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          A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

History General Motors
        1920 - 1930

Between the years 1920-24 the GM concern was consolidated. This was urgently necessary after the development years, because they were close to collapsing. The individual marques were working, to a large extent, independently, there was no coordination. The production margin was partially quite unpredictable. Money, in varying amounts, was administered by the factories. The head-office was running out of cash, some of which was tied up in unnecessary stockpiling.

Alfred P. Sloan, who was appointed as president in 1923 and who had already played a decisive part in the organisation plan of 1919/20, had quite a job on his hands. He introduced coordination committees, bit by bit, for the buying, production, advertising/sales and the financial departments, which gave the individual factories as much independence as was necessary. This made financial- and product planning possible. Thus, e.g., the framework was provided for which marque in the concern, would be placed in which price segment. For Chevrolet, this meant placing a car which was very close to the price of the Model T from Ford.

At this point, perhaps we should look closer into the structure of the car and its environment in 1920. At that time, 90 percent of the vehicles were open cars, these were of course not suitable for the long distances travelled in America. Even more so at that time, because the network of roads was still in quite a rudimentary state. Thus one drove mostly at much less than the 60 km/h which was possible for simple vehicles. Braking, by the way, was only mechanical and on the rear wheels, similar to the hand-brake nowadays. The average compression ratio was 4:1, because the necessary improvements in the fuel production, which GM, and through Charles F. Kettering were being pushed, were still pending. The result was, the fuel consumption was no lower than today but the performance was very modest. Even on a slight inclination uphill, with the unsynchronised gearboxes, one had to double de-clutch. One had to wait another 20 years for the automatic transmission common today in the USA, which would also be developed primarily by GM.

Although the electric starter had already been invented by Kettering in 1912, in the low price segment however, it was not necessarily standard. The batteries had only a short life, one of the reasons for the success of the Model T Ford , which could also be started without a battery. At almost every change of the engine RPMs the ignition timing had to be adjusted using a lever on the steering wheel. The cars were still painted like carriages, with black enamel paint. This took up to 4 weeks in the factory and caused storage problems. The protective coating however, was by no means durable. Fortunately, GM had, in the meantime, a close connection to the du Pont-chemical factories and thus, from 1925 onwards, the automobile world benefited from the introduction of nitrocellulose paint, a decisive step forward.

Interesting is also the environment. Up to now, only first-car vehicles were mostly bought, a used car market was still relatively unknown. After all, since 1915 cars had already been bought by paying in instalments. One was still a long way from the annual model change which is normal in America nowadays. At least, since 1911 a laboratory for the testing of materials existed, and since 1912 Kettering also worked for GM, however, only in 1920 was a research society founded which systematically tried to solve technical problems. In the course of many years, private industry would achieve an important lead over the universities, only to merge with them again, to a degree, around the end of the century.

The foundations of having an in-house development department were laid in the early twenties. With the increase of closed car bodies, the styling of the vehicles also progressed. Since 1919, GM had a 60 percent interest in the Fisher brothers coachbuilders which was completely taken over in 1926. In 1924 the first testing track in the automobile industry was established, which distinctly reduced the testing on public streets which was, until then, normal procedure. As is common in America, it encompassed even then, 45,000 mē and in the course of time, would expand to almost four times that amount.

However, back to the situation in 1920. First of all the company conglomeration is complete. Together with the first thrust in the direction of the motorisation of America, GM had also developed more or less untidily. In 1908-1910 and 1918-1920 there had been thrusts after which however, there were also harsh repercussions. They were facing a comprehensive revision in all areas. Duties were redistributed, developments were co-ordinated and through profitability calculation, e.g., a comparison between the different subsidiaries was possible.

Bearing this in mind, it seems especially important that the offered vehicle range be adapted to the needs of the market and also to the competition. Thus price ranges are formed and these were assigned to individual factories whose production margins were co-ordinated. In future a great deal of value was placed on the long-term planning, particularly in view of the required production figures whose early ascertainment, in the automobile business, proved to be exceptionally difficult. Under the new president Sloan, bit by bit, all areas of the car production were questioned. Which areas could be centrally regulated, and which should be left to the individual manufacturer.

In the course of the 1920s it was apparent that the internal improvements were a good preparation for the coming disruptions at GM. Thus, the car sales increased in 1923 at first, only to drop again strongly in 1924. In 1927 Henry Ford closed his factory for nine months, which gave General Motors the possibility to pass the number 1 on the market. This is put into perspective again when Ford brought out his Model A, but his success really lasted only one year. Thus, we've come to the event of the 1929 stock exchange collapse, which caused a production decrease to less than a quarter during the subsequent years. At least, Mr. Sloan maintained that GM had made no deficit during this period. They had acted quickly on the changed situation, they had closed factories and dismissed workers. Particularly nowadays, there are a number of economic scientists who reprimand the behaviour of those responsible after the outbreak of the worldwide economic crisis. Were the breaking out of strikes in the mid 1930s probably also a result of the coarse of action taken by the people in power during the crisis?

During the 1920s, important principles for the export transactions were developed. In the difficult western European market assembly plants were helping out, GM in Berlin for one. But one had already anticipated that, in the long term, their nationalism would force the Americans to build complete cars. Once again the differences between GM and Ford appear. The latter establish a completely new factory in Cologne, while GM was still on the lookout for a partner. As usual, one always thinks of the biggest companies first, in 1919 the first thought was Citroen. GM only wanted a participation, Andre Citroen wanted to sell, and the French government was against it, a really difficult scenario. In addition, after the inspection of the production plants, some sobering disillusionment appeared regarding the investments to be made.

A similar situation appeared in 1925 through the planned takeover of Austin in Great Britain, adding to this, were the peculiar taxation politics which favoured the small-displacement, long-stroke engines. Finally, in 1928, the much smaller Vauxhall company was taken over. The, at first, modest interest in Opel, rose noticeably when three important executives visited their production plants. In further inspections Opel could exhibit even more plus-points: 736 sales outlets and the biggest motor vehicle manufacturer in Germany. The remaining Opel brothers managed the clou, shortly before the worldwide economic crisis, the sale of their operation for a total of 33 million dollars (a part was paid later) and nevertheless to remain, furthermore, in the company. During the first address of a board member in front of the dealers however, it was not taken too seriously when predicted, for the future, the sale of 150,000 vehicles per year, a number, by the way, which was easily exceeded in 1954. That's how big the differences were when considering the future. The Americans saw Germany, as far as motor technology was concerned, as a developing country, about as backdated as 1911. Serving as a small additional example, may be that Opel, although a mass production manufacturer, did not offer spare parts which could be directly installed, to the dealers. They either had to make them themselves, or re-work the parts delivered from the factory. Still a lot to be done for GM... 11/09               Top of page               Index
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Translator: Don Leslie - Email:

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