The 1980s cars had a big problem in America.
American automobiles of the 1980s were being outsold by imports, notably Japanese cars. In the early 1980s Chrysler lost $1.7 billion in a single year; Ford lost $1.5 billion and GM $763 billion.
It was a reality that the Big Three had to face and the truth was hard to swallow. The Japanese, whose products were being derided by Americans a generation before, had done their homework and were producing cars that outperform American-made ones. It was a slow process that produced reliable, quality cars. In the early 1950s, Japanese automakers visited American plants. They learned what they had from American plants, absorbed the technology and then adapted it to fit their own society. They created massive auto factories where work was broken down into specific operations carried out by teams working together.
This was a departure from the way Americans produce their cars. In the U.S., management and workers didn't get along well. The auto unions fostered a distrust between them and management, hence quality of the cars they make wasn't a priority with them but just a byproduct of their existence as employees. In Japan, there was not only mutual respect between supervisor and worker, there was also constant dialogue. Management valued the input of the assembly-line worker because he was closest to the production process.
The Japanese didn't really invent anything. They used many of the existing technologies plus discipline in manufacturing their 1980s cars.
The slide of 1980s automobiles in America was precipitated by the 1979 oil embargo on Iranian oil placed by the U.S. in response to Iran's hostage-taking of American embassy personnel in Iran. For the second time in the 1970s, there were long lines and high prices at the gas pump.
Americans had realized that they had to shed their dislike for smaller cars, where they had to cram their big frames and bodies. Fearful of being unable to use their cars because of the gas shortage, they started buying the smaller Japanese cars. Precisely during that time, the Japanese started pouring their 1980s cars into the U.S. and people started buying them. Americans, who shortly before loved their big, thirsty American-made cars, discovered that Hondas, Nissans, and Toyotas were not only fuel efficient, but mechanically sound as well. That was the shift.
The same derision for shoddy "Made in Japan" products turned to affection. Confidence in Japanese cars began to rise dramatically through a combination of advertising and word of mouth. Starting in early 1980s, the greatest recession/depression for the American auto industry happened. On the other hand, the Japanese were doing very well. In the meantime, by 1980 industry observers estimated that for every 100 American cars coming off the assembly line, there were 700 defects.
American drivers of 1980s cars made in Japan were getting used to a different kind of quality standard, the defect-free standard; the vehicle that almost never has to go back to the dealer for a repair.
American car executives finally realized that to be able to compete with imports, they had to raise their quality and productivity, the standard of excellence in car manufacture, or they weren't going to make it in the car manufacturing business. In the early 1980s, Chrysler was in bad shape compared to Ford and GM who had better resources.
Ford Motor Company
Ford hired Philip Caldwell in late 1979, the first person outside the Ford family to be named CEO. Still reeling from the Pinto disaster, Caldwell had to do something dramatic in manufacturing 1980s cars in order to save the troubled company. He mandated to make quality the number one goal of the Ford Motor Company. But not before losing $1.5 billion in 1980, $1.1 billion in 1981, and $700 million in 1982, a total of $3.3 billion in three years, an astounding figure for a company that had not reported an annual loss since World War II.
Although Ford had a profitable and respected line of trucks, among car owners, the company had become something of a joke. It was decided that the company needed something completely different: a midsize car that would be striking in both design and performance. That car was the Taurus. Conceived in 1980 and introduced in 1985, the Taurus was instrumental in reversing Ford's decline.
Unveiled in January 1985, it was immediately popular. Dealers could not keep the 1980s cars in stock. It performed very well, it was smooth, efficient, economical, comfortable, and fun to drive. It was rounder, more stylish - it didn't look typically American. It was at one time called "the hotdog" because of the sort of round shape but the shape was a blessing in disguise because it became a very distinguishing factor.
The Ford Taurus helped to lift Ford from its early 1980s difficulties.
Ford committed $3 billion to the Taurus project. Even though Ford turned the corner before the Taurus was introduced, by 1986 profits soared to $3.3 billion. The huge popularity of the Taurus, coupled with renewed interest in the company's high-end "Panther" cars (the Lincoln Continental, Lincoln Town Car, Ford Crown Victoria, and Mercury Grand Marquis) helped Ford earned $4.6 billion in 1987 and $5.3 billion in 1988.
1980s Lincoln Continental
1985 Lincoln Town Car
1983 Ford Crown Victoria
1984 Mercury Grand Marquis
Chrysler's comeback was engineered by Lee Iacocca, a
charismatic guy. Once working at Ford to bring the Mustang to
profitability, he was hired by Chrysler to turn the business around.
Virtually broke, the government bailed the company with an unprecedented
$1.2 billion guaranteed loan. With Iacocca's steady hand, the company
slashed its work force by half. With it's line of K-cars - Dodge Aries,
Plymouth Reliant, Chrysler LeBaron, Dodge 400, and, in Mexico, Dodge
Dart, strongly performing, in the first quarter of 1984, Chrysler
showed a profit of more than $700 million. At the end of that year, profit was
$2.38 billion. Profit in 1985 was $1.64 billion. Its line up of 1980s
cars, once again, were profitable.
1980s Dodge 400
1982 Plymouth Reliant
1982 Chrysler LeBaron
1981 Dodge Aries
Lee Iacocca became a celebrity. By turning around a virtually bankrupt company, he went on to make $20 million in 1987. Life again for Chrysler's worker was great. Iacocca, who took the helm of a struggling company, was even talked about as one who would run for President of the United States.
GM made $4.5 billion in 1984, owned 44 percent of the U.S. market, but for all of that, made a series of miscalculations that proved its undoing. By the end of 1986, GM's market share had fallen to 34 percent. Their 1980s cars were of low-quality. Management's stubbornness in the decisions that it made caused the company to spend more than it was making. GM's CEO, Roger Smith, relied on automation (42 billion dollars spent on new factories and equipment form 1980-1985). But the technology failed to deliver. GM's million-dollar robots made more mistakes than its human workers and the company continued to produce the shoddiest 1980s cars in Detroit.
The Pontiac Fiero, a tiny plastic sports car that looked great but had the tendency to burts into flames, was one of the company's worst cars. In 1989 the company built more than 240,000 4-cylinder Fieros; each one was recalled twice!!
Response was slow on its new GM-10 cars (which included the Pontiac Grand Prix, Chevrolet Lumina, and Buick Regal). Mechanical problems plagued the car. Sales were bad. Losing money, the company slashed the work force and closed factories.
Fortunately, GM was compelled to change its tactic. The management adopted the Japanese team approach to making its cars at its independent Saturn division. Saturn's customer-friendly approach to selling them won customers over.
The Pontiac Fiero, shown above, was one of GM's most infamous lemons.
GM-10 cars shown below
1988 Buick Regal
1980s Pontiac Grand Prix