One question that people often look for the answer to is – why Studebaker failed to continue their business even after gaining immense success. This American company is best known for designing electric vehicles in the early 20th century. It first started manufacturing the car bodies for New York Electric Vehicle Co. in 1897.
Back then, Studebaker used to manufacture only battery-driven passenger cars and commercial vehicles. This automobile company switched to gas-powered vehicles after 14 years in 1911. Moreover, Studebaker even produced horse-drawn vehicles like buggies and farm wagons until 1920.
The company decided to sell their horse-driven vehicles to another automobile company named Kentucky Wagon Manufacturing Co. Unfortunately, Studebaker went out of business in 1933, especially due to the inability to pay the debt. The president of this company, Albert Erksine, resigned and died later this year.
However, Studebaker eventually overcame the financial challenges and continued the business. It partnered with Wagner Electric, a leading electric equipment manufacturing firm, in 1967. Then, Worthington Corp established Studebaker-Worthington this year through the merger of Studebaker-Packard Corporation.
Let’s get to know more about Studebaker and the reasons why it shut down their business:
Why Did Studebaker Discontinue their Automobile Business?
Several reasons can be addressed for Studebaker’s sudden declaration of shutting down their business. An effective policy for business guides all the employees of the organisation to make the best decisions. On the other hand, Absurd policies can lead to business failure.
Studebaker’s business policies are the prime reason why they fail to run the company. Inadequate knowledge about the vehicle bodies or parts is another reason for their failure. Besides, the company made poor decisions between 1920-1940.
This automobile manufacturer collaborated with Packard in 1954, but still, their business failed to generate profits. Here are the other reasons why Studebaker goes out of business:
1. Failure to Meet the Customer’s Demand
Fulfilling customers’ demands is crucial for every business, regardless of their size or type. It helps the business to drive sales and enhances the customer’s trustworthiness when a company consistently meets these needs.
However, the failure to meet the customer’s ever-changing demands can decrease the company’s sales. It also damages the company’s image and reputation. This is what happened with Studebaker. They could not fulfil the customer’s expectations, and they suffered a severe loss.
2. Failure to Develop Unique Styles for Vehicles
Innovation is necessary for automobile manufacturing companies as it fosters growth. Bringing new and advanced technologies into automobiles helps the business to sustain itself in the competitive market. However, Studebaker failed to create new styles for their vehicle, which let their automobile business down.
3. Lack of Engineering Improvements
Continuous engineering and quality improvements are essential for every automobile manufacturer. It helps businesses to stay ahead of the stiff competition and enhances customer satisfaction. Defective vehicle parts might lead to accidents, which could take the customer’s life.
Studebaker was unable to include new engineering improvements in their vehicles. This automobile manufacturing company used the same design in their cars for a decade. This is another reason they leave the business within a few years.
4. Problems in the 1953 Vehicle Models
Studebaker debuted two new Champion models – one with two and the other with a four-door style. The company also offered the 2-door body style flashy Starlight coupes and Staretliner in 1954. The trim levels for Studebaker Champion were introduced in 1954 to drive sales.
Studebaker’s 1953 and 1954 vehicle models can be easily differentiated by seeing brakes. The 1953 models’ was difficult to service and caused genuine concern to the vehicle owners. Sales and quality problems with these car models are another major downturn for Studebaker.
5. Insufficient Funds
Sufficient funds are required to run a business or continue daily operations. Insufficient funds make investing in new products or redesigning existing vehicle parts difficult. In short, having money is essential to cover the necessary business expenditures.
Studebaker failed to save money for their business, preventing them from producing or improving the vehicles’ quality. Besides, they paid the shareholders a large amount of the automobile company’s profit. This didn’t seem a problem to Studebaker until 1953, but they ran out of cash to continue the business in 1953.
6. Company’s Management-related Problems
People blame the management team when a company fails, which is true in most cases. Studebaker shut down their business also for this reason. The company agreed with Curtiss-Wright in 1956. He managed this premier automobile manufacturing business for a while, creating another problem.
Studebaker needed funds to run the business, not a new manager. Instead, Curtiss-Wright’s intervention in the company was a major downturn. He had almost no experience or knowledge in the automobile industry. Curtiss-Wright’s management created more crises in the Studebaker company.
7. High Labor Costs
Another major problem with Studebaker was their aggressive union, resulting in high labour costs. The company was already encountering financial challenges, and the high labour cost caused more problems.
Studebaker always fulfilled the union demands to avoid the risk of a strike. Thus, they tried to pay their labourers high wages even when the company was going through a crisis. They took a large debt to pay their workers and produce the vehicle parts. As a result, Studebaker went bankrupt for not repaying the debt to the lenders.
8. Sherwood Egbert’s Faults
Studebaker discontinued the agreement with Sherwood Egbert when he was diagnosed with stomach cancer. Many think the company would have recovered from the financial loss if Egbet had been alive. However, his mistake was that he only stayed in the car business. It can be assumed that if Egbert changed the company’s focus to other businesses, Studebaker would never fall.
Which Was the Fastest Vehicle of the Studebaker Company?
You must have heard about the classic Studebaker Avanti, right? It is considered to be the world’s fastest car, which was released in 1962. This Studebaker car reached over 170 mph, and it was supercharged with a 289-cubic-inch R3 engine. However, Avanti’s design received massive criticism from many in the 19th century.
Pictures of Studebaker’s Avanti first appeared in magazines in 1962. It has a unique 4-seater coupe, which attracted many buyers. Raymond Loewy and Tom Kellog designed and styled this fastest Studebaker vehicle. They completed Avanti’s design within 40 days, which is pretty impressive.
Studebaker Avanti is basically a modified version of the Lark 109 model. It has a convertible chassis and fibreglass instead of steel in the car’s body. The company also added power disc brakes with finned drum brakes in the vehicle’s rear.
Avanti weighs only 1,404 Kg and it offers a similar driving performance to Ford Mustang. Unfortunately, Studebaker stopped producing Avant in 1963 due to financial problems. Nate, Arnold Altman and Leo Newman redesigned this car and renamed it “Avanti II” and changed the engine for better performance.
Which was the Last Car Manufactured by Studebaker?
The last car that Studebaker produced is a “66 Cruiser 4-door sedan with a 283 CID V8 engine. The engine of this vehicle is located at the front and has a rear wheel. It weighs 1390.261 Kg, which is comparatively lighter than the Studebaker Avanti. You will find this vehicle in the Studebaker National Museum, located in South Bend.