General Motors Corp. history

Founded in 1908 by William Crapo DURANT, General Motors became the world’s largest car maker and largest corporation after World War II. In the early years, it was created by consolidating several car companies and other specialty companies under one umbrella. The company captured almost 50 percent of the domestic market for cars and trucks before losing some of its market share in the 1980s.

Durant, a former cigar salesman, got his start in transportation by building the Durant–Dort Carriage Company into the country’s largest carriage manufacturer before turning his attention to automobiles. He began by purchasing the Buick Motor Company in 1904 and sold stock to finance its operations. By 1908, Buick had become the largest producer of cars in the country. The same year he founded General Motors in order to diversify his product line. Within a year, GM had sold more than cars and trucks on sales of $29 million. But Durant’s management was poor, and he lost control of his company in 1910. He regained control in 1918, after having created Chevrolet in the interim. The new GM included Chevrolet, and he soon purchased Fisher Body, which was to become the standard carriage designer for the company. The General Motors Acceptance Corp. was also founded in 1919 to act as the finance arm of the company.

Durant lost control of GM again in 1920. One of his former appointments was Alfred SLOAN, and in the 1920s Sloan began introducing a series of then-radical management changes that led to a more efficient and productive company. In 1923, Sloan was named president. Another of his innovations was changing models slightly from year to year so that the public would sell its older models in favor of the new. During World War II, the company was heavily involved in war-time production of military vehicles. In the 1950s, the company recorded its first billion-dollar profit year. Sloan retired in 1956, and its new chairman, George Wilson, was on the cover of Time magazine, having made headlines by stating before a congressional committee that “what is good for General Motors is good for the country.” The company managed to hold its grip on the worldwide auto market for another 20 years before encountering serious competition from overseas automakers in Japan and Europe.

In the 1980s, domestic market share continued to drop to about 35 percent. The company remained as the world’s largest automaker, but its market dominance was about 12 percentage points below what it had been during Sloan’s administration. The company also began an aggressive campaign of adding other nonauto divisions. It bought Electronic Data Systems (EDS) from Ross Perot in 1984 and Hughes Aircraft in 1986. It also launched ventures with foreign automakers, especially Toyota, and purchased Saab of Sweden in 1989.

In 1990, GM launched Saturn, its first new line of cars in decades, as an independent operating subsidiary. Jack Smith was named chairman in 1991, and the company began a turnaround. It experienced its best net income ever in 1995. But the company’s market share continued to drop and was only about 28 percent in the late 1990s. EDS was sold in 1996 as the company sought to streamline its operations. By the late 1990s, its sales were slightly less than $200 billion per year.

Further reading

• Farber, David R. Sloan Rules: Alfred P. Sloan and the Triumph of General Motors. Chicago: University of Chicago Press; 2002. 
• Freeland, Robert F. The Struggle for Control of the Modern Corporation: Organizational Change at General Motors, 1924–1970. New York: Cambridge University Press, 2001. 
• Jacobs, Timothy. A History of General Motors. New York: Smithmark, 1992. 
• Madsen, Axel. The Deal Maker: How William C. Durant Made General Motors. New York: John Wiley & Sons, 2000. 
• Sloan, Alfred. My Years with General Motors. 1964. Reprint, New York: Doubleday, 1996.