The Rise and Fall of Postwar Independent American Car Companies
For over a hundred years, cars have played a fundamental role in everyday life, taking people to and from their desired destination. Brave entrepreneurs have turned the automobile industry into one of the biggest money-makers of the twentieth century. Many American men were attracted to the prospect of owning a car brand, so independent car companies became popular after World War II. Independent American car companies played an important role in the Postwar economy. Although most independent car companies have disappeared from the marketplace, a new electric independent car company is trying to forge its identity in the 21st century. Tesla, while investors and consumers alike are intrigued by Tesla’s cars, the company is doomed to fail like its predecessors.
At the beginning of the 20th century, the automobile was first introduced to the general public. Many car companies were founded during this time by confident entrepreneurs taking a bet on a relatively new idea. These companies were called “Independent Car Companies,” meaning unlike General Motors or Ford, only produced and sold cars under one brand or name. Companies like Ford were not independent because they produced Fords, Lincolns, Mercurys, and for a brief time, Edsels. The independent companies were not highly successful, dwindled in World War 2, leaving only a few surviving independent companies (Orphan Car Club). One of these was Studebaker. Studebaker was founded in 1853 by the Studebaker brothers as a wagon and carriage company. Seeing the potential in automobiles, they switched to making cars in 1899. Packard was another independent brand founded in 1903. In 1903, Packard’s manufacturing plant in Ohio produced 400 automobiles. The company found success in the beginning of the 1900s, leading the way for more companies (Daily Kos). Five years later, the first Willys-Overland manufacturer was founded by John Willys in Toledo, Ohio. The future maker of Jeep, Willys-Overland, was the second-largest producer of automobiles in the United States after Ford Motor Companyfrom 1912 to 1918. The 1900s and 1910s saw a boom in independent car manufacturers.
Not to be outdone by its competitors, the Hudson Motor Car Company was founded 1909 on the principles of “Strong, Speedy, Roomy, & Stylish.” The first Hudson automobile was priced at $900, considered inexpensive for such a high-grade machine (Hemmings.com). Some 1,108 Hudson automobiles were turned out in the latter half of 1909. Seven years later, in 1916, Nash was founded. Originally called the “Thomas Jeffrey Co.”, it was renamed when Charles Williams Nash bought the company in 1916. The 1917 Nash Model 671 was the first vehicle produced that bore the name of the new company's founder. Sales of Nash boomed in 1918 at 10,283 units. All of these independent car companies survived WWII, and some (like Willys-Overland) flourished during it. Willys-Overland invented the design for the Jeep and competed with Ford’s Jeep throughout the war. By the end of the war, both Willys-Overland and Ford had sold 600,000 cars. These three independent makers had gone from small companies to giants in the field, thanks to the economic boost from the war.
The end of the war commenced the end of many car brands, but it also was the beginning of two more notable independent car companies. Founded in 1946, Kaiser-Frazer was the only new U.S. automaker to achieve success after World War II, if only for a few years. It was a joint venture between the Henry J. Kaiser Company and Graham-Paige Motors Company. California based industrialist Henry Kaiser, whose company helped build the Hoover Dam and battleships for WWII, and the CEO of Graham-Paige, Joseph Frazer wanted more from the automobile industry, so they pooled together their money. This was one of the miracles of the industrial age. They were able to found a company and have cars rolling off the production line in a year. Also in the late 1940s, foreign cars began to be imported into the U.S. for the first time in modern history. The first foreign car, the German Volkswagen Beetle, was imported in 1949. Americans only bought two Beetles that year. Prior to WWII, there was no regular importation of cars into the country. In 1950, less than 1/1000 cars on American roads were foreign. American car manufacturers continued to dominate the industry through the 1950s.
A new trend within the automobile industry began with the production of “compact cars.” Compact cars were basically medium-sized cars, the equivalent to the British “small family car”. Nash and Kaiser-Frazor both developed compact cars. The “Henry J”, named after Henry J Kaiser, was a very simple car for its time. It was a huge flop for its basic design and the fact that it cost more than a Chevy compact car. Sales declined every year it was on the market (1950-1954). Nash created the Nash Rambler. Compared to Henry J, it was stylish, cheap, and came with accessories other companies charged extra for. It was a huge hit, being the inspiration for cars such as the one in the movie, The Incredibles. In 1953, Nash also started making another compact car, called the Metropolitan. The Metropolitan was also a huge success in the United States. Although the Henry J floundered, Nash’s compact cars flourished and continued to gain sales for many years.
With the start of a new decade, independent automobile companies struggled to compete with large companies. Historically, the companies had struggled with financial issues throughout their existence, but the issues grew in the 1950s. Bigger companies made more profits than that of smaller companies. This was because General Motors could make 1.7 million Chevys in a year, but Hudson could only produce 325,000 cars. To solve this, many car companies consolidated to gain more money. By the end of 1951, Joseph Frazer had left Kaiser-Frazer officially, so the company decided to only focus on Kaiser production and never created a Frazer again. Kaiser-Frazer bought Willys-Overland in 1953 and shortened its name to "Willys". They dropped Frazer from the company title and became Kaiser-Willys. Nash and Hudson combined in 1954 to create the “American Motors Corporation” (AMC). AMC switched to making Nash Ramblers and Metropolitans. Up until this time, Packard had been the number one luxury car in the USA. They were only overtaken by Cadillac in 1949 (Zschoche). The same year, Studebaker and Packard joined together to create the “Studebaker-Packard Co.” Many independent makers were banding together to try to save money, cut issues, and survive the industry.
Other independent companies were feeling the squeeze. Kaiser-Willys was losing money due to its cars not being up to par mechanically. Kaisers still used a V6 engine, even though the big companies were using V8s. Instead of using their money to develop a V8 engine, Kaiser-Frazer focused on trying to bring their cars to the public. Due to the competition in the marketplace, Kaiser-Willys was spending 25¢ per advertisement, versus GM’s 1.6¢ per magazine. Independent makes were trying their best to prove to consumers that they were relevant and better than big companies. Another reason for various car companies ending was the sudden interest in compact cars. The American Motor Company and Kaiser-Willys both funded compact car projects. Kaiser-Willys’ compact car, the Kaiser Henry J, failed and did not sell the numbers they had hoped. Not being able to compete and with no more money, Kaiser made its last car in 1955.
The late 1950s signaled the end to many things. There was no Willys’ passenger vehicle made past 1955. Kaiser-Willys now only made Jeeps. Hudson and Nash both came to an end in 1957. The American Motor Company was profiting from Ramblers and Metropolitans, so they dropped the full-size Nash and Hudson cars. Therefore, the two cars became AMC Ramblers and AMC Metropolitans. Packard made its last car in 1958 due to going bankrupt. Since Packard only made luxury cars, they were not selling as many units as other companies, like Studebaker or Hudson. Ford was selling Cadillacs without problems because they could rely on their other makes of car if it failed. AMC Metropolitans stopped production in 1962. In 1963, Kaiser-Willys dropped Willys and became Kaiser-Jeep. Studebaker was the last to fall in 1966. They could not bring designs to the market due to the advertising prices, so they also ran out of money. AMC stopped using the Rambler name after 1969 and labeled their main passenger car series “Hornet” in 1970, reused from the Hudson era. AMC purchased Kaiser-Jeep in 1970. By 1972, foreign cars had become a trend in America. In less than thirty years, from two Volkswagons, 17% of cars on American roads were imported. Now, it’s 48%. On December 14th, 1987, the last AMC, the Eagle Wagon, left the assembly line. Financial troubles resulted in Chrysler stepping in by 1987 and purchasing AMC (Zschoche). This purchase brought the end to the era of independent car companies.
In 2003, the first major independent American car company since the end of Studebaker was founded. Tesla Motors was founded by American entrepreneurs Martin Eberhard and Marc Tarpenning and was named after Serbian-American inventor Nikola Tesla. In 2004, Elon Musk came to the fledgling company and provided much of the initial capital support to run it. Its founding idea was to create efficient electric cars. Tesla created a three-piece strategy. The first piece was to release a sports car, which was then the only effective type of electric vehicle in terms of profit. It was followed by a $60,000 sedan, and eventually a $30,000 sedan, sold to the masses. Despite launching the Roadster, in 2009 Tesla faced significant financial problems. The company had less than $10 million in cash on hand, potentially less than it needed to even deliver on the cars it had already sold. With loans and opening their company to NASDAQ, Tesla raised $691 million dollars. The Model S was the next car to be produced in 2012. Generally speaking, it was the first practical electric car to hit the market, at a high price. It received various awards and showed what an electric car could do. In 2013 Tesla made its first quarterly profit. In 2017, Tesla Motors changed to Tesla Inc. (TheStreet). It has had many successful cars, such as the Model 3, the Model X, and the Model S. Despite its initial successes and the public’s interest in electric cars, Tesla has had difficulties in scaling and increasing its market share in the U.S.
Because of the high cost to manufacture its models and its inability to meet consumer demand, Tesla will likely fail like its fellow independent car companies. In 2018, Tesla Inc. faced financial issues. Missed predictions caused investors to dump company stock, and it lost more than 5% of its value in a collapse worth $12 billion. Tesla was making it’s Model 3 sedans at a fraction of the rate planned. In three months the company finished and shipped 2,400 cars after promising that it could complete more than 5,000 per week (TheStreet). Tesla is like Packard, being a mainly luxury car. They are trying to go down-market to diversify and appeal to a larger market. To do that, they have to have more factories and manpower. Because they were not able to scale and be able to meet production goals, they fell short of their target to meet demand. This caused consumer dissatisfaction. Investors became upset and the stock lost value on NASDAQ. This was coupled with the CEO, Elon Musk, who was in the media making many embarrassing comments. Musk has an unconventional business style that puts investors ill at ease, much like Henry Kaiser. In light of Tesla’s similarities to the independent car companies of the 20th century, it is likely that Tesla will also fail.
Tesla Inc. and Elon Musk will have to change many things to keep the business profitable and popular. It has many factors in common with Tesla’s predecessors. Currently, Musk is working on his space exploration company, SpaceX. Part of Kaiser-Frazer’s fall was them focusing on compact cars instead of improving their current cars. It would help if Elon Musk would actually help his company instead of doing other activities. Also, Musk needs to focus on raising funds and putting modest prices on his cars. If they are too high, like Packard, no one below the upper-class be able to buy them (TheStreet). Without such affordable cars in its offerings, Tesla will never be able to compete to be the average American’s choice car.
Automobiles are one of the most important things in a person’s daily life. Since it was invented, the automobile has attracted many entrepreneurs as a way to make money and explore their ideas. Though many of them did not last more than twenty years, independent car companies have played an important role in American history and economy. Tesla is the only current independent American car company and is going to fail just like its predecessor companies.
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