In 1955, automobile manufacturer General Motors (GM), capitalizing on post-World War II prosperity and consumer demand, became the first U. S. corporation to post a profit of $1 billion.
GM was founded in 1908 in Flint, Michigan, by William C. Durant, a keen businessman who had become a millionaire in the horse-drawn carriage business. In 1904, Durant bought the financially troubled Buick Motor Car Company. Seeking a strategic advantage to ensure longevity and success in the auto industry, Durant embarked on a massive campaign, acquiring within two years more than two dozen automobile companies, including the Olds Motor Vehicle Company and the Cadillac Automobile Company. Durant’s aggressive and expansionistic attempts to outstrip the Ford Motor Company and control the auto industry overextended GM financially. Investors took control of GM from Durant, who then embarked on yet another auto industry venture, creating the Chevrolet Motor Company. Chevrolet adopted the Ford Motor Company’s strategy of mass-producing cheap automobiles for the working class. Chevrolet was a success, putting Durant in a financial position to acquire enough GM stock to take control of the company again, and, in 1918, Durant merged Chevrolet with GM.
Upon the entry of the United States into World War II in 1941, GM switched from civilian automobile production to manufacturing tanks, airplanes, weapons, and other war supplies to support the Allied forces’ war effort. Following the war, GM returned to producing cars and trucks, introducing new innovative features such as automatic gearboxes, power-assisted steering and brakes, air conditioning systems, and safety belts.
Alfred Sloan completely redesigned GM in the 1950s and made it into the world’s biggest and most profitable company. The passage of the INTERSTATE Highway Act of 1956, aided by the general prosperity and economic growth of the postwar era, created a wave of auto consumerism that was responsible for the huge success of GM in the 1950s. Sloan’s great skill in mass-production management made use of the American consumer’s eye for style and fashion to keep engineering costs down. GM introduced car models that, year after year, exhibited little more than cosmetic changes.
GM also took advantage of the surge in mass media advertising and marketing. American TELEVISION viewers were aroused by shiny Chevrolet BelAirs and Pontiac Bonnevilles that sat on rotating stages as elegantly dressed commercial actresses pointed out their impressive features.
By the end of the 1950s, GM faced problems with expensive union contracts, antitrust pressures from the government, and finally, competition from the Volkswagen Beetle, introduced in 1958. A final blow came in 1965 when Ralph Nader published Unsafe at Any Speed. Nader attacked the American auto industry’s safety standard in general, but specifically targeted Chevrolet’s Corvair as a dangerous car.
Postwar consumerism had put no pressure on the auto industry for improvements in fuel efficiency, durability, serviceability, environmental protection, TECHNOLOGY, or safety. The lack of concern for these factors left the industry unprepared for the foreign competition and fuel crisis challenges of the 1970s.
Further reading: Timothy Jacobs, A History of General Motors (New York: Smithmark, 1992).
—Jason Reed
World History
