Five Favorite Industry Failures

2007 Suzuki XL7 2
All photos by Randy Stern

Failure is something that society either hates or loves.

How does a failure occur? Mismanagement is one source of the problem. Incompetency is another – perhaps notes as the biggest source of failure. Timing can be attributed to failure, if the market does not respond at the right moment. Then again, the market can play a huge factor in failure.

This all leads to the idea that failure in the automotive industry can be epic. With millions of dollars on the line, one miscalculation can spell disaster. Disasters in the auto industry are completely documented by my peers – replete with Monday morning quarterbacking.

Sometimes, a failure can go quietly into the night. Not often does this happen, but companies that lost the plot might try to save face before the wall of scrutiny converges upon them.

We often recall the failures in our industry. Even their efforts were hard fought to the end, their memories continue for us to examine what went wrong, as well as what went right.

This Five Favorites looks back at failed automotive entities that gave it try in the USA market. Let us emphasize the words "good try," as these were brands with good intentions and execution only to find themselves on the wrong side of the balance sheet.

Here come some not so pleasant memories…

DAIHATSU: Prior to being absorbed into Toyota, Daihatsu operated as an independent company specializing on small cars. The USA market was looking for inexpensive transportation, though were hesitant on subcompacts or city cars in the late 1980s. Meanwhile, Malcolm Bricklin saw some rewards from importing Zastava's Yugo GV here proving that small car sales are possible in this market. Daihatsu took a gamble, as the Charade was redesigned with a global market in mind. In 1988, the Japanese firm set up shop with its own dealer and parts distribution network – albeit small. Adding the Rocky SUV helped matters as it targeted the Suzuki Sidekick and Geo Tracker for a post-Samurai compact segment battle. Neither vehicle took this country by storm – not with the deep coffers of General Motors, Ford and Toyota propping up subcompacts and compact SUVs at greater numbers than Daihatsu combined. This great idea led to the closure of the company’s USA operations in 1992. The rub of all of this – the Charade was actually good next to the Geo Metro and Suzuki Swift of its time.

KAISER: During the Great Depression, automotive companies were falling by the wayside. Once prosperity returned to the USA, the companies that remained were settling into a pecking order between the "haves" (GM, Ford, Chrysler) and the "other guys" (Packard, Nash, Hudson, Studebaker, Graham-Paige). World War II helped everyone out as they began building for peace. Prosperity returned with the spoils of war, but one company was left limbo in the process – Graham-Paige. In 1947, industrialist Henry J. Kaiser reached out former Graham-Paige executive, Joseph W. Frazier to reboot the company under Kaiser's corporate family. In the process, the company integrated Willys-Overland to incorporate a war hero – Jeep. By 1953, Kaiser had a solid automotive division with an array of assets that made them the envy amongst the "other guys." Along the way, Kaiser built smaller cars under three brands – including one for Sears – and engaged with a designer "Dutch" Darrin to create the iconic namesake Kaiser Darrin roadster. The end of Frazier foretold events in the 1950s. Loss of sales in 1949 led to a feud between Kaiser and Frazier. The latter left the company, giving Kaiser full reigns of the business. By 1955, Kaiser stopped building passenger cars and concentrated on the Jeep business. In 1970, Kaiser sold Jeep to American Motors ending the corporation’s venture into automotive production. After all, it was all about Jeep.

EDSEL: The 1950s was a good time for the automotive industry with so many brands competing for the middle market. Ford already had Mercury and was planning to send Lincoln to equal Cadillac and Imperial. A further upmarket step was made with the creation of the Continental division and its ultra-expensive Mark II. Still, Ford looked at the middle – where Oldsmobile, Pontiac, Buick, Dodge, Hudson, DeSoto and Packard lived. In developing the Edsel – named after Henry Ford's son – the team at Ford attempted to create a few distinct features to attract upper middle customers. The result was indifference. Though Ford had a lot of capital to play with, the economy decided to go into recession. Also, Ford had plenty of redundancy in its market – a Ford consumer would get a Fairlane 500 at the same price as an Edsel Pacer and Mercury Monterey. In 1960, Ford pulled the plug on Edsel. Fifty-plus years on, we are still talking about it.

MN C&C October 2011 4

DELOREAN: John Z. DeLorean was a genius – albeit flawed. He had every intention on creating a mid-rear engined sports car that equaled in the cache of the Ferrari 308 and Porsche 911 of its time. The idea seemed like a good one: A stainless steel finished gullwing door unibody, Douvrin V6 power mated to either a manual or an automatic, and built at a plant in Northern Ireland. However, there were a few some small problems. Aside from DeLorean's appetite for cocaine, the engines were semi-reliable (at the least), customers wanted other colors than the brushed finish and the plant was in Northern Ireland – with "The Troubles" still going on, albeit simmered down. By 1982, DeLorean sent the company in bankruptcy. Who knew that it would become a movie star, twice over?

SUZUKI: Before the first SJ410 mini-SUV arrived on our shores, Suzuki was known for motorcycles and marine engines. For several years, Suzukis were sold in Hawai'i as efficient transport around the islands. For 1985, the SJ410 was remarketed as the Samurai and thrill seekers went for it. The automotive division of American Suzuki could have folded in light of Consumer Reports' report on the Samurai's balance issues, but the company had bigger plans for our market. The lineup grew to the Swift, Esteem and Sidekick, which sustained the division through the 1990s. Then, came an interest twist of fate. Since GM had a holding in Suzuki and just took over Daewoo, American Suzuki imported several models from the Korean company’s lineup under their own name. Did that seal Suzuki’s fate? Probably. Introductions of the SX4 lineup and the highly acclaimed Kizashi sedan were seen as too late to save the automotive division. This year, American Suzuki went into bankruptcy. To offset its debts, they closed the automotive division and retained the motorcycle, marine power and all-terrain vehicle businesses. It did not help that the Yen was too strong for any company to manage. What made this "failure" a sad one? The Kizashi – plain and simple.

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