The Rearview Mirror: How a Merger Saved a Carmaker’s Reputation

Henry J. Kaiser

Many believe that Henry J. Kaiser failed as an automaker, given that his Kaiser and Frazer brand cars lasted just eight years. But this week in 1953, a year before production of his namesake cars ceased, Henry J. Kaiser bought ailing automaker Willys-Overland for $63.4 million.

It was the biggest automotive merger to date, though some wondered why he cared – and with good reason. But the purchase would prove to be a wise one and make Kaiser a successful automaker – thanks to the Jeep.

WWII to the rescue

Willys-Overland wasn’t always the basket case it became when it was acquired by Kaiser. In fact, for a time in the 1920s it was second only to Ford in terms of sales. But management errors led it to declare bankruptcy in 1933 and to come out of it four years later. Although the company produced over 60,000 cars and made a profit of $473,000 in 1937, the trip to bankruptcy failed to inspire buyer confidence and the company’s fortunes declined again.

It was only under the leadership of sales manager Joseph Frazer that the business did not fail once again. As car sales remained sluggish, Frazer had won a U.S. Army contract to build the Jeep, resulting in a 1941 profit of $809,258 and a backlog of $42.5 million in defense orders. Willys-Overland profited from the war, with dollar volume rising from $21 million in 1941 to $213 million in 1944.

A post-war market brings new challenges

A 1944 Jeep Willys MB

When the war ended, you might have expected Willys to resume car production. But the company lacked the ability to build its own organs. With nothing else to market, Willys-Overland created the military Jeep MB and introduced it as the 1945 Jeep Universal.

The company continued to market variants of the Jeep, the first being the Willys Jeep station wagon in 1947. Designed by Brooks Stevens, its slab-sided appearance resulted from his need for body panels that could be produced in a factory that stamped the sheet metal for the house. Appliances. It was followed by the Jeepster in 1948. After more than three years of no new car production, consumers bought anything and Willys flourished.

However, it wasn’t until January 1952, a decade after the last Willys automobile was built, that the automaker introduced a new car: the Aero Willys. Smaller than any car built by General Motors, Ford or Chrysler, the Aero Willys rivaled the Nash Rambler, Hudson Jet and Kaiser’s Henry J – compact cars trying to find success in a market that only rewarded big cars.

Willys cars have never been so popular, but Kaiser did not buy Willys for his cars.

Willys managed to sell over 41,000 units and things seemed to be going well. But his days were numbered – and Henry Kaiser wanted Willys-Overland Motors.

A Kaiser never takes refuge

Liberty Ship manufacturer Henry Kaiser had entered the automotive business in 1946, partnering with Joseph Frazer, who left Willys-Overland to start the new marque, known as Kaiser-Frazer.

Initially the cars were selling well, a new design in a market awash with modestly updated pre-war models. But the Big Three were ready with all-new lines for 1949, while the Kaiser-Frazer models were little changed.

As an auto industry veteran, Joseph Frazer advised to cut production in light of the next flood of new models. Henry Kaiser told him that “a Kaiser never entrenches” and planned to build 200,000 units. They sold about 60,000. There were so many left, that a few 1950 models eventually got new serial numbers and were sold as 1951s. By then Frazer was gone and the nameplate fell off . In its place came the Henry J, a compact car sold at a time when sales of small cars were as meager as their size. It failed, but its engine was from Willys, which Kaiser decided to buy.

1957 Jeep FC-170, one of Willys utility vehicles

Some have wondered why, given that Jeep’s appeal was pretty minimal at that time, but Jeep had no competition for its four-wheel-drive vehicles. And the Aero Willys was still a fairly new design.

But Kaiser was in a situation.

He had never failed in anything he had done in his life. But so far, the automotive sector has proven to be an exception. Kaiser-Frazer hadn’t made a profit since 1948, and a scent of death permeated the brand. Willys-Overland gave him a new line of products to sell. He nabbed it for $63.4 million.

Although Come saw this as throwing money after evil, it turned out to be a wise move for Kaiser.

Wills-Overland was renamed Willys Motors, although its cars, along with Kaiser’s Kaiser line, were on their last legs. Seeking to save his automobile empire, Kaiser launches a marketing campaign to capitalize on the public’s fascination with the Jeep. Within two years, Jeep’s sales volume exceeds $160 million, and Kaiser makes a profit of $5 million.

Cars are another matter. The Kaiser and Aero Willys were phased out, although the latter continued to be built with styling revisions in Argentina until 1970.

Jeep continues to grow

Jeep Gladiator 1963

Willys Motors is renamed Kaiser Jeep Corp. in 1963. The following year, Kaiser bought out Studebaker’s defense business, which dated back to the Civil War, as the Jeep product line continued to grow with the arrival of the Wagoneer. By the time Kaiser died in 1967, Jeep had manufacturing plants in 33 countries.

Two years later, Kaiser Industries agrees to sell Kaiser Jeep Corp. to American Motors Corporation. The deal closed in 1970, when AMC renamed it Jeep Corp., establishing it as a subsidiary of AMC. Kaiser’s military division is transformed into AM General.

AMC greatly increases the appeal and popularity of the Jeep. But much like Kaiser Jeep, AMC’s car lines are starting to lose popularity, even though their Jeeps remain profitable. In the 1980s, AMC merged with French automaker Renault, which also failed to revive AMC’s profitability. In 1987, Renault sold AMC to Chrysler Corp. CEO Lee Iacocca admitted that the only reason he bought AMC was to acquire Jeep. It would be a very smart move, as the brand’s popularity has skyrocketed along with consumers’ desire for SUVs.

It would be the crown jewel of Chrysler Corp. upon its merger with Mercedes-Benz to become DaimlerChrysler, and the subsequent acquisition of Chrysler as part of Fiat Chrysler Automobiles. Today, it is part of Stellantis and is among the best sellers of the company’s 15 brands worldwide.