In its early years the automobile industry consisted of hundreds of firms, each producing a few models. William Durant, who bought and reorganized a failing Buick Motors in 1904, determined that if several automobile makers would unite, it would increase the protection for the group. He formed the General Motors Company in Flint, Michigan, in 1908. Durant had bought 17 companies (including Oldsmobile, Cadillac, and Pontiac) by 1910, the year a bankers’ syndicate forced him to step down. In a 1915 stock swap, he regained control through Chevrolet, a company he had formed with race car driver Louis Chevrolet.
GM created the GM Acceptance Corporation (auto financing) and acquired a number of businesses, including Fisher Body, Frigidaire (sold in 1979), and a small bearing company, Hyatt Roller Bearing. With the Hyatt acquisition came Alfred Sloan, an administrative genius who would build GM into a corporate colossus. Sloan, president from 1923 to 1937, implemented a decentralized management system, now emulated worldwide. The auto maker competed by offering models ranging from luxury to economy, colors besides black, and yearly style modifications. By 1927 it had become the industry leader.
GM introduced a line of front-wheel-drive compacts in 1979. Under Roger Smith, CEO from 1981 to 1990, GM laid off thousands of workers as part of a massive companywide restructuring and cost cutting program. In 1984 GM formed NUMMI with Toyota as an experiment to see if Toyota’s manufacturing techniques would work in the US. The joint venture’s first car was the Chevy Nova. GM bought Ross Perot’s Electronic Data Systems (1984) and Hughes Aircraft (1986). In 1989 the company bought 50% of Saab Automobile. In 1990 GM launched Saturn, its first new nameplate since 1926, reflecting a new companywide emphasis on quality.
Two years later it made the largest stock offering in US history, raising $2. 2 billion. Culminating a period of boardroom coups (relating to the company’s lagging effort to reduce costs) in the early 1990s, John Smith replaced Robert Stempel as CEO. NBC apologized in 1993 for improprieties in its expose alleging that GM pickups equipped with “sidesaddle” gas tanks tended to explode upon side impact. The government nonetheless asked the company to recall 4. 7 million trucks. A unanimous federal appeals court in 1995 overturned the settlement of a national class action suit involving the pickups.
That year GM sold its National Car Rental business to a group of investors led by former Chrysler executive William Lobeck. In 1996 the United Auto Workers struck at 2 GM plants in Ohio over the company’s increasing its outsourcing of brake parts. The strike lasted 17 days, idling 24 of the automaker’s 29 North American plants (reflecting the vulnerability of just-in-time supply chains), and ended with neither side satisfied. GM sued Volkswagen in 1996, alleging the German automaker encouraged former GM executive Ignacio Lopez to defect to Volkswagen with boxes of proprietary company information.
The bitter dispute led to Lopez’s resignation from Volkswagen and was resolved in early 1997 when VW agreed to pay GM $100 million and purchase $1 billion of parts from GM over 7 years. In 1996 GM spun off EDS (with a market value of $27 billion) to shareholders. Also that year GM agreed to sell 4 of its parts plants to Peregrine Inc. (formed by investment firm Joseph Littlejohn & Levy) for an undisclosed amount. In late 1996 GM began producing Chevrolet Blazers in Russia.
