John Z. DeLorean was among the most talented American automotive executives of his era yet made elementary mistakes when he launched his own car company. One could partly blame those failings on DeLorean’s narcissism and erratic behavior, but his basic approach also smacked of the short-term focus that permeated the American auto industry during the 1970s and early-80s.
DeLorean placed an emphasis on landing clever deals, such as a heavily subsidized factory in Northern Ireland. However, he failed to come up with anything vaguely approaching a sustainable long-term strategy.
To see what I mean, let’s pretend that things went exceedingly well during the company’s formative years. For example, the American economy was strong enough in the early-80s to support robust sports car sales, the DMC-12 was realistically priced and DeLorean managed to keep his launch costs down. Even under that rosy scenario, I doubt the company could have generated sufficient profits from a rear-engined two-seater which didn’t lend itself to higher-volume derivatives.
In a way DeLorean acted similarly to Bob Lutz during his subsequent tenure at General Motors: DeLorean built what he wanted to drive (or be seen in) rather than what would keep the factory lights on.
The DMC-12 was a much more sophisticated car than the Bricklin SV-1, but the latter actually had a better chance of long-term success. Bricklin’s economies of scale were less daunting because it used more off-the-shelf parts. Even more importantly, the SV-1’s front-engine, rear-wheel-drive platform had more flexibility to add models.
Of course, the Bricklin also had its own fatal issues, such as “the company’s inexperience working with Detroit auto companies, a host of unresolved design problems, company nepotism, supplier shortages, worker absenteeism and a series of rapid price escalations that saw the actual price of the car more than double over initial projections,” according to Wikipedia.
If DeLorean had been in charge of Bricklin, he might have had the managerial experience necessary to overcome many of those problems.
By the same token, the DeLorean Motor Company might have had a greater chance of survival if it had been launched by someone with the skills and temperament of BMW’s Herbert Quandt or Honda’s founder, Soichiri Honda. DeLorean products would undoubtedly have been less flashy, but they also would have been more likely to withstand the test of time.
SOURCES:
- Old Car Brochures; 2018. Bricklin (1975); DeLorean (1981)
- Wikipedia; 2018. “Bricklin SV-1,” “DeLorean Motor Company,” “Soichiro Honda.” “Herbert Quandt.” Accessed August 16.
I Never liked the Delorean car but very much the Back to the Future movies I still see them now and then!
An interesting premise, indeed.
DeLorean’s arrogance did him in, I think. He was gifted enough to rise in the GM ranks, but his arrogance did him in there, as well. His arrogance led him to believe he could not fail, so when the eponymously-named car showed signs of failure, he turned to some… unusual financing methods.
A modern-day comparison to Malcolm Bricklin might be Paul Elio.
Both believed they had fresh new ides to bring to the market.
Both were industry semi-insiders, although Bricklin was a failed huckster of kei cars, and Elio an engineer. Neither had enough pull to really make it work
Bricklin managed to put together about 3,000 cars for sale to the public. Elio made zero.
I don’t have the citation handy, but I think that in an interview late in his life, DeLorean acknowledged that his early success at GM had made him arrogant.
As senior management at General Motors, arrogance, a shallow obsession with flashiness and marketing, and myopic short-term thinking are pretty much a given.
This thinking isn’t really dead in “Detroit”.
There’s de Nysschen moving Cadillac to NYC in an effort to appear more upscale, Akerson who wasn’t willing to build cars that would “blow the doors off” but just be competitive.
Ford’s move to be a “mobility” company while killing off their car lines in the NA market..
I imagine the Corporate meetings involve a lot of buzz phrases like shift the paradigm, set the bar higher, Synergy, Disrupt and maybe even a forced joke about being on fleek in an attempt to appeal to the yoots.
I don’t know what fleek is, but if anyone needs me at the end of the day I’ll be outside the box under the bus going forward.
And football metaphors. Lots of lots of football metaphors.
What’s the game plan. Who’s the quarterback on this project. Move the ball forward. A Hail Mary pass.
It is not just Detroit with the myopic issues, it is endemic to the economy as a whole. Shareholders, with their constant need of this month’s sales numbers being higher, negates the ability to focus on long term strategy. Instead of being asked to look at long term plans, companies are forced to put out new product without sufficient planning, or reduce costs, or make some sacrifice of long term strategy. Add in arrogant CEOs, seemingly out of touch with the market, and voila, instant failure. Even some of the more successful CEOs eventually found their downfall in the arrogance of their perceptions on what the market really wanted. When you show someone something that they did not even know they wanted, then you are thinking long term. We have very little of that happening in the auto industry right now.
I think you’ve really put your finger on two serious ways the mainstream industry is falling short. One: US automakers in particular are subject to Wall Street’s obsession with short-term profit at the expense of all else. Their impatient greed screws up most of American industry, not just Detroit. We could change the rules to favor long-term business decisions more like what the Europeans and Asians enjoy, but for now the Wall St. short-termers and short-sellers rule.
The other is lack of genius-class leadership, which is rare. I’m thinking of Steve Jobs in our time, maybe Lee Iacocca in earlier times. Their genius is in knowing what consumers want before they do. And having the personal leadership and charisma to bring it about. Who knew how badly the world wanted iPods, iPads and iPhones? For that matter, how about the Mustang and the minivan?
DeLorean surely thought he was a genius but he fell short. Wide-track and GTO were good ideas, but not industry-changing.
Today’s genius candidate is Elon Musk. The EV was a joke for decades. Enabling technology came along but few saw its potential. Who knew a high-end supercar electric sedan would rock the car world? Now he’s smart in trying to escape from Wall St. by going private. Like the others, Musk is human and suffers bad patches at times. We’ll soon see if Elon can rise to the level of Jobs in his product and business genius.
I’m watching the news while reading this, DW News has just reported that the big buyer who was going to take Tesla private has pulled out. And as a consequence, share prices of Tesla have dropped 3-4%.
One of the best ideas-that-got-nowhere to come out of the 2008 crash was a penny-per-trade stock transaction tax which would wipe out any profits from flash trading and help to cultivate the buy-to-hold mentality that theoretical defenses of capitalism count on.
Well said, JFrank!
We could think of Roger Smith, one of the worst CEOs ever. He managed to drive General Motors down to the ground and alienated lot of loyal owners into switching to Japanese and European brands.
What astonishes me about Smith was his willingness to spend lavishly on robots, FWD, anything Big Picture that would scale on paper, while absolutely refusing to put in the cost-per-unit it took to make a car feel *nice*. Buicks and Oldsmobiles felt like Chevys used to and Chevys just felt…cheap. It was the opposite of putting the money where the customer could see it.
Good points above.
That said, I think the fact that the DeLorean was a CREDIBLE car (in a way that, honestly, IMO, I don’t think the Bricklin was–I consider it a glorified kit car), a real car, is an amazing accomplishment!
There is so much that can go wrong…yet today, 35 years later, there are running DMC-12s.
I feel the same about the Tesla. Yes, the CEO is arrogant–and losing tons of money, but the Tesla is not just credible, but in many aspects, superlative.
Even the “lousiest” modern automakers, say Renault or Fiat or Lada, offer products with a level of reliability and refinement that is very hard for a start-up to match.
It’s not rocket science to build an credible automobile, but the details are things that can go wrong…death by a thousand paper cuts.
The lead pic in this…… I see Chevy influences. It looks almost like some one put a Delorean logo on the hood of a cavalier
Well, keep in mind that sealed-beam headlamps were still mandatory in the United States when the DeLorean was designed and built, and the options were round or rectangular one large or two small on each side. There’s really only so much you can do with that, even if we include hiding them.
True. But I think I’m the lead pic it’s the flat hood and the fiberglass grill surrounding that initiated that thought
There’s definitely a resemblance, the 84 3-door Caviliers always looked like Deloreans to me as well, but I think the 84 facelift was influenced by Delorean, not the other way around.
I’m not so sure I get your point. Building a 2 seat sports car has been THE only way anyone has been able to break into the auto business since WW2 and survive. Think Porsche, Ferrari, McLaren, Lotus, and a good number of others. Obviously, Porsche was the model DeLorean was trying to imitate. Porsche went on to become the most profitable automaker in the world, and almost succeeded in taking over VW. Even though that failed, it still generated massive gains for the Porsche clan.
What was DeLorean supposed to do; lay out a plan to imitate GM or another mass market maker? That’s just utterly impossible. Ask Elon Musk how easy it is to break into the mass-market arena.
Can you cite me an example of a new start up automaker entering the US or European market with a mass market car(s)? The only place it’s happening is in China, for obvious reasons. And the only other example is Tesla, but DeLorean and his car weren’t nearly as radical as Tesla.
DeLorean did what he had to do to fulfill his egotistical vision of building a car with his name on it. Although the car had flaws and failed, in principle, building a sporty 2 seater is just about the only way one could even hope to make that work. So I don’t fault him for that. It was the one logical and obvious thing he did do right.
Only post-WW2 startup I can think that made mainstream sedans is Kaiser-Frazer, and that obviously didn’t work out.
Subaru would be one. 1953 and the 1500 and 360 weren’t sports cars by any stretch. The “sports” cars they did eventually build were interesting but not particularly successful.
Well, Henry J was a Kaiser-Frazer, so I guess that doesn’t count (nor does the consolidation of older brands like Hudson into AMC, nor converted names like Eagle).
I think Saab was formed right after WW2, but of course it is also gone now (but it had “regular” cars but also some sports cars.
Other cars like “Citicar” from Vanguard were really along the lines of Tesla (obviously stressing economy more than performance)..but they’re gone too.
Kia dates from right before the end of WW2, but Hyundai is apparently from 1976 (though undoubtedly its roots go further back…and of course they make much more than automobiles.
Agree with Paul.
From my perspective, the Quandt analogy is a bit hard to see; he was essentially family money that sustained BMW while the company was on the verge of introducing the Neue Klasse. He himself had little to do with that model, but provided the cash lifeline giving it time to get to market. Soichiro Honda – in contrast to JZD – was a failure before he was a success which I would posit was a significant aspect to his eventual longevity.
+1
Well said, Don
Tesla didn’t break into the industry with a mass market car. The Roadster was quite popular, at least in the Bay Area where it was more visible than DeLoreans or Bricklins ever were. And, the Roadster was heavily based on an existing car (Lotus Elise) just like Porsche with the 356/Beetle relationship. DeLorean leveraged the powertrain with a new platform; Tesla leveraged the platform with a new powertrain but both picked their areas for value-add and leveraged the rest.
Agree, my company used to produce the owners manuals and some marketing materials for Tesla years before the Model S was even a glimmer and they were still building (converting?) them by hand in the industrial back streets of San Carlos.
It’s ironic that the DeLorean was a rear-engine car. Not a mid-engine car, but a true rear engine car.. Back when John DeLorean and Bunkie Knudsen were at Pontiac, they rejected the Pontiac Polaris – a compact car based on the Corvair – and instead came out with the rope-drive Tempest. And by the 1970s, the rear-engine concept was generally considered a dead end, (Porsche excepted, of course). But for whatever reason, John DeLorean gave the green light to a rear engine car with his name on it. By the way, I love rear engine cars, but I have to admit that they’re an acquired taste!
When I was eighteen back in 1981, a friend recommended I read “On A Clear Day You Can See General Motors”, by John DeLorean. I had never heard of him…yet, but his book made an impression on me. My friend and I discussed the book, but my main disappointment with it was there was no “GM’s side” to the story. My friend said,”Do you think they would have responded , even if asked?”. Good point. Even still, DeLorean came off as arrogant and self-aggrandizing.
Then came the car. It looked fabulous, the stainless steel finish was unique, but there were issues, to be expected. The issues grew larger. Then there was the bust. It. Was. All. Over. Then DeLorean penned a second book, I forget the title, but I recall eagerly looking for it. I read the preface, where he recounts a moment several hours before the bust, where he says he was going out to essentially steal from the mob. That’s all I had to read. There’s nothing that could possibly be taken seriously in a book written by a man who thought he could hoodwink mobsters, and live to tell about it. To this day I’m surprised they didn’t “off” him just for the disrespect.
All that said, I felt then, as now, that it was a mistake to start with a higher-end sports car, rather than a mass market car such as a small sedan. I read Paul’s earlier comment that the only way any new, upstart car company breaks into the market is with upscale product. I look back to Hyundai’s entry into the US market. Granted, they were not a new company, but to most Americans they were. They started at the bottom, rather than the top, with the Excel. A car that pretty much everyone I know scoffed at. Yet here they are, 30+ years hence, and they’re a respected, top-selling brand. Now that I think about it, all the “invasion” brands, VW included, started at the bottom end of the market when entering the US market. With all his experience and executive ability, I still think that’s what DeLorean should have done. Something cheap, with mass appeal. So…I’m respectfully disagreeing with Paul in this regard.
Are you aware of the fact that essentially nobody is making a profit on small cars in the US? Not even the Japanese and the Koreans. In fact, Hyundai has been hit with huge losses lately, because they have too many sedans and not enough trucks. There is zero money to be made in small cars, and that’s from manufacturers that have the production facilities in place. Investing billions to build factories to make small cars is absolute suicide.
The only reason the Japanese did so well with small cars in the 70s and 80s, and the Koreans in the 90s and 00s is because their currencies made it possible to sell them here at a profit, at least some or most of the time. But these companies already had large factories.
What you’re suggesting flies against everything that is the reality of the current market. Car companies are freaking out about the huge losses on sedans and passenger cars.
You are absolutely correct about the current market. However, I thought we were discussing the market of 35 years ago, when DeLorean was still a player. To be honest, I really I have little clue as to how companies determine their marketing and sales strategies in foreign markets based upon currency valuations. That said, I also disagree with the author of this article about the early 80s economy being conducive for the launch of an upper-crust type car. It was a horrible recession in the early 80s; maybe by 1984 the time was ripe, but DeLorean Motor Cars was already dead by then. Lots of manufacturers today lack a dedicated truck line. Honda seems to do okay without any trucks; and I do not consider the Ridgeline, Pilot, or any variants thereof to be trucks. They’re cars with increased ride height and suspension travel, in my opinion. Toyota just can’t seem to get any serious traction with their Tundra, but they also have the Hino nameplate. Isuzu gave up on cars long ago in the US market, but their low cab forward medium duty trucks are the standard by which that segment is judged. Nissan is giving the Titan a new push in the commercial light truck segment, but that’s a low-profit/high-volume market. It seems the sedan is on the way out, but I’m not convinced. As you said, it’s a low/no profit market, but things can change. I suspect they will, and the manufacturers that can quickly react to a changing market trend stand to make a mint. Ford is taking a huge gamble killing off their car line; it won’t be there if and when they need it.
But, what do I know? I’m just an interested observer with no training, no experience, and no skin in those games. Just my thoughts.
Hyundai had low labor costs (emerging economy) and a protected home market to fall back on. Also, in the ’80s auto loans were shorter, interest rates higher and personal leases far less common so even when gas was cheap there was still a market for small and basic.
Bricklins, meh. Deloreans, meh.
I also read ‘On A Clear Day You Can See General Motors’ a long time ago. It was written by a reporter who did NOT have John Z.’s permission to release it. And from what I remember, he came across as incredibly arrogant as well.