Not everything goes the way as it was intended.
Selling a new brand in the USA is not as easy as you think. The impetus begins with good intentions, but somehow the idea of competitiveness takes over. Once that competitive edge is lost to the mainstream, it all goes down from there. If the resources are not there to recover, you might as well call it a day.
Sadly, this is a business lesson that often used as examples of failures. But, should we consider them failures? Perhaps another lesson from the music industry would be apt here – if you had a one-hit wonder and continues to have airplay and downloads, you are not a failure.
Then again, we are talking the automotive industry. It can be fickle sometimes. A new brand would set up shop in the USA thinking that people would buy thousands of their products and everything will be fine. When the first showrooms open up, no one even considers the "what if" question. What if people do not buy these products? What would be the exit plan for the brand? The question might be present, but when you set up an automobile entity on these shores, you are always optimistic that everyone would love your vehicles enough to be sustainable for both the short and long term.
This brings up the question of which automobile brands became epic failures in the USA. As well, as which happen to be one-hit wonders with a following that resonates today. But, which question is worth investigating?
While Hyundai enjoyed a banner launch year in 1985, Malcolm Bricklin's Yugo started out strong. Initial Yugo GV sales momentum was achieved despite an image problem that consumers had between the South Korean and the Serbian/Yugoslavian products. Hyundai sold us on the fact they were built with 25% stronger materials than the Japanese. Yugo could not exact that claim – or any other advantage to purchase one, except for price alone. All told, 141,000 Yugos were sold through 1992.
Were US consumers not ready for the Yugo? The problem was actually two-fold. First off, the subcompact class was not fully established in this market – it never had. There were successes, the Renault Le Car (R5) had a cult following in the 1970s and 1980s, and the Geo Metro sold more than their share of inexpensive, three-cylinder runabouts when the Yugo showed up. Even in 1990, you do not deliver volumes if you sold anything smaller than a Honda Civic or a Toyota Corolla.
The second part is the sad fact that the Yugo was not made well. The quality from the Zastava plant the Yugo was made at was cheap, in reflection of its price and its native production standards. Everyone doubted its reliability, in particular Consumer Reports, and it was feared that post-warranty servicing and spare parts would be expensive and hard to come by. That fact alone would challenge the initial value proposition. The reality was one that came crashing down on the entire Balkans region – war. Bricklin gave up on the little car by 1992 just as gunfire was traded across the soon-to-be-former Yugoslavia.
Norman Braman's South Florida-based dealership empire was successful enough for Rover Group in the UK to appoint him as the distributor for their new Honda-based premium sedan. The Rover 800 was transformed into the Sterling, which arrived about the same time as the Acura Legend – its platform sharing cousin. It sounded like a solid proposition – a new and fantastic platform, sumptuous British interiors and a modern design.
However, Sterling was doomed from the start. Right off the bat, the Sterling's cousin was doing extremely well. In 1987, Acura sold over 109,000 Legends, while ARCONA sold only 14,000 Sterlings. The car was priced higher than the Acura, though some may attribute the higher pricing to tariffs and content – excuses, just the same. What the Acura had over the Sterling was execution in terms of initial quality, dealership experience and solid post-sales support. By 1992, Braman closed up shop.
Daihatsu was an independent car company when they arrived stateside in 1988 with the Charade hatchback. Joining Geo, Ford, Suzuki and Yugo, the subcompact marketplace was an uneasy one that was worth the risk. To offset the Charade, Daihatsu also brought the Rocky – a direct competitor to the Suzuki Sidekick/Geo Tracker.
Like the Geo Metro, Daihatsu tried their hand by selling the Charade with a three-cylinder engine for its lowest price car. A 1.3liter four-cylinder was offered in its higher models. Unlike the Metro and the Yugo, Daihatsu was asking a higher price, despite it being the best built amongst the subcompacts of that era. In the end, Daihatsu could not match what GM's Geo and Suzuki were doing in the USA and pulled their products from the market in 1992.
Then, Daewoo arrived. After the initial success of Hyundai and the struggles Kia had to endure to establish themselves in the USA, one wondered if more Korean automakers would try their luck stateside. Daewoo already provided General Motors with product from their joint-venture – the compact Pontiac LeMans. Instead of the LeMans, Daewoo came in with a three-car lineup in 1997 with low-priced, high content models in the subcompact, compact and mid-size classes.
The promise was there with styling by Giugiaro's Italdesign firm, a careful selection of single-brand retailers and good price points. As with the initial years of importation of any brand from the Republic of Korea, quality was not there. By the time the Lanos, Nubira and Leganza were on US roads, Hyundai and Kia began to turn things around – soon to be joined at the hip back home.
Daewoo ran into serious troubles back home. The automobile unit was losing money, spares were hard to come by and dealers lost the support from the distributor, who lost support from corporate. The public simply turned their backs on Daewoo on one single issue alone – vehicle quality. The public would not tolerate anything that was built and made well by the early 2000s.
Though the Daewoo brand was gone by 2002 in the USA, their products would continue to be sold under different brands – Suzuki, Chevrolet and Pontiac. The reason was the gradual acquisition of Daewoo by GM. Once complete, the brand existed for a bit longer in the Republic of Korea until it was determined that Chevrolet was the better brand to sell GM's Korean products.
Small import operations were not the only ones that experienced epic failures. Ford Motor Company had a tendency to try – and fail – on several occasions. Two big ones came to mind: Edsel and Merkur. The story of Edsel has been told many times: The promise of growth in the mid-priced field with a marriage of Ford and Mercury components and a somewhat unique design. Then, the economy went into the tank in 1958. Edsel's launch year witnessed buyers shying away from the mid-priced field and a new brand of car. Edsel sold its final car in 1960. Other mid-priced brands went away by 1961, such as Packard, Hudson, and De Soto.
Merkur was a different kind of issue. Ford of Europe was on the rise with many vehicles becoming desirable worldwide. The transformation of the Cortina into the aerodynamic Sierra was a dramatic one which induced serious sales for Ford across Europe and in export markets where the car was sold. Someone in Cologne thought that North America would enjoy the Sierra, even though consumers began to accept Ford's aerodynamic design in homegrown products. The Sierra's influence was already evident in the Thunderbird, Tempo and the Taurus. In 1985, Lincoln-Mercury dealers began receiving the rebadged Sierra as the Merkur XR4Ti – the coupe version of the European superstar with a US-built turbocharged in-line four under the hood.
Enthusiasts in the know admonished Ford for placating Federal emissions standards because the driveline in the original Sierra XR4i was unacceptable – a surprise, since the updated Cologne V6 showed up in the Scorpio. The knocks against the XR4Ti grew from the pricing due to currency valuations that favored a higher Deutsche Mark. Some blamed the higher-than-acceptable price since they had to take Sierra XR4Tis to the Karmann plant to "federalize" them by hand.
If there was an icing on the cake to knock down Merkur – it would be the Scorpio. That icing left a strange taste for stateside consumers. The Scorpio appeared to be a brilliant flagship for Ford of Europe, but not so for a premium mid-sized hatchback in the USA. It was simply lost in translation. Merkur was found to be unnecessary and was booted from Lincoln-Mercury showrooms in 1989.
Epic failures may have begun as great ideas. Some were thought of when the economy was in good shape without any inkling of any downturn or worse. Others were ahead of their time for this market. Miscalculations that may have been oversight, but would become clear when in a matter of a short period of time as these brands were obliterated.
Remember any of them? Perhaps not fondly, but if you do – they have done their job after the last spare part was distributed.