Canada: Studebaker Hangs On

The headquarters of the Studebaker Corp. is still in South Bend, Ind., but its best-known operation and at least some of its hopes are in Hamilton, Ont., where Studebaker’s auto division moved last year after losing $50 million since 1959. Studebaker is more of a mite among mammoths than ever, but its Canadian auto plant is a going concern. Last week, addressing a meeting of Studebaker dealers in Boston, Studebaker of Canada President Gordon Grundy announced that the plant’s production is sold out through November, added that 1964 sales were near the break-even point.

The dealers also discussed the 1965 models, Studebaker’s first produced entirely in Canada. Studebaker has dropped its radically styled Avantis and slow-selling Hawks, now is concentrating on the more conventional Commanders and Daytonas. Like many European auto firms, notably Volkswagen, it has made only “running changes,” will not try to compete with Detroit’s yearly model changeover. So far this year, Studebaker has sold 27,800 cars in the U.S., v. last year’s 65,000, and 5,718 in Canada, a slight rise. Despite U.S. tariffs that average $62.50 a car, lower Canadian labor costs keep prices within bounds: the 1965s start at $2,125 in the U.S., a price that is $70 higher than last year’s but includes more standard equipment.

Short of space in its Canadian facility, Studebaker has rented 50,000 sq. ft. in a nearby warehouse. For parts to replace those it no longer makes, the company orders 65% from Canadian suppliers (the 1965 Studebaker engine is made by a General Motors Canadian subsidiary), the rest from the U.S. Its dealers, most of whom also handle other cars, have remained remarkably loyal; though the company feared that it might lose half of its 1,900 U.S. dealers, only 200 have quit.

Next year the auto division hopes to increase sales enough to hit the breakeven point. That would be a welcome relief to the corporation’s ten other divisions, which make everything from floor sweepers to stoves but whose healthy profits (more than $11 million in 1963) have offset auto losses. No one expects any major Studebaker comeback (the company now has only one-half of 1% of the U.S. auto market), and Detroit would not be surprised if Studebaker eventually completed its exit from the auto business. But Studebaker is stubbornly hopeful. “We’re living hand to mouth,” says one executive, “but every day our hand gets to our mouth a little faster.”