On January 21, 1862, most Americans were focused not on the Civil War raging in the East, but on stories of that year’s Great Flood on the West Coast. In Los Angeles it had rained for 28 days straight; the waters completely washed away the small mining town of Eldoradoville. Up north the overflowing American and Sacramento rivers forced the state government to flee to San Francisco. Agua Mansa, once San Bernardino County’s most thriving community, ceased to exist when the Santa Ana river overflowed. Today all that remains of that village is its cemetery.
Civil wars and even floods of Biblical proportions meant little to Adam Opel, however. On the same day the New York Times explored the disaster in Sacramento at length, Opel opened a small sewing machine factory in his cowshed in Russelsheim, Germany. Business grew relatively quickly; and within 20 years the Adam Opel manufacturing enterprise had left the family’s cowshed for legitimate manufacturing facilities. But even before he moved, Opel had branched out into the manufacture of high-wheeled bicycles. By the time he died in 1895, Opel was the leading maker of both machines in Germany.
But he had kids, who took to the bike end of their family’s manufacturing more than to the sewing machines. Once dad was gone they couldn’t wait to get into the next big thing — automobile manufacturing. Their first joint venture was to build cars from a local locksmith’s design in 1899, but they gave that idea up after two years of mostly failures. Instead they licensed the rights to the French Darracq chassis with a two-cylinder motor, to which they added a custom body, and it succeeded just enough to keep them in the motoring game.
By 1906 they were manufacturing cars of their own design, but it was the 1909 Opel 4/8 PS that put the company on the map. In the days when no country had many roads, this Opel became a favorite of doctors for its durability in all driving conditions. The near luxury car also cost about half what Germany’s other luxury sedans did at the time. True, Opel’s growth was nothing like Ford’s in America, but by the 1920s they were prosperous enough to install their country’s first moving assembly line.
On the eve of the Great Depression, Opel sold nearly 40 percent of all cars in Germany and was that country’s top automotive exporter. That was enough to interest General Motors in the company; the next year GM purchased 80 percent of the outstanding stock from the Opel family and in 1931 took total control of the firm. Four years later Opel was one of the first manufacturers to introduce an all-steel, unibody vehicle. This good thing came to an end when Germany decided to start the Second World War.
Contrary to popular belief, American corporations did not sever relations with their German divisions. Politicians may wind the public up to chant for war, but for businessmen it’s just another international corporate problem to overcome. After all, all wars end, and the day they do it’s back to trying to make a living. Like Ford in Germany, Opel first produced trucks for the Nazis before taking up production of aircraft parts and tanks after 1942.
Now, Washington and Detroit had a gentleman’s agreement not to intentionally bomb their factories in Germany. Fair enough; Detroit was the Allied armies’ key manufacturer. By August of 1944, however, that agreement had become untenable; and both GM’s Opel factory and Ford’s were targeted for bombing runs. Technically, once we declared war on Japan after Pearl Harbor, and Germany in turn declared war on us, control of the Opel factory did fall under the command of the Nazi wehrmacht.
Shortly thereafter General Motors petitioned the Treasury Department and was allowed to write off the $35 million it had invested in Opel against current U. S. earnings. After the war, both GM and Ford sued the federal government for bomb damage to their factories in Germany; and in the mid-Sixties those cases were settled in Detroit’s favor.
The war had taken its toll. Russia demanded, as part of its reparations, all of the Opel Brandenburg factory’s machinery, tools and dies to begin producing one of its vehicles. Russelsheim had been bombed so much that half of the town lay in ruins, but the Opel workers went back to their factory and started clearing it out and rebuilding it. That dedication to Opel had to impress the management at GM, because within a year of the war’s end Opel successfully built its first postwar vehicle.
Still, in 1948 GM sent a group to Germany to determine that company’s viability and Europe’s economic near future. The group would recommend that GM retake control of Opel as a viable investment. When that report was presented to the financial policy committee, it voted the exact opposite, thinking it best to cut GM’s German losses and move on. It was Alfred Sloan, famed GM chairman, who overruled his financial committee, something he hadn’t done often.
Sloan didn’t think GM should have to insert any more capital into Opel. Instead it should create a credit line for them; and if in two years Opel was not showing major progress, GM would then walk on the investment. But progress came and by 1953 Opel was back to building over 100,000 vehicles a year; and in the late Fifties it came to America as the import brand for Buick dealers across America. (Pontiac dealers got Vauxhalls in the same period out of England, while Studebaker brought Mercedes-Benz to this country.)
Our family owned two Opels. One was a late 1950s Kadett station wagon — that generation’s version of a compact SUV — that we purchased in the mid-Sixties for $150. Later, after he could no longer easily control his 1952 Nash without power steering, we purchased another Opel station wagon for my grandfather. My buddy, Skipper Brown, saved his money and purchased an Opel GT about the time I inherited that Opel station wagon.
Six years later I took employment with a Dallas Buick dealer, on whose lot sat several Opel Mantas that had failed to sell in previous years. Because of the currency exchange, those compact Mantas had window sticker prices higher than brand-new, far more popular Buick Regals. Moreover, the Texas sun had bleached out their velour interiors; over all, the vehicles looked in rough shape. But by then Buick was no longer importing Opel from Germany. To add insult to injury, GM also owned a part of Isuzu in Japan; and in 1977 GM brought over a cheesy Isuzu compact car with an insignia in tape with huge lettering all across the rear quarter panels that read, “Buick Opel by Isuzu.”
Of course it was neither a Buick nor an Opel. It looked goofy and, frankly, made the Fiats on our lot look good. But that was General Motors’ mindset in the late Seventies: All problems could be solved with a silly-looking nameplate made of black tape.
As the years passed, America would receive quite a few Opels, just not named as such when they landed in America. Some were better than others: The J Body GM cars of the early Eighties, Chevy Cavalier, ran on chassis designed by Opel’s engineers. The Buick Regal is an Opel Insignia, while the Buick LaCrosse runs on a platform Opel’s engineers designed. Even the current Buick Encore compact SUV is in fact an Opel Mokka. There have been numerous other vehicles brought here from Opel’s studios; and GM’s lineup in South America would not exist without Opel’s German engineering staff.
Today General Motors, staring at $15 billion in losses for Opel in Europe since the turn of the century, is trying to call it quits and has discussed selling the company to Peugeot. But one wonders whether this train didn’t derail decades ago. After all, it’s fair to say that companies like BMW and Mercedes made German imports to this country extremely popular starting in the mid-Seventies, and Volkswagen has grown to become the world’s largest car company in the exact same period. And yet long before Japanese cars became the standard for smaller, fuel-efficient automobiles, many Americans owned and liked their Opels. The company’s last big hit was its 1999 Zafira minivan, which was huge in Europe and rejected by Saturn dealers in the U.S. — they preferred the failed L Series sedan. And it does seem like GM’s American management has not known what to do with Opel over the past 40 years, other than use Opel’s exceptional designs and engineering for many of GM’s products here — while ignoring the fact that the Zafira minivan could have been a huge hit in America, too.
After all, the Zafira’s engineering was done by Porsche, because GM Detroit had Opel busy working on new models for South America. For what it’s worth, in the late Nineties Opel’s economists told Detroit that its big push in Brazil was too early for that country’s economic conditions. They begged GM to put their engineering staffs to better use and wait for Brazil to turn the corner. Detroit disagreed; but one tends to believe that’s been the entire problem with the relationship over the decades.
Alfred Sloan’s My Years with General Motors is still in print. Bill Gates called it one of the most important books on business he had ever read, but I doubt many at GM have done so. In fact, I’m sure of it: In one of the book’s key passages, Alfred Sloan admits that at no time in GM’s history have all its divisions made money in the same year. Never happened, during the entire time he took GM from a company on the brink of abject failure and turned it into the largest and most profitable corporation in the world. Yet over the past four decades GM executives have discarded that kind of business logic, first consolidating divisions to save money, then dumping anything whose profit margins didn’t make them happy.
And, to be fair, GM is still one of the top volume car companies in the world. But with Holden of Australia gone, Autovaz of Russia left to someone’s else devices, all of GM’s Japanese co-ownerships unwound and now, potentially, the end of Opel and of England’s Vauxhall, one wonders when GM will cut deeply once too often — with the last cut being the fatal one.
Interestingly, Opel, which provides so much in engineering for GM worldwide, lost less money last year than GM invested in Lyft. But that’s a sign of the economic times, too. Real car companies aren’t nearly as exciting — and are far more difficult to run — than dropping a half billion on an iPhone app.
© 2017 Ed Wallace
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, conferred by the Anderson School of Business at UCLA. He reviews new cars every Friday morning at 7:20 on Fox Four’s Good Day and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. E-mail: email@example.com