is one of the first companies to dare to take this courageous step into the public eye at the time. In 1991, the Mercedes-Benz Archive launched the “Stuttgart Days on Automotive and Corporate History”. They promote historical debate in the automotive industry through an interdisciplinary dialogue between academics, publicists, experts, journalists and those interested in history.

The great constant in 85 years of dealing with the history of Mercedes-Benz is the vibrancy of the story. This is also made clear by newly opened archival records in 2021, which provide fresh perspectives on the past: e.g. a photo album of racing driver Hermann Lang and a cigarette case of boat racer Hermann Weigand with a picture of the Daimler racing boat “Lieselotte” as well as other original vehicle brochures, which are now available in the archives’ holdings

A Film Tribute to Stirling Moss and the Mercedes-Benz 300 SLR

Farewell to a legend: “The Last Blast” short film follows the unparalleled drive of the famous Mercedes-Benz 300 SLR “722” in a London tribute to Sir Stirling Moss

 “Who do you think you are? Stirling Moss?” This, so the story goes, is what a policeman asked the legendary British racing driver following a particularly ‘daring’ overtaking manoeuvre on the streets of London. “Yes sir, I am” was the honest reply.

There’s a nod to this legendary tale – and a number of other aspects of Moss’s life and career – in “The Last Blast”, a new short film by Mercedes-Benz Classic. A police motorcycle outrider admonishes the over-enthusiastic driver of the very Mercedes-Benz 300 SLR made famous by Moss’s win in the 1955 Mille Miglia race. As the camera zooms in on the front wing of the bike, we see a sticker bearing the famous question.

With this, part of a police-escorted drive across central London, ‘The Last Blast’ celebrates the life of Moss, who died on 12 April 2020 at the age of 90. Filming took place at the end of September 2021 in London – where he lived for more than 60 years – yet somewhere the famous Mercedes-Benz racing car, with its legendary Mille Miglia starting number of 722, has never been driven before.

But while the Silver Arrow is the visible star of the show, there’s an invisible one, too: the late racing driver himself. In this very car, together with navigator Denis Jenkinson, he achieved a famous victory for Mercedes-Benz in the 1955 road race from Brescia to Rome and back. And it is in Moss’s honour that the company had the straight-eight engine howl for one last blast on a drive across central London before the car is retired, returning to its permanent home in the Mercedes-Benz Museum in Stuttgart.

The result is a moving three-and-a-half minutes of film. The starting point of the drive, very early one Sunday morning, is The Temple. It then takes in the Houses of Parliament, Trafalgar Square, the Royal Automobile Club and the The Ritz hotel. On the way, “722” passes what was Sir Stirling’s very own 300 SL “Gullwing” – the car in which he travelled from London to the Mille Miglia in 1955. Its drive through the city ends in front of Moss’s own home in a Mayfair mews. There, his son, Elliot Moss, stands in front of the door and looks at the watch on his wrist, which his father wore for many years. It’s exactly 7:22 am, the original start time of Moss and Jenkinson’s Mille Miglia entry and the reason for the car’s racing number. The 300 SLR rolls to a halt one final time, and its engine is switched off.

This is Mercedes-Benz Classic’s tribute and thanks to Sir Stirling Moss who dedicated decades of service to the brand. And also to his family, for the unwavering support they showed him, and for their personal involvement in this very special film project.

Factsheet for “The Last Blast”

• Feature-film cinematography and production 
  • Drive with the Mercedes-Benz 300 SLR (W 196 S) through London
  • Designed to honour Sir Stirling Moss and ‘his’ 300 SLR number 722 from the 1955 Mille Miglia road race
  • Multiple references to the life and work of the British racing driver
  • Also a farewell tour for this original 300 SLR racing sports car before it returns to the Mercedes-Benz Museum: it has also made guest appearances at the Goodwood Festival of Speed, the British Grand Prix and the Goodwood Revival in 2021
    
    
• Elaborate film work 
  • Filmed on a Sunday morning with around 50 cast and crew
  • Eight police motorcycle outriders on duty
  • Renowned production advisers INP Media Limited and Samuelson Wylie Associates with considerable Hollywood action movie experience
  • Helicopter shots by the team best known for their aerial work for the James Bond franchise, as well as for flying under Tower Bridge for the 2012 Olympics Opening Ceremony film
  • Preparation of the 300 SLR by Mercedes-Benz Classic
  • Special permits for trucks entering London

• Media mix and period of playout 
  • planned channels: TV and the established worldwide Mercedes-Benz social media channels

When Automobile Showrooms were really Showrooms! 1951 Studebaker for Christmas.

 

Thanks to Ed for the photo!

Until the coming of the auto malls, many dealers were very much a part of communities and were located where foot traffic was present. Today one typically drives up to the dealer and one only rarely looks in the showroom, perhaps only when the dealer is closed.

This is a magnificent scene, reflective of an age gone by.

An American Automotive History Essay Question. Can you answer it?

 To be included in a take home exam, Fall semester, 2021, HST 344, “The Automobile and American Life.”

I.               Essay (50pts.). Be as factual and detailed as possible in crafting a well written and organized answer, with both an introduction and a conclusion.. Rely on the assigned textbook and Isidore PowerPoints as your reference, as this is not a research question.

 

Whether the Automobile Age in America ended after 1970 or not remains an open question. Whatever the case, however, the domestic industry faced several serious challenges during the next 40 years, including foreign competition, federal government regulation, Oil Shock I (1973), Oil Shock II (1979), and the Recession of 2008-9. As a result, the “Detroit Three” declined significantly in market share and prestige. You are to examine the first phase of this “gathering storm,” beginning with the late 1960s and ending in the early 1980s.

 

Your essay should consist of the following.  

1)    Focus on the period 1968 to the early 1980s.

2)    Discuss the various political and economic disruptions along with the industry’s vulnerabilities and response. You should include (not particularly in the following order):

a.     a discussion of the impact of federal government regulation related to safety and emissions, and industry response.

b.     The ramifications of Oil Shock I and II must be discussed in some detail.

c.     Discuss the quality and market fit of 1970s American vehicles.

d.     Contrast Japanese and European automobiles with American brands. In particular, what were some reasons for the spectacular rise of the Japanese Industry?

e.     How did Lee Iacocca’s leadership and the federal government save the Chrysler Corporation?

3)    Finally, how was this period represented in films about automobiles and trucks? What does the story of the automobile industry and film from this time say about American identity?

 

The World’s Oldest Existing Truck?

• Daimler motorised truck from 1898, the world’s oldest existing original truck. View of the right side.
• 
• Daimler motorised truck from 1898, the world’s oldest existing original truck. View of the right side.
• 
  
The world’s oldest existing truck
• Significant further development compared to the first truck from 1896

 In the spotlight this time: the Daimler Motor-Lastwagen, or motorised truck, from 1898.

: Daimler motorised truck, 1898:

The Mercedes-Benz Museum presents the world’s oldest original truck in its permanent exhibition. It is the Daimler Motor-Lastwagen from 1898, built by Daimler-Motoren-Gesellschaft (DMG). Its payload is 1.25 tons – considerable for the time. The two-cylinder engine develops 4.1 kW (5.6 hp) at 720 rpm from a displacement of 1,527 cubic centimetres.  So little engine power for this weight!

How does this early transport pro cope when fully laden? Quite simply: not quickly, but steadily. The maximum speed is only 12 km/h for the empty truck anyway. Breweries were among DMG’s first commercial vehicle customers: twelve beer barrels, each containing around 60 litres, can be carried to the inn by the truck, which dates from 1898. The fact that it only travels slowly through the streets with this load is something it has in common with the breweries’ horse-drawn carts. However, it takes a lot of effort on the part of the teams. The Mercedes-Benz Vito operates in its forebear’s weight class today, while the Sprinter covers it even more effortlessly. Both are much faster.

Transport in 1898: Just two years earlier, Daimler-Motoren-Gesellschaft had sold its first truck to England. The car itself is only twelve years old. Cars and trucks on the roads of the time? Extremely rare. Especially in cities, horse-drawn carriages are still used to transport people and goods. The movement of goods over long distances, on the other hand, tends to be handled by rail or ship.

Economical logistics expert: This is exactly the situation when the Daimler motorised truck arrives on the scene. Its field of expertise is the flexible and reliable transport of heavy goods, initially mainly within cities or on shorter overland routes. The purchase pays off for the carter because the truck is cheaper to maintain than a stable full of four-legged horsepower. In addition, he can expand his delivery area, because even a fully loaded truck is still faster than an equivalent horse-drawn vehicle. Profitability and market development: these are still important purchasing criteria for commercial vehicles today.

Sophisticated technology: A large loading platform on wooden wheels with an internal combustion engine – this is a simplified description of the Mercedes-Benz Museum exhibit of the vehicle from 1898. This truck is completely tailored to its tasks. Although it is only two years younger than the first truck, delivered in 1896, its technology has already been significantly developed and the basic characteristics of certain key details remain much the same to this day. For example, the engine is now located at the front underneath the driver’s seat, and the truck is steered via a steering gear instead of chains. The power transmission via pinion in the wheel anticipates the modern outer planetary axle. Highly sophisticated features for 1898, too, are the efficient engine cooling by means of a tubular radiator, and three brakes, which act on both rear wheels as well as on the belt pulley. Brakes only on the rear axle remain common for many years.

Work tool: Other details reflect its character as a commercial vehicle, for the focus is on transporting the load and not on the comfort of the driver. Without a cabin, he is exposed to the wind and weather. But he shares this fate with the carter on the horse-drawn vehicle and, like him, usually has a cape and horse blanket on his bench behind the horizontal iron steering wheel for protection. In any case, the driver already benefits from the Daimler truck’s sprung axles, with leaf springs at the front and coil springs at the rear – although these are designed, above all, to protect the load and engine from vibrations.