A Brief History of
The First 100 Years of the Automobile Industry
in the United States
Chapter 15 - Saviors of the industry: more dreams of glory
by Richard A. Wright
In the 1970s, the outside world crashed in on Detroit. Washington began telling it how to build cars and Middle East politics put the fear of gasoline shortages into America.
Washington, in its search for solutions to the knotty problems of air pollution, safety and fuel economy, stirred hopes anew of men who would build their own cars in defiance of the automotive establishment. As is often the case with intractable problems, public relations played a major role.
Difficult challenges confronted the auto industry and many private inventors tried to meet them. Washington, ever distrustful (with some reason) of the auto industry, encouraged newcomers and rekindled dreams of glory.
Many congressmen preferred to believe an unknown inventor who told them his steam car or electric car would work and would solve the air pollution problem rather than General Motors engineers who said the physical laws which set limitations that made steamers and electrics die out in the '20s were still there.
It is significant that despite all the interest in exotic engines, the cars that were actually built by independents were quite conventional.
And one of these conventional (in its power train, not its appearance) cars that created quite a stir was built by a most unconventional auto maker, Malcolm Bricklin. Before his dream of building a car with his own name on it ended in a flurry of legal actions in late '75, some 2,875 of the sleek safety/sports cars were built.
Of these, 790 were '74 models, powered with American Motors V-8s. For '75, Bricklin shifted to Ford V-8s and 2,083 of that model year were built. Only two '76 models had rolled off the line in New Brunswick when Bricklin Canada defaulted on loan payments and was placed in receivership .
Malcolm Bricklin was not a typical auto executive. He favored blue jeans and cowboy boots and came on more as a high-rolling gambler than a smooth Wall Street type. Nonetheless, he managed to raise more than $20 million to build the Bricklin.
A college dropout, Bricklin made his fortune in the retail hardware business. He started with three small A-frame stores, turned to franchising and within two years sold his interest in the 174-store Handyman chain for $1 million. He was not quite 22.
He went to work for Innocenti, an Italian firm which had a 15-year supply of Lambretta motors scooters sitting on lots in the United States (30,000 of them, with sales of 2,000 a year). "I sold 'em all in 60 days," Bricklin said.
He began distributing the Rabbit, a scooter built by Fuji Heavy Industries. Just as Bricklin was starting to roll, Fuji quit making the Rabbit. Bricklin went to Japan to try to persuade Fuji to change its mind. He had no luck with the Rabbit, but Fuji officials showed him the Subaru 360 and tried to interest him in selling the odd little car in the United States.
In 1968, Bricklin formed Subaru of America and was in the auto business. He stayed with the company until it went into the black in 1971. He kept his 9 percent interest, but left management to build his own car.
With a design for a low, sleek sportster with gull-wing doors, Bricklin raised more than $20 million and acquired an almost-new plant in St. John, New Brunswick.
When production began in 1974, the car was not quite what Bricklin had intended. It had a V-8 instead of a four and it cost $7,500, not "less than $3,000" as had been the goal. But one of Bricklin's highest priorities was that it look like a world-class car. It did.
After production ended, the price of Bricklin cars was quickly bid up to $11 ,000 and more. It was a popular car with its fans, but the maker went bankrupt.
Bricklin got back into the auto business after Fiat pulled out of the United States. He began importing the Fiat Spider 2000 as the Pininfarina and the X-1/9 as the Bertone. But these cars had not sold well as Fiats and their new names made no difference.
Then Bricklin started a company to import the Yugo, a warmed-over Fiat model built by Zastava in Yugoslavia, which stirred up a great deal of public interest. Why did the Yugo capture the public's imagination while the much more elegant Pininfarina and Bertone have not? The Yugo's advertised price started at $3,995.
The importer tried to paint the Yugo as another Model T -- good, solid basic transportation for not much money. But the public quickly perceived it as not low-priced, but cheap. It faded from the U.S. scene, not with a bang as it had entered, but with a whimper. A number of other entrepreneurs tried to start their own auto firms in the '70S, the most famous of whom played a role in another interesting feature of the late '60s and early '70s, which was a series of top-level job changes.
When John Z. DeLorean left GM in 1973 as vice-president and group executive in charge of all car and truck divisions, he was following in the footsteps of his mentor at GM, Semon (Bunkie) Knudsen. Son of William E. Knudsen, a legendary automotive pioneer at both Ford Motor Co. and GM, Bunkie reversed his father's direction and left GM to go to Ford.
At GM, Knudsen made his name as general manager of Pontiac Division. Under his reign, Pontiac changed its image from stodgy to hot. Knudsen moved rapidly to general manager of Chevrolet, then group vice-president and member of the board of directors of GM, and finally executive vice-president in charge of just about everything. He was on the fast track to the top.
But in 1967, Ed Cole was named president. Knudsen didn't like it.
About that same time, Henry Ford II decided to head the National Alliance of Businessmen at the urging of President Lyndon B. Johnson, a post that consumed much of Ford's time and energy. On Feb. 1, 1968, Knudsen quit GM and four days later became president and, in Henry's absence, chief executive officer of Ford Motor Co. His name was not on the building, but after Henry, Bunkie was boss. Lee Iacocca, the heir apparent, was not amused.
Knudsen made a mistake that lacocca did not make later when he went to Chrysler Corp. When Knudsen went to Ford, he did not bring (with a few exceptions) his own team from GM.
Ford executives quite naturally resented Knudsen coming in at the top. They worked for lacocca, who was then head of North American Operations.
Less than two years later, Ford fired Knudsen with a classic, if laconic, explanation: "It just didn't work out."
Fifteen months later, lacocca was named president of Ford Motor Co. In 1978, he was fired by Henry. Once again, "it just didn't work out." By the time lacocca got the ax, Chrysler Corp. was in deep trouble and in danger of going bankrupt. Chrysler Corp. Chairman John J. Riccardo hired lacocca and the auto maker was out of the hands of the accountants and back in the hands of auto men.
Iacocca went to work on Chrysler's uninspired product line and breathed new life into it. He went to Washington and sold Congress on the idea of loan guarantees for Chrysler to help it raise the capital it needed to compete; Chrysler needed new models because the system of dynamic obsolescence Alfred Sloan built was still operating.
There was much talk about "bailouts" and "corporate welfare," but the guarantees did not cost the taxpayers a cent and undoubtedly helped save Detroit's largest employer. They also helped make Lee lacocca a hero, bigger than Henry J. Kaiser or George Romney had been in earlier days, a hero whose name was bandied about as a presidential candidate.
Bricklin and DeLorean were not the only would-be car makers in this new wave of automotive messiahs.
William Lear, of Lear jet fame, tried a number of times to develop a workable steam car, but never got it off the ground.
Wallace Minto devised a steamer which used fluorocarbon fluid instead of water and interested Nissan in it. But it never saw production.
Sam Williams tried valiantly with turbines and put a few in American Motors cars.
The most bizarre episode was the attempt by Liz Carmichael, a six-foot 200-pound transsexual born Jerry Dean Michael, to build a three-wheeled car called the Dale.
The Dale, designed by Dale Clifft, was to be powered by a two-cylinder engine, get 70 mpg and sell for under $2,000. A sleek prototype was built, but production never began. There were rumors of fraud. Authorities began investigating.
At Carmichael's trial on charges of grand theft, fraud and securities violations, Clifft said he still believed in Liz Carmichael. He claimed he stood to receive $3 million in royalties once the Dale went into production. In all, he received $1,001, plus a $2,000 check which bounced.
Carmichael went to prison.
The man who came the closest to success, the man who seemed to have everything it took to do it, was John Z. DeLorean.
His car was to be a gull-wing safety/sports car with Lamborghini-like styling -- similar in concept and looks to the Bricklin. ItalDesign helped with styling and Colin Chapman, of Lotus fame, was called in to help with engineering.
With financing from dealers, celebrities and the British government, DeLorean began production in 1980 in a plant in Northern Ireland. Within 17 months, the plant was closed. Fewer than 9,000 cars were built.
The DeLorean saga took a bizarre turn in 1982 when he was arrested in Los Angeles and charged with drug dealing. The government had the deal on videotape, but DeLorean was acquitted. Creditors and federal agents tried for years to track down millions of dollars they were convinced were hidden in the tangle of DeLorean organizations.
DeLorean's story is not over. And he still, from time to time, professes dreams of building his car.
In the '70s, the American love affair with the auto seemed to go sour. After the second oil crisis in 1979 caused a large and rapid increase in the price of gasoline, buyers wanted small cars and the Japanese had the best.
Detroit had been devoting most of its attention to meeting federal requirements in air pollution and safety and downsizing its traditional big-American-car offerings. The U.S. makers had done little to make their cars attractive to buyers, an area in which they had led the world in the '50s and '60s. The Japanese had done much.
In the early '70s, sales soared to new heights. In 1973, sales of American-built cars totaled almost 9.7 million units, a record which still stands. That was the peak. Sales slid, while the Japanese, who had been working hard on making their cars attractive to the American buyer who wanted a small car, sold more and more cars in the United States.
Detroit seemed dispirited. Chrysler Corp. was sliding toward financial disaster. American Motors was in deep trouble. General Motors seemed to have lost its touch. It plowed $50 million into development of the Wankel rotary engine, but couldn't get it to work. Japanese maker Mazda did. Before the end of the decade, Ford Motor Co. was losing money at an alarming rate and there was talk, unbelievable as it sounded, of Ford pulling out of North America.
America's love affair with the auto was being sorely tested. After the first oil crisis in '73, many people dumped their big American cars and took a beating. The crisis faded, big cars came back and the little cars they had bought were not worth much. They took another beating. The second oil crisis convinced everyone and Detroit phased out the big car and the big V-8 engine. But the car prices climbed. Buyers took another beating.
Skyrocketing oil prices caused economic recession, while government policy encouraged inflation. Cars, which Americans had taken for granted for decades, were becoming too expensive to buy, own and operate. At least American cars were.
But the Japanese offered a wide array of small, high-mpg and high-quality models. Detroit had concentrated on numbers, while Japan had concentrated on quality. The result was that the Japanese were selling about one of every four cars sold in the United States.
There were others in the '70s who would save the industry. Constantinos Vlachos, of Grand Couleee, Wash., developed an engineless car, which operated on fluorocarbon fluid vaporized by electricity from a battery, providing a high-pressure gas to operate pumps which rotated each wheel.
Frederick M. Guilfoyle, London, Ont., proposed to build a car powered by a fuelless engine with two-way pistons operated by compressed air. The air would be compressed by windmills.
Fortunately, problems were solved by more conventional means and eventually OPEC fell into disarray.
Copyright 1996, Richard A. Wright
Published by Wayne State University's Department of Communications