The real reasons Oldsmobile went out of business


On December 12, 2000, GM announced the retirement of what was America’s oldest automobile brand, reserving it a place in the pantheon of historic names like Packard, Hudson and Studebaker. General Motors would phase out Oldsmobile over the next two years as part of a broader restructuring program aimed at reducing production volume in the United States and Europe. We understood that this decision was a necessary evil to allow what was, at the time, the largest car manufacturer in the world, to meet the drop in demand and return to profitability.

We believed him because in addition to unplugging the Oldsmobile division, GM’s workforce on both sides of the Atlantic saw their wages slashed by ten percent, the multinational’s US auto production was halved to fourteen percent in the first quarter of 2001 and a UK production plant completely closed. So, as GM workers groaned and Oldsmobile lovers mourned their loss, we understood that the company suffered a substantial reduction in fourth-quarter profits.

According to then-GM chairman and CEO Rick Wagoner, the company braced for consolidated net income of $550 million to $600 million in the fourth quarter and earnings per share of $1.10 to $1.20, a down substantially from the $1.70 per share forecast for the fourth quarter. . But why was Oldsmobile the top pick for elimination over other GM brands, such as Pontiac, Chevrolet, Buick and Cadillac?

Related: 10 Coolest Oldsmobile Cars Ever

Brief presentation of Oldsmobile

Unsurprisingly, the biggest takeaway from GM’s announcement on that ominous day in December was the termination of Oldsmobile. Within a century, the doomed division became synonymous with General Motors as only a few of its brands have. Somehow, however, the Oldsmobile name was mentioned most frequently on multiple occasions as pundits called on GM to cut its overlapping divisions, including Saturn, Buick, Cadillac, Oldsmobile, Pontiac and Chevrolet. .

In fact, the automaker was so close to doing just that in 1992, but reversed the decision at the last minute to give the brand one last chance. It’s a unique case of “how the mighty fell,” given that Oldsmobile was GM’s crown jewel, least likely to be recommended for disposal just eight to ten years prior.

It is apparent that the brand’s problems began with the overlap of bodywork and mechanical components between GM divisions, particularly in the late 1980s, making it increasingly difficult to tell them apart – to differentiate a Chevy from a Buick and a Buick an Oldsmobile. Moreover, it was during this time that Honda and Toyota disrupted the American auto market, exploding the market shares of Chevy and Ford with models like the Corolla and nibbling the pies of Cadillac and Buick with an offer like the Acura. and the Lexus, leaving Oldsmobile to look unfairly as the misfit.

Oldsmobile was founded as Olds Motor Vehicle Company before becoming a GM brand and went on to produce some 35 million vehicles before it was all finished. As a GM brand, it found its place in the middle of the company’s five divisions, above Chevrolet and Pontiac but below Buick and Cadillac.

So the automobile manufacturing company that Ransom E. Olds started in 1897 has lived to spawn unforgettable cars with groundbreaking technologies and designs. Subsequently, GM woke up in the 1990s to a changing market landscape where it no longer had the semi-monopoly it enjoyed some four decades ago.

Being bankrupt for eighteen years today means that the newer Oldsmobile models you’re likely to see on the road these days are so old. But the brand flourished in the 1980s, selling an average of more than a million Olds each year. They were reliable, as Americans found them to require less maintenance than other cars. It’s a disservice to choose one of the many Oldsmobile models produced over its 106-year history, but the Cutlass is admittedly the most popular.

The Cutlass Supreme sat atop
the oldsmobile cutlass
model range, offering additional performance and luxury above even the Cutlass S. Oldsmobile offered
the mid-size Cutlass Supreme
for over three decades between 1966 and 1997. It began as a trim set but quickly grew to become the best-selling model in its class and, in fact, the most popular Oldsmobile.

It didn’t have a direct replacement (we like to think none were worth it) even though the Cutlass nameplate was replaced by the Oldsmobile Intrigue in 1998. The Cutlass Supreme was equipped with a transmission RWD and was offered as a two-door hardtop, sedan, and station wagon through the 1980s, and a convertible until 1972. Similar GM models were the Chevy Monte Carlo, Pontiac Grand Prix, and Buick Regal, all in the personal luxury car segment.

Related: This Is How Much A 1979 Oldsmobile 442 Costs Today

How GM knocked Oldsmobile to the ground

The fate of Oldsmobile is a classic case of slow demise. It was one of the first two divisions to become GM in 1908 (the other was Buick) and the first to design and use the first V8 mill in 1916. In 1935 Oldsmobile built its millionth car. Forty-three years later the marque opened a new plant in Lansing to produce the Cutlass and in 1984 a reorganized General Motors turned Oldsmobile into a sales and marketing division within the Buick-Oldsmobile-Cadillac group. Unfortunately, it had its best sales that year.

In the end, Oldsmobile couldn’t survive the numbers game. As mentioned earlier, growing competition from Toyota and Honda led to a steady decline in Oldsmobile sales, but GM brought down the division when it opted to use Oldsmobile as its import-fighting brand. This new operational direction meant transforming Oldsmobile into a car for young American families who would choose America over imports.

It was a gamble, as it meant alienating the brand’s existing fan base. Thus, the traditional large and spacious American Oldsmobile metamorphosed into a smaller and sportier car. Oldsmobile’s loyal customer base turned away in disgust. “We tried to do a very difficult thing because we tried to distance ourselves from our customer base,” said Ron Zarella, GM’s executive vice president and president of the company’s North American operations.

The bet yielded positive results, but ultimately failed to attract enough young buyers to be profitable. Oldsmobile and Saturn were the only two GM North American divisions to lose money at the time. The GM chief said at the press conference that he had done everything he could and was “clearly aware that we really made a good effort”.


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