Business Abroad: Borgward Steps Down

Carl Borgward is a builder of genius, a clumsy manager of a large enterprise, a dilettante in financial matters, and a lovable human being.

Thus Hamburg’s Die Welt, in an atypically Teutonic blend of business judgment and sentiment, last week summed up the exit of the grand old gadgeteer of the West German auto industry. With his Borgward auto complex some $48 million in debt, 70-year-old Carl Friedrich Wilhelm Borgward agreed to give up his positions as president, sole owner, chief engineer and designer of the firm he founded 33 years ago and built into the sixth-largest automaker in Germany. The Bremen city council will take over Borgward and its subsidiaries to try to save the 19,000 jobs—some 23% of Bremen’s work force—by turning Borgward into a publicly owned stock company.

What chiefly caused Carl Borgward’s downfall was the same disease that afflicted many another European automaker last year—an overestimate of the U.S. appetite for imports and a failure to foresee the rousing success of 1960 U.S. compacts. With U.S. sales of 6,000 Borgwards in 1958 and 8,500 in 1959, Borgward optimistically spent $24 million tooling up to sell 15,000 cars in the U.S. last year. He sold only 2,000, has an estimated 19,000 cars on hand, many of them shipped back from the U.S. Beginning last October, he got loan after loan until his credit ran out.

Fading exports were not his only trouble. A fine designer, he sometimes got carried away by his last-minute ideas. Production men and cost accountants were run ragged by his habit of adding strips of chrome and other gadgets to models ready for production. Even though his production got as high as 107,000 units per year, between 1949 and 1961 Borgward put out 17 completely different models in some 60 styles. Said one of his aides in rueful amazement: “Give him a piece of clay and before you know it Carl has another model.” He often tailored his cars to his own measurements, and since he was only 5 ft. 4 in., tall men were often uncomfortable in his cars. On one car, buyers complained of an odd right rear seat that was impossible for any normal-size person to fit in. Shrugged Borgward: “The seat was designed for the family dog.”

Nevertheless, Borgward’s freewheeling inventiveness often captured the public fancy. One of his earliest successes was a 1924 three-wheel truck, still widely copied. In the postwar years, Borgward put out the bestselling LP-300 Minicar, catching the bugmobile craze on the rise. If Borgward had concentrated on tiny cars, he might easily have dominated the mini-car market. But after he had sold 350,000 of them, he grew bored, moved on to expand his bigger cars—and failure.