The frigid bite of winter’s chill in South Bend, Indiana is no match for the frosty feelings inside the Studebaker assembly plant on Dec. 20, 1963.
As a two-door Studebaker Lark hardtop coupe rolls off the assembly line, someone scrawls the words “Merry Christmas” on its windshield, its holiday message one of contempt, not cheer. It is the last Studebaker built in America, ending a 112-year legacy of vehicle manufacturing in the United States and the last gasp of an automaker that would disappear two years later.
A 19th Century legacy
Brothers Henry and Clement Studebaker open a wagon-building firm in South Bend, Indiana in 1852, having moved from Pinetown, Pennsylvania. The brothers’ timing is fortuitous. They supply wagons for the California Gold Rush, western migration, the Union Army during the Civil War, and the British military during the Boer War. By 1902, the company is the largest vehicle manufacturer in the world.
But success building wagons makes them hesitant to enter automaking, despite having built a horseless carriage in 1897. Once they do, they choose the wrong horse: electric vehicles, beginning in 1903. The company switches to gasoline power in 1911, by which point Ford’s Model T outsells Studebaker by nearly 5-to-1.
A near-death experience
While Studebaker would never be the world’s largest transportation manufacturer again, they remain reliably profitable until 1928, when Studebaker president Albert Erskine buys luxury automaker Pierce-Arrow. Its market dries up shortly thereafter with the onset of the Great Depression. Two new low-cost models, the Erskine and the Rockne, fail.
An ill-advised purchase of White Motors, and the company’s insistence on paying stockholders generous dividends despite worsening financials, lead Studebaker to bankruptcy in 1933. Erskine resigns, and new management is brought in.
By 1939, the company exits bankruptcy, and is on the upswing with the success of the Champion, developed by industrial designer Raymond Loewy. Moreover, World War II proves profitable; Studebaker’s lucrative relationship with the military remains intact.
By 1946, the company is in solid financial health, and is among the largest surviving independent automakers alongside Packard, Nash, Hudson, Willys and Kaiser-Frazer. Pent up demand for new cars leads to a sellers’ market in the late 1940s, and Studebaker enjoys record sales and profits.
A downfall 17 years in the making
But it’s at this time that Studebaker plants the seeds of its demise.
Officials give into union every demand in an effort to keep the lines going and profits rolling in. This, along with outdated factories, lead to a high break-even point, which proves problematic as the postwar sellers’ market becomes a buyers’ market, and sales slide. All-new styling by Raymond Loewy in 1953 brings a year of profits. Yet there could have been more had not executives built a surplus of stubby sedans rather than the sexy Starliner and Starlight coupes, which outpaces sedan demand four-to-one.
A merger with Packard in 1954 brings little relief as Packard President James Nance is horrified to discover Studebaker’s break-even point is 50,000 units higher than the company has ever built.
In an effort to improve finances, Nance signs a three-year management contract with aircraft maker Curtiss-Wright. The company closes Packard’s Detroit-area plant, drops the Packard line, and enlists Studebaker as the American importer for Mercedes-Benz, Auto Union, and DKW automobiles.
But it’s not enough; the company needs a hit.
A mad scramble to stay alive
In desperation, the 1953 bodyshell is shortened and redesigned as the compact Lark in 1959. Sales rose 250% from 1958, generating profits for the first time in six years. But 1959’s revenue isn’t plowed into future products; it’s used to diversify into new businesses.
As Detroit’s Big Three introduce their own compacts the following year, demand drops. Once more losing money, designer Brook Stevens is tapped to redesign the 1953 Loewy coupes and update the Lark, while Loewy is brought in to design a new halo car, which becomes the Avanti. The company even sponsors the popular sitcom, “Mr. Ed.”
But it all proves too little, too late.
On May 18, 1962, NBC-TV airs the documentary, “Studebaker — Fight for Survival”, hosted by reporter Chet Huntley.
The scent of death is in the air.
By Dec. 20, 1963, with sales of less than 68,000 units, Studebaker ends production in South Bend, leaving 7,000 workers unemployed and damaging the local economy for decades.
Randolph Guthrie, Studebaker’s board president, says its automotive division, which by then accounts for only 54% of the company’s business, has lost $40 million since 1959, the last year of profitability. Without automobile production, Studebaker would have realized a $12 million profit.
What happens next
Lark production moves to Studebaker’s plant in Hamilton, Ontario, with capacity of 30,000 units annually and salaries 10% to 15% lower than those in South Bend. Other vehicle lines are dropped. The rights to build the Avanti, along with its facilities and tooling, are sold to two local Studebaker dealers who form the Avanti Motor Corporation in 1964 and continue building the car as the Avanti II.
Studebaker’s other South Bend plant, which produces 5-ton trucks for the Army, is sold to Kaiser Jeep in February 1964. (When Kaiser Jeep is sold to American Motors Corp. in 1970, the division is spun off as AM General.)
But Studebaker’s move to Canada is not an attempt to remain a viable automaker; it’s a way to gradually exit automaking. There’s no funding for new models, nor is there a foundry to produce engines. Studebaker switches to using Chevrolet power. Fearful of the company’s imminent collapse, Daimler-Benz ends its agreement with Studebaker, forming Mercedes-Benz USA in 1965 and cherry-picking Studebaker’s best stores.
By 1966, after sales of 2,045 Larks, Studebaker shuts its Canadian plant, ending a 114-year history of vehicle manufacturing.
Mr. Printz,
I’m sure Raymond Loewy, my father-in-law, would have enjoyed your most insightful and informative column.
Merry Christmas and happy motoring,
David Hagerman
Raymond Loewy Estate
Mr. Hagerman,
Thank you for the kind words. Your father-in-law was an amazing designer; his cars are proof of that, as is everything else he designed.
Sincerely, Larry Printz