Autos: Studebaker’s Year of Decision

Automakers call their lowest-priced, highest-selling models “bread-and-butter lines.” For South Bend’s Studebaker Corp., which introduced its bread-and-butter ’64 models last week, the term has a hungry meaning. Despite the uphill drive of athletic President Sherwood Egbert, 43, Studebaker’s share of the auto market slipped from a precarious 1.12% last year to a disastrous 0.9% in the first eight months of this year. While every other automaker was rolling to fat and happy records, Studebaker’s sales through August dropped to fewer than 44,000 cars, and the company—whose automotive division has operated in the red for eight of the past nine years—lost $7,500,000 in 1963’s first half. Clearly, 1964 will be Studebaker’s do-or-die year.

Bad Luck. To profit, the company needs to achieve at least 115,000 sales, or well over 1.5% of the expected ’64 market. The Studebakers that Egbert showed off at Utah’s Bonneville Salt Flats last week are handsomely restyled—the first major redesigning that he has been able to carry out since 1961, when he left the presidency of an outboard motor company and accepted the challenge to revive Studebaker. Six inches longer and somewhat sleeker, the cars have abandoned the boxy look of the earlier Lark line. Even the Lark name is being downplayed in favor of model names such as Challenger, Cruiser and Daytona. But the Studebakers will face fierce competition from Ford’s sharply redesigned Falcons and the Chevy II, Dodge Dart and Chrysler Valiant.

Egbert also has to live down some mishaps from the ’63 model year. Foremost among them was the longnose, short-tail Avanti sports car, which Egbert intended as his answer to the Thunderbird. An incredible series of production snafus involving its Fiberglas body delayed the Avanti’s debut by six months; Egbert had confidently predicted 10,000 sales of the ’63 Avantis—at about $5,000 each—but only 1,743 have moved. Similarly hurt was the sales potential of another Egbert innovation, the Wagonaire station wagon with a sliding roof; at the last minute, Studebaker discovered that the top leaked and had to pull the Wagonaires off the assembly line to correct it. Compounding these fumbles, a strike at a supplier plant stopped Studebakers supply of car doors for six weeks.

Good Start. Partly to avoid ’64 production bugs, and partly because the ’63 sales were slow anyhow, Egbert halted Studebaker’s production lines for retooling in June—one month earlier than usual. Says Egbert: “A year ago at this time we had zero cars, but so far this model year we’ve shipped 7,200 to our dealers.” Egbert, who is an enthusiastic amateur flyer, is also winging around the U.S. to pep up Studebaker dealers and keep more of them from switching to competitors. With only 2,000 dealers—v. General Motors’ 14,000, Ford’s 8,000 and Chrysler’s 6,000—the company covers scarcely 70% of all U.S. marketing areas.

Egbert is rapidly diversifying Studebaker into nonauto lines, from chemicals to ice cream cabinets. Last year he spent $47 million on four acquisitions, including Trans International Airlines, whose one DC-8 and four Constellations haul passengers on charter. Egbert is also expanding into the international market with Studebaker’s Franklin Manufacturing, which sells refrigerators and freezers to mail-order houses. Other subsidiaries include Clarke floor polishers, Gravely small tractors, Onan engines and generators. Together, the safer nonauto lines account for 50% of Studebaker sales and have kept the company afloat.