General Motors' Branding Fiasco Part Four – Oldsmobile Pegs Out
Of all of GM’s domestic brands, Oldsmobile most accurately represents everything that went wrong with GM’s divisional structure. Historically the most innovative GM division, its twilight years were spent pathetically proclaiming “This is not your father’s Oldsmobile.” Olds rode a roller-coaster in the sales charts, hitting glorious peaks before its final, fatal free-fall. But the tragedy of Olds is that it could have been the instrument of GM’s redemption.
Ransom E. Olds founded his eponymous automobile company in 1897. In 1901, the Curved Dash Oldsmobile was the world’s first mass-produced automobile. Although expensive in absolute terms, it was the lowest priced machine of its day.
But Olds wasn’t Ford. By the time GM bought Olds in 1908, the brand had moved upmarket. Two years later, Oldsmobile unveiled The Limited, a stunning but expensive ($4600) achievement.
When a Limited won a famous race with the Twentieth Century Limited locomotive, Oldsmobile found its marketing niche. From then on, glamour, power and speed defined Oldsmobile’s appeal.
As part of his brand ladder strategy, GM boss Alfred Sloan knocked Olds down a couple of pegs, placing it right between Pontiac and big brother Buick. While Chevrolet and Ford fought for supremacy at the bottom of the market, GM’s Buick, Olds and Pontiac (BOP) line-up proved a formidable formula. It gave The General a seemingly unassailable stranglehold on America’s automotive mid-market.
When GM’s price structure began to compress in the forties and fifties, Olds embarked on a course of safe, predictable and increasingly boring GM fluff. Although the brand earned its keep with several popular products (e.g. the Rocket-powered 88), as the middle child, Oldsmobile felt the pricing squeeze most acutely.
It wasn’t long before Oldsmobile fielded essentially identical line-ups with both Pontiac and Buick. Style became one of the few distinguishing factors. Olds faired relatively poorly in GM’s inter-divisional beauty contests; the ’58 models are particularly loathsome examples of garish Detroit baroque.
As Pontiac and Buick expanded into Olds’ once happy hunting grounds, the division struggled to make a living in brand limbo. Oldsmobile had to find something substantive to sell, independent of pricing and fashion.
Technical innovation was the answer. Building on a reputation for mechanical creativity– sealed with the Hydramatic Drive of 1940– Oldsmobile became GM’s “experimental division.”
The Rocket V8 of 1949 was a perfect example; it was the first popularly-priced high-compression V8. The engine turned the light-weight Oldsmobile 88 into the first modern performance car, and ushered in the horsepower race. Olds went on to pioneer front wheel-drive (Toronado, 1966), turbo-charging (Turbo Jetfire, 1962) and air bags (1974).
In the ‘70’s, Oldsmobile finally hit its stride. The success of the Cutlass helped Olds leapfrog Pontiac and Plymouth to become America’s third most popular automotive brand.
In 1977, Oldsmobile ran afoul of GM’s increasing predilection for parts sharing. A shortage of Rocket V8’s led to the substitution of Chevy engines instead— on the down low. GM’s response to the uproar was to add the label “GM cars are equipped with engines produced by various GM divisions”. It was another milestone in the terminal decline of divisional brand identity.
With GM’s BOP price strategy in tatters, with the last vestiges of inter-brand mechanical differentiation cast aside, with Oldsmobile dealers demanding (and receiving) badge engineered copies of the genre of the moment (minivan, SUV, compact, etc.), Oldsmobile was on autopilot to oblivion.
In the mid-late eighties, Olds crashed and burned, as America’s mid-market tastes shifted towards imports. The inadequately-developed Olds diesel V8 spewed more fuel on the flames of GM’s quality woes. Between 1985 and 1990, Oldsmobile sales plummeted by 60 percent.
In 1985, GM desperately needed innovative design, engineering, production, quality control and customer service. Oldsmobile coulda/shoulda been the home of plastic panels, or hybrid propulsion, or flexible manufacturing, or any number of potentially liberating technologies.
Instead, GM Chairman Roger Smith spent billions creating an entirely new domestic brand: Saturn. The upstart start-up replaced Oldsmobile as GM’s innovative, experimental division, effectively sealing Olds’ fate.
On April 29, 2004, GM produced its last Oldsmobile: a cherry-red Alero GL. While the model has its defenders, the badge-engineered Pontiac Grand Am was still an ignominious end for a 110-year-old brand, whose powerful and charismatic eight cylinder engine inspired the world’s first rock and roll song.
Oldsmobile’s death taught GM an important lesson: it couldn’t afford to shutter its other moribund divisions, restore order to its brand portfolio and rationalize its business. Strict state-enforced automobile dealer franchise laws punished GM for pulling the plug– to the tune of over a billion dollars. Olds’ death also demonstrated that shuttering one amorphous GM division does nothing whatsoever to help the remaining brand’s sales.
And now Saturn is in the same boat as Olds was during the eighties: competing with its corporate siblings with platform-engineered cars and fighting for limited development and marketing dollars. What’s so innovative about that?
More by Paul Niedermeyer
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