Autos: Now There Are Four

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Such considerations aside, Detroit is skeptical about Studebaker's ability to maintain a toehold in the U.S. through its Ontario subsidiary, which is headed by Gordon E. Grundy, president of Studebaker of Canada. Studebaker talks about making 30,000 to 40,000 units annually in Hamilton, but its Canadian market is only about 8,000 cars (the Hamilton plant is now turning out only 48 cars a day), and cars that did not sell well in the U.S. are not likely to improve their sales appeal by crossing the border. Studebaker will continue to be the American sales agent for Mercedes-Benz, which President Byers Burlingame and other top executives drive instead of Studebakers—to the astonishment of Detroit's brand-loyal executives.

Profit Motive. What happened to Studebaker? South Bend was too remote from Detroit to enable the company to move quickly with all the industry's new trends, and Studebaker's ancient plant there was hopelessly inefficient. The company's dealer organization was too small, haphazard and ineffectual. Efforts to revitalize the company were snarled by lack of cash and a series of incredible production snafus. In the past five years, Studebaker has lost at least $40 million in automaking; this year, despite the introduction of pleasantly restyled 1964 models, sales for the first eleven months fell to 59,742 cars. Last month Studebaker's directors fired President Sherwood Egbert, who insisted on staying in auto production, to clear the way for getting out of the auto business; in his place they put Burlingame, 63, a financial man, with orders to stem the losses.

Studebaker may be largely out of autos, but it is by no means out of business. Under Egbert's direction, Studebaker picked up so many new companies (appliances, chemicals, superchargers) that half of its $400 million sales this year came from nonautomotive divisions. These divisions earned $12 million—though the company will end the year heavily in the red because of auto losses and the cost of closing the South Bend plant. Freed from its auto losses and armed with a healthy tax write-off, Studebaker says that it expects to make an overall profit next year.