When GM First Messed Up

Through arrogance and poor quality, GM lost boomers' faith and trust back in the 1970s—and never regained it, writes Ed Wallace

By Ed Wallace

It was 1974, and America was racked by the worst recession since the Great Depression, a direct result of the Arab Oil Embargo of 1973. At 21, trying to find my way in the world with somewhere around $5 left in my checking account, I took a sales job at Sam White Oldsmobile in Houston. Even though car sales were beginning a collapse—from 14.6 million annually to 11.1 million two years later—things were still good in Houston. Sam White would end up No. 2 in the nation that year with 5,200 Oldsmobile sales, beaten for the top slot by Bill McDavid Oldsmobile on the other side of town.

Over the next 10 years I would have a front-row seat to the self-inflicted destruction of General Motors. It started in 1975, and the undoing of General Motors was the result of three problems.

First, GM creative designs were quickly heading south. Second, GM executives seemed not to care about major engineering mistakes that would ultimately cost them the loyalty of their large core audience. Finally, the arrogance of GM's executives was incredible. Anyone who gave them an honest appraisal of their products' shortcomings would have his head handed to him and his ears blistered.

Starfire and Swivel Seats

Sam White Oldsmobile was the perfect first spot for a young man in the auto industry. Most important, Bill Buxton, Oldsmobile's general manager, was in our store on a regular basis. However, he didn't care for any criticism that suggested GM's products might cause a defection in its customer base.

It started with the 1975 Olds Starfire. The interior space was cramped because the transmission required a large center hump. The car had originally been designed to use Mazda's Wankel rotary engine, but at the last minute GM realized that the engine could not be certified to meet 1975 emission standards. So GM quickly decided to use its old Odd-Fire V6, having repurchased the patent rights from Jeep.

In spite of its smaller size, the Starfire drove like a tank and gulped gasoline, and its engine was noisy and rough. Anybody who bought an Olds Starfire (or its cousins the Chevy Monza or Buick Skyhawk) would be a motivated buyer for Japan's next offerings.

1975 also marked the year that GM decided to remove the conventional bucket seats from the unbelievably popular Cutlass Supreme and replace them with the swivel buckets used in the Chevrolet Monte Carlo. Salespeople groaned: That design never allowed easy access to the backseat. Plus the seats squeaked, and they started wobbling soon after purchase. Customers hated the seats for the inconvenience; dealers hated them because of their known problems. The entire sales staff at Sam White Olds politely told Bill Buxton of our concerns.

Bad decision. Buxton launched into a tantrum that you might expect from a 5-year-old. Red-faced, he told the entire staff that they were the worst salesmen in all of General Motors if they didn't understand the brilliance of GM's decision. It was shocking to see a GM executive behave in that way.

But GM's callous disregard for its customers was just beginning.

Basic Stupid Choices

In early 1976 tire manufacturers experienced a national strike. Car companies were forced to build their products without including a spare tire—in a period when customers cared about that safety item. The promise was that once the strike was over, GM would send spare tires to the dealerships to be added to its cars.

Only…in fulfilling that promise GM simply sent tires—not specifically the same models or tread designs on the customers' vehicles—meaning that virtually everyone got a mismatched spare. It was a huge deal to GM customers back then; I'd never seen customers as angry about any issue as that deception.

In 1977, GM was caught swapping engines between car divisions. Today that's a normal part of the business, but salespeople had been trained to sell their customers on why a Chevrolet engine was not a Buick engine and so on. With this revelation, General Motors had managed to make liars out of half of its national sales force.

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