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My Years With General Motors

Alfred P. Sloan jnr

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When Sloan took control of GM in 1921, company had multiple product lines which did not make money. So made explicit the aim of the company was to make money, not just to make cars. So reorg into price line groups, from cheapest to most expensive, with price steps close enough not to leave big gaps that a competitor might exploit.

Sounds commonsense now, but not obvious at the time. Ford had more than half the market with just two models - the high-volume-low price Model T and the low-volume-high-priced Lincoln. The other car makers - Dodge, Willys, Maxwell (later Chrysler), Hudson, Studebaker and Nash were all making cars with different pricing policies.

Having decided the relevant price brackets, GM then aimed to place their cars at the top of each price range and make them of such quality that would attract customers prepared to pay a little more for the best, but also to grab buyers from next bracket who could see the price advantage for nearly the same quality or specs.

The concept eventually proved right, but was ahead of it's time - not until end of decade did it come into its own. Several other factors had to come into play first.

The most impt was the rise of the closed body. This made it impossible for Henry Ford to maintain his dominance of the low-price field, because the light chassis of the Model T was unsuited to the extra weight. (HF did it anyway, but made the car underpowered and it was not a success). The Model T was no longer the best value.

The big thing that HF failed to realize was that the used car market was mopping up all the demand for cheap cars. You cd get a better specced second hand Chev or Dodge cheaper than any Model T. Then, when used car buyers came to buy a new car, it was bc they wanted more features, and so they went for a Chevrolet or Plymouth.

And hire purchase introduced, making the cost difference seem even less.

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