Though hugely successful, Ford was not alone in the American automotive landscape. A potent
rival was growing ever stronger: General Motors. This was built by William Durant. Unlike Ford,
who was an inventor turned entrepreneur, Durant was not a mechanic and had no personal experience
building automobiles. Indeed he is reputed to have thought cars were noisy, smelly and prone
to frighten passing animals. What he did have was tremendous proficiency at sales and negotiation.
His first deal was Buick, which had already been sold twice, first to the Briscoe Manufacturing
Company then to the Flint Wagon Works, neither of which were able to turn the company
around. But the owner of the Flint Wagon - J.H. Whiting - knew of Durantʼs talent at promotion
and approached him one day in the hopes of convincing him to join the Buick team. Though they
were having trouble establishing profitability, Whiting knew the car itself was first rate and believed
Durant only needed to drive it once to understand its potential. He was right. Though not a
automobile aficionado, Durant recognized immediately the top-notch quality and driveability of
the Buick. Shortly thereafter, he agreed to join Buick not only as General Manager but also as a
major investor.
It didnʼt take long for Durant to turn the company around. Shortly after signing on, he took the
new Buick Model B to the New York Automobile show and returned to Michigan a few days later
with orders for 1108 new cars. On September 16, 1908 Durant incorporated General Motors of
New Jersey with an investment of $2000. Twelve days later the company issued stock that generated
over 12,000,000 dollars. Within two months Durant had acquired the Olds Corporation, then
turned his sights on the troubled Oakland Company in which he acquired a 50% interest.
When the
owner passed away the following summer, Oakland came under the full control of General Motors
(Oakland was renamed Pontiac in 1932). In the same year GM purchased Cadillac Motor Car
from Henry M. Leland for $5.5 million. Durant was an enthusiastic deal-maker and salesman, but
he appears to have been somewhat impulsive in his business dealings. After an 18 month spending
spree, Durant had managed to acquire in whole or part almost 30 manufacturers. Not surprisingly
this left GM financially overextended. In 1910 an acute cash shortage gripped the firm and a bailout
was orchestrated from a consortium of eastern bankers. In the process Durant was ousted from
the firmʼs management.
Unfazed, he immediately partnered with Louis Chevrolet, an avid auto racer from Switzerland
who designed and built a prototype for a new car. The Chevrolet Motor Company was founded on
November 3, 1911. But Durant and Chevrolet clashed over design philosophy. Chevrolet preferred
a higher quality, premium car; Durant favored a cheaper, smaller car which would appeal to the
mass market. The exact details of the split are still unknown, but we know that Louis Chevrolet left
the company in 1913. Durant stayed on and quickly built the firm into an industrial powerhouse,
selling a substantial 15,000 cars between 1914 and 1915. This was a large number by any standard
and was especially impressive considering the youth of the company. Indeed, the company did so
well Durant was able to buy up substantial quantities of GM stock. By 1915 he had acquired sufficient
shares to obtain a majority stake and regained control. Nonetheless Durantʼs extravagant nature did not fit well with the increasingly conservative GM management. He resigned in 1920.
