Automotive News GM 100 Supplement

First of the big-time bean counters oes the name Donaldson Brown mean anything to you? If you’re a General Motors bean counter, you’ll probably genuflect and raise your eyes to heaven at the sound of that name. If not, you’ll assume a puzzled expression and ask “Donaldson who?” Donaldson Brown was the first great finance executive in an industry that wasn’t much given to finance executives. Production guys and supersalesmen were the gods in those early days. He was a DuPont man. Before joining GM, he was treasurer of E.I. du Pont de Nemours & Co. and was a member of the board of directors and the Executive Committee by age 33. Brown had more than a passing interest in that company. His wife was the former Greta DuPont Barksdale. So why did he leave the DuPont organization? Because Pierre DuPont asked him to. Pierre Samuel had become chairman of GM in 1915 and was president from 1920 to 1923, taking over when Billy Durant lost the company for the second time. © GM Corp. Donaldson Brown 1920: Joined GM as finance vice president 1929: Became chairman of the Finance Committee 1937: Became vice chairman 1946: Retired from GM 1965: Died at age 80 Donaldson Brown: Find the break-even point, plan for it, and the extra sales are gravy. Brown is remembered at GM for the standard-volume theory and for the 10-day sales reports, both of which changed the infant industry. ment in both up cycles and down cycles. Pretty heady stuff. A simpler explanation might be: Set your break-even production/sales point, and load all your fixed costs onto those vehicles. If you sell more cars and trucks, your profit soars by leaps and bounds. Elementary — but oh, so effective. 2 major contributions Pierre Samuel beckoned Brown in 1920, at which time Brown’s knowledge of the automobile was that it was useful in getting from Point A to Point B. But he knew something about auto body colors. DuPont made paint, and GM bought oceans of it. The days of Henry Ford’s “any color, so long as it’s black” had ended. Brown stayed at GM 25 years. He started as finance vice president, became chairman of the all-powerful Finance Committee in 1929 and vice chairman of GM in 1937. He is remembered at GM for the standardvolume theory and for the 10-day sales reports, both of which changed the infant industry. The standard-volume theory was complicated. In Billy, Alfred, and General Motors, William Pelfrey said Brown defined it as the optimum production capacity utilization needed to guarantee an acceptable profit and return on invest- Leader of the pack Brown also inaugurated the 10-day sales re- ports, a running scorecard of how things were going in the showroom. Since 1993, those numbers have been given to the media only monthly, but you can be sure that Rick Wagoner and a chosen few still receive them every 10 days. So why was a finance guy messing with sales? Alfred Sloan explained it in My Years with General Motors: “The chairmanship of the General Sales Committee was given to Donaldson Brown, finance vice president, because of the bearing of statistical and financial controls on production and sales problems.” Author Pelfrey recalls that Brown brought R.L. Polk & Co. into the act because he wasn’t satisfied with numbers from dealers and divisional sales executives. Polk has been a major statistical force in the industry ever since. Brown also helped set up Motors Holding Division, a dealer financing organization that has given a start to thousands of men and women who had the smarts but not the dollars to enter the retail auto business. Motors Holding provided seed money and guidance; the dealers bought out GM’s interest and went on to successful careers. As vice chairman, Brown opened the door to the top of the heap for several generations of bean counters: Albert Bradley, Frederic Donner, Richard Gerstenberg, Thomas Murphy, Roger Smith, Jack Smith and Rick Wagoner. All were finance guys; all became chairmen of GM; all except Bradley were CEOs. Brown retired from GM in 1946. He died in 1965 at age 80. —John K. Teahen Jr. The Cadillac caper: Brand claimed Lincoln’s sales crown in ’98 — but the figures were phony Holler’s sales record was something for Chevy to shout about To say that Bill Holler had a tough act to follow as Chevrolet general sales manager is one of the greatest understatements in the 100-year history of General Motors. He took the job in October 1933, succeeding Harry Klingler, who outsold Ford in 1931,1932 and 1933 — and that was the Mark of Excellence for Chevy in those days. Klingler went on to a distinguished 16-year career as Pontiac general manager. He put the Silver Streak on the Pontiac hood, where it stayed until Bunkie Knudsen yanked it off after becoming general manager in 1956. And Holler took over only four years after Dick Grant left his Chevy post to become sales vice president for all of GM. That’s Dick Grant of the steak and beans dinners (see story, Page 88). Dick Grant, who outsold Ford. Dick Grant, GM salesman nonpareil. I t couldn’t happen, but it did. Lincoln outsold Cadillac in 1998. After all, Cadillac had led the luxury class in sales since 1950. No way Lincoln could finish on top. It couldn’t happen, but it did. Cadillac was so determined to retain its crown that it lied about its December 1998 sales. Lied just enough to apparently beat Lincoln by 222 units for the year — 222 sales out of more than 360,000 for the two brands. Sure, Cadillac admitted its “mistake” in May 1999, but who cared? It was too late for Lincoln to capitalize on its victory. “Oh, by the way, we were the leading seller of luxury cars last year.” And the media’s likely reply: “Now, you tell us. What do we care? That was months ago.” Nevertheless, it was one of the darkest events in General Motors’ history. Maybe not as dark as the inept shadowing of Ralph Nader in 1966, but certainly on a par with the secret engine switch of the mid-1970s and the boardroom revolt of 1992 that unseated the chairman, president and several other high officials. Sales numbers are sacred in this industry. You simply do not lie about them; you do not doctor them. Cadillac ignored those tenets. Why do I say Cadillac lied? GM and Cadillac employ many expert sales statisticians, people who probably can predict any nameplate’s sales within single digits days before the results for any period are announced. Comment John K. Teahen Jr. is senior editor of Automotive News. is a nice fellow and a likable chap,” Crain wrote in his May 17, 1999, column. “But on his watch, Cadillac committed an outrageous lie. Others may be equally culpable, but whether or not he knew about it at the time, the person at the top is responsible.” Smith apologized to Lincoln Mercury President Mark Hutchins. But Lincoln had prepared a major advertising campaign to mark its victory, built around the theme, “We’re No. 1.” Naturally, the ad campaign was canceled. What exactly did Cadillac do? It reported sales to dealers as sales by dealers. Cadillac had been reporting dealer deliveries of 12,000 to 18,000 vehicles a month in 1988. In December, it reported 23,861. The phony figures gave Cadillac 187,343 sales for 1998 to Lincoln’s 187,121. Cadillac’s actual tally was 182,570. From left: Bill Holler, Felix Doran Jr. and H.B. Hatch A Depression and a war And the timing was tough, too. It was October 1933, the heart of the Great Depression. What a time to start a job selling a family’s secondmost-expensive purchase, after a home. Just as Holler was pulling Chevy out of the Depression, the nation was lambasted by the recession of 1938. A couple of more good years, and then World War II. You couldn’t sell cars because you couldn’t make cars. And that was Holler’s term, 1933 to 1945. Three times he surpassed the division’s record for car sales, topped by 930,250 in 1936. That mark stood until 1949. Four times, he topped Chevy’s pre-1930 record for truck sales, led by 204,344 in 1936. Chevy trucks didn’t beat that total until 1948. And Holler beat Ford in 1934 and 1936-41. before production ended in February 1942. Holler joined Chevrolet in 1925 to help formulate the policies of the newly formed sales promotion department. The following year he conducted the first convention ever held by the Chevy sales organization, and more than 2,000 people attended. After assignments in Chicago, Los Angeles, Pittsburgh and Buffalo, N.Y., Holler returned to Detroit in 1930 as assistant general manager for the Eastern United States. Three years later, Holler was appointed head of Chevrolet sales. Holler retired in 1945 to join his two sons in the retail end of the business. He was elected to the Automotive Hall of Fame in 1969 and died that year at 80. —John K. Teahen Jr. ‘Hold me responsible’ Smith now is GM’s group vice president of global product planning. He was asked to recall the 1998 incident for this report. Smith acknowledged that “it’s never been a particularly happy reflection on my part to know that the team I was presiding over” did those things. He concluded: “It happened on my watch. Hold me responsible, and don’t be trashing anyone else, just trash me.” The 1998 campaign was the last time Cadillac and Lincoln have paced the luxury class. Mercedes-Benz led in 1999, and Lexus took over in 2000. Lexus now is posting the kind of numbers that Cadillac put on the board in its heyday: 300,000 plus. — John K. Teahen Jr. Bill Holler 1925: Joined Chevrolet sales promotions department 1933: Succeeded Harry Klingler as Chevy general sales manager 1936: Under his leadership, Chevy set division record with 930,250 sales 1942-45: Because of production halt during World War II, Chevy sold only 83 cars in 1943-44 1945: Retired from Chevy and with 2 sons began selling cars 1969: Elected to Automotive Hall of Fame. Died at age 80. AUTOMOTIVE NEWS Resign, Crain says I’m sure that some of those number crunchers were disturbed by the Cadillac figures that were laid upon them. A source close to the inner workings of GM told m

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