Some were happy unions, while others ...
Daimler and Benz
Chrysler and AMC
Chrysler and Daimler
Chrysler and Cerberus
Chrysler and Fiat
Studebaker and Pierce-Arrow
Studebaker and Packard
General Motors and Frigidaire
General Motors and Saab
Saab and … well, just about everybody …
We told you it was complicated
Volvo and Geely
Ford’s Premier Auto Group
Rolls-Royce’s Two Suitors
Nissan and Renault
Volkswagen and Porsche
- Daimler and Benz
- American Motors
- Chrysler and AMC
- Chrysler and Daimler
- Chrysler and...
- Chrysler and Fiat
- Studebaker and...
- Studebaker and...
- General Motors...
- General Motors...
- Saab and … well,...
- We told you it...
- Volvo and Geely
- Ford’s Premier...
- Legal Separation
- Rolls-Royce’s Two...
- Joint Custody
- Nissan and Renault
- Volkswagen and...
Marriages usually start with the best of intentions, but you never know where they’re going to go. Some couples are very happy, while others trudge along and make the best of it. And, of course, more than a few eventually make their way to divorce court. Let’s look at some of the “automaker marriages” over the years to see just how they fared.
Historians generally credit Karl Benz with inventing the automobile in 1886, but many give equal billing to a motorized carriage built by Gottlieb Daimler around the same time. Benz’s company became Mercedes-Benz after agent Emil Jellinek substantially increased sales but insisted a new model be named after his daughter Mercedes. Daimler died in 1900, but Benz was still around when Daimler-Motoren-Gesellschaft and Benz & Cie. merged in 1926. Although their companies got together, it’s believed the two men never met.
American Motors Corporation, or AMC, was formed in 1954 as a marriage of Hudson, founded in 1909, and Nash, formed in 1917 after it took over a small automaker named Jeffrey. Plans were to include Studebaker as well, but that never happened. Cars were marketed under the Hudson and Nash names until 1958, when models were sold as Rambler, which had been a popular Nash nameplate. In 1970, the company bought Kaiser-Jeep, which gave it the popular SUV that would provide much of its appeal to its future marriage partner.
Renault bought a share of AMC in 1979, primarily to sell its compact Le Car in North America, but a severe recession created huge losses for the small American automaker. Rather than lose its foothold, Renault poured in another $122 million for controlling interest. But the French cars never sold very well, and Renault left the U.S. market when it sold AMC to Chrysler in 1987 for $1.5 billion. The deal included Jeep, with an estimated worth of over $800 million, along with AMC’s plant in Brampton, Ontario, which had opened just a year earlier, and which now makes the Dodge Charger and Challenger, and Chrysler 300. Chrysler promptly renamed the AMC car line Eagle, but discontinued it in 1998.
Following the AMC deal, Chrysler worked its way back to considerable profitability, which didn’t go unnoticed in Germany. A 1998 marriage of Daimler and Chrysler was initially billed as a “merger of equals,” but pundits soon quipped that when pronouncing DaimlerChrysler, “the Chrysler is silent,” and they were right. The initial plan was that Chrysler’s facilities could help amortize Benz’s high production costs, but little of that happened. Mercedes-Benz did introduce North America to European-style work vans when it sold the Sprinter through its truck-savvy Dodge dealers. But Chrysler was soon bleeding cash, and Daimler wanted a divorce.
It’s rumored that General Motors came very close to buying its cross-town rival from Daimler, but ultimately, in May 2007, Chrysler went to Cerberus for $7.4 billion. It wasn’t a good omen: Cerberus was a capital management company, not an automaker, and it was strictly looking for rapid profit. It brought in numerous advisors, many of whom had worked for Chrysler before, but the planned comeback didn’t happen, and Chrysler filed for bankruptcy in April 2009. Cerberus sold off Chrysler Financial to TD Bank, and had tried but failed to sell the Viper division, too.
Chrysler’s bankruptcy wiped out most of Cerberus’ stake in the car company. Following its bailout, Chrysler essentially belonged to the U.S. government, which handed over a portion of it to Fiat in return for keeping the American assembly lines running and jobs intact. The Italian automaker gradually purchased more shares, and in January 2014 completed the takeover. The company is now called Fiat Chrysler Automobiles. The deal brought Fiat-brand cars back to North America, and shared engineering has produced blended models such as the Dodge Dart and Jeep Cherokee. Only time will tell if this will finally be a successful relationship for Chrysler.
Pierce-Arrow was a high-end luxury automaker founded in Buffalo, New York in 1901. Studebaker bought it in 1928; the company was profitable, but it was relatively small, and its shareholders saw a benefit in joining a much larger firm. Pierce-Arrow had its best year in 1929, but then came a double whammy of the Depression and Studebaker president Albert Erskine, who continued to hand out generous stock dividends even as car sales plummeted. Studebaker sold Pierce-Arrow to a group of Buffalo businessmen in 1933 for $1 million, but the company folded in 1938. Studebaker also went bankrupt in 1933, and while it eventually bounced back, Erskine resigned and then committed suicide.
Following the Second World War, smaller U.S. automakers were seeing tougher times. Many merged with others to save themselves, including Packard, which bought Studebaker in 1954. But things got worse, and the company asked the government for help. Eisenhower was campaigning for presidential re-election and didn’t want an auto company failure on his watch, so he pressured an aircraft company to buy some of Studebaker-Packard’s plants and assets in return for government defense contracts. A subsequent 1957 reorganization kept Studebaker but killed Packard. The last 1958 Packard models were hideous versions of the Studebaker Golden Hawk.
Rather than create its own vehicles, General Motors was founded as an umbrella company that bought auto and parts companies. In 1918, GM founder Billy Durant also bought the Guardian Frigerator Company. A small firm based in Detroit, Guardian made electric refrigerators, a far more convenient alternative to the icebox. Durant renamed it Frigidaire and turned it into a very successful business that eventually made a wide variety of products, including air conditioners and stoves. GM sold the company in 1979, and today it belongs to Electrolux. GM wasn’t the only automaker to associate with appliance companies: Nash developed the first compact, under-hood air conditioning system through the expertise of its Kelvinator refrigerator division.
After a breakup, there’s always a chance of finding love again—but in this Saab story, it wasn’t to be. General Motors bought Saab in the heady days when it was all the rage for American car companies to own a foreign automaker or two, taking half of the Swedish company in 1990 and the rest ten years later. Its products became a hodgepodge of genuine Saab cars and some Saab-badged GMs (plus one based on the Subaru Impreza), and it lost enough cash that GM finally stopped the assembly lines and put it up for sale. Then things just got weird …
Pay attention, because it gets complicated. GM sold Saab to Spyker in January 2010, and two months later, the factory started making cars again. In June, auto writers drove and praised the all-new Saab 9-5, and the company signed a deal with BMW to supply turbocharged engines. But money got tight, production stopped, and Spyker talked to Chinese and Russian investors. Pang Da, a Chinese automaker, ordered cars and production began, but ceased again when unpaid suppliers stopped shipping parts. So …
Pang Da ordered more cars and promised to pay in advance, but no money arrived. Saab received a loan from an investment fund, but the plants stayed idle, and Saab filed for bankruptcy. The Swedish courts denied the automaker’s reorganization attempt, but then a parts supplier forced it into insolvency. Saab then got a funding commitment from an investment company, but it fell through, too. Pang Da finally came back to the table, but that’s when GM stepped in: Saab still held GM technology that the American automaker wouldn’t hand over to the Chinese company. That was the fatal blow. On December 19, 2011, Saab finally folded.
Sweden’s other automaker went to Ford in 1999 for $6.45 billion. The relationship was expected to be beneficial to Volvo, since it would save money by sharing platforms and engineering, and it would be able to devote more attention to its heavy-duty truck and bus business. But despite all its good intentions, Ford couldn’t make money with this low-volume acquisition, and it sent Volvo back out on the market. In 2010, it was purchased by Chinese automaker Geely for $1.8 billion, a far cry from what Ford originally paid for it.
Ford’s purchase of Volvo was part of its Premier Auto Group (PAG), an unusual plan to take the essentially blue-collar brand into the upper echelon. It began in 1987 with the purchase of Aston Martin, and eventually included Volvo in 1999, Jaguar in 1989, and Land Rover in 2000—and those last two, originally independent companies, married in 2002 with PAG as their matchmaker. Each year, Ford optimistically reported that PAG was on the verge of profitability, but losses soared as high as $894 million. Lincoln was even rolled into PAG for a couple of years before being pulled back out.
None of the PAG brands were money-makers going in, and they didn’t do any better with Ford, especially when cross-engineering began and buyers balked at Jaguars with Ford parts inside them. With new cost-cutting measures sweeping through Ford, PAG was doomed. Aston Martin went first, sold in 2007 to a consortium that included an Aston Martin collector and an investment firm in Kuwait. It was valued at $925 million, with Ford retaining a $77 million share. Jaguar and Land Rover went as a package to India’s Tata Group for $2.3 billion, about half of what Ford paid for them. The timing was fortuitous: the cash influx and leaner operation helped Ford get through the financial crisis without government bailout money.
Although it represented the pinnacle of automotive luxury, Rolls-Royce fell on hard times when global exchange rates caused huge losses in its aircraft engine division. It was nationalized by the British government in 1971, and sold to engineering and manufacturing firm Vickers in 1980. Vickers put it up for sale in 1998, and Volkswagen outbid BMW for it. But while VW got the car, the flying lady mascot, and the factory, the name and “RR” logo technically belonged to Rolls-Royce’s aircraft engine company—and because it had a joint venture with BMW, that automaker got the license for those. Neither VW nor BMW could build the entire package.
At first, BMW played tough. It already supplied many of Rolls-Royce’s engines and components, and it threatened to turn off the tap, which would have left Volkswagen struggling for parts. After ten months of negotiations, they worked out a solution. For the next four years, VW could use the name to build the cars, but would continue to buy the engines from BMW. The companies parted ways in 2003, with Volkswagen building Bentleys in the historic Rolls-Royce plant in Crewe, and BMW making Rolls-Royces at a new facility in Goodwood.
It didn’t have much luck with American Motors, but Renault did much better with Nissan. The two formed the Renault-Nissan Alliance in March 1999, which they called the first industrial and commercial partnership of its kind between French and Japanese companies. While each company retains its own identity, the two recently announced increased commonality in engineering, manufacturing, and purchasing, to reduce costs. It’s a partnership that seems to be working well, and in 2010, it inked a deal with Mercedes-Benz to share small-vehicle platforms and engines.
Bickering couples usually wait at least until after the honeymoon to start their battles, but these two started their courtship that way. In 2008, Porsche tried to take over Volkswagen, a much larger company. Hindered by the financial crisis and its slumping sales, Porsche couldn’t quite get the majority of shares it needed. Mired in debt, Porsche then agreed to a takeover by Volkswagen, which acquired half in 2009, and the remaining portion in 2012. The deal included Porsche keeping one share of VW, which legally made it a restructuring rather than a takeover, saving some $1 billion in taxes. It didn’t start out as the ideal marriage, but it looks like it’s finally smooth sailing.