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This article, reprinted with permission from The Freeman, is sponsored by the Advocates for Self-Government. The Freeman is published by the Foundation for Economic Education (FEE). Find out how to get a free sample copy of this award winning monthly journal and the 1996 FEE Book Catalogue.
by Anthony Young
Mention "Edsel" to anyone over the age of 30 and you will hear pretty much the same response. While the answers may vary somewhat, practically everyone knows it was a car in the 1950s that failed miserably. Many people will add that they think it bombed because of its bizarre front-end styling. But, in fact, the Edsel failed for more fundamental reasons.
The Edsel proved that mere size doesn't insulate corporate decision-makers from errors in judgment; large automotive corporations are just as capable of making major mistakes in new product planning, production, advertising, and marketing as smaller companies. It is a fascinating story that holds free market implications worth remembering.
The early 1950s were a euphoric period for automakers. In 1955, Americans bought a record 7,169,908 new cars. This auto-buying frenzy was just one aspect of the postwar economy that Vance Packard wrote of in The Status Seekers, published in 1959.1 In Packard's view, automobiles evolved from being mere transportation vehicles just after World War II to symbols of middle class affluence in the first half of the 1950s. The V-8 engine reigned supreme and horsepower was the watchword. It was in this heady market atmosphere that Ford Motor Company conceived a new car that hopefully would help the company surpass General Motors in overall market share.
Seeds of Disaster
Ford executives attributed General Motor's large market share to GM's wide range of offerings -- from the low-priced Chevrolet and Pontiac, to the mid-priced Buick and Oldsmobile, up to the luxury-priced Cadillac. Henry Ford II and Board Chairman Ernest Breech believed that the low-priced Ford, upper-middle-priced Mercury, and luxury-priced Lincoln car lines left a gap Ford should fill. A 1952 market study confirming this made the rounds at Ford and Lincoln-Mercury division headquarters. The new car should be for the young executive. By 1954, a task force drew up plans for a mediumpriced car to be sold through Lincoln-Mercury dealers.
One top-level Ford executive, Lewis D. Crusoe, disagreed with the proposal, stating strongly that the new car should be a product of a whole new Ford division with its own dealer network. Henry Ford II and Ernest Breech agreed with Crusoe. This was the first key mistake in the Edsel saga and perhaps the most damaging.
The Ford Motor Company was restructured so there would be distinct divisions for Ford, Mercury, Lincoln, and the yet-tobe -named mid-priced car division. In the summer of 1955, the staff for the new "E" (experimental) car division was brought together in some inconspicuous buildings that had made up the short-lived Continental Division.
What's in a Name?
One of the first jobs for division president Dick Krafve was to select a name for the division and the models to be built. The task was fraught with peril. As author Robert Lacey put it, "The name had to excite the public while not alarming it unduly. It had to distance the new vehicle from existing Ford, Lincoln, and Mercury labels, while remaining reassuringly part of the same great family of automobiles. It had to satisfy all manner of other requirements, from starting with a letter that would look good on the front hood ornament, to not rhyming with anything rude."2
Market research had played a key role in developing both the concept and name of the highly successful Ford Thunderbird, introduced in the fall of 1954. Ford again drew upon market research for the names of its new division and models.
Polling was conducted in New York, Chicago, and two small towns in Michigan, asking people not just for ideas, but what came to mind when certain names were suggested. The possibilities numbered 2,000. Foote, Cone and Belding, the new division's ad agency, ran a contest with its employees that produced 8,000 suggestions, later pared down to 6,000 names. In an effort to get new direction, the head of Ford market research contacted poetess Marianne Moore, asking her to come up with names that would evoke "some visceral feeling of elegance, fleetness, advanced features and design." Among her more memorable suggestions were Resilient Bullet, Utopian Turtletop, Pastelogram, Mongoose Civique, Andante con Moto, and the Varsity Stroke.3 Understandably, none of these was adopted.
In a meeting of the Ford Executive Committee in November 1956, exasperation reached its peak. Chairman Ernest Breech finally made the momentous decision. "Why don't we just call it Edsel?" he asked. Edsel Ford was Henry Ford I's only son. Edsel's three sons were William Clay, Benson, and Henry II. All three were opposed to Breech's suggestion, but the name was adopted.
Twelve months of work to come up with just the right name for the division had gone down the tubes. It was a name having significance only to the Ford family, not the man in the street. In fact, during name-association polling, "Edsel" brought forth responses like "Pretzel" and "Weasel." In a terse memo, public relations director for the new division, C. Gayle Warnock, typed, "We have just lost 200,000 sales."4
The names for the models were chosen from a final master list having positive connotations. They were Pacer, Citation, Corsair, Ranger, and for the three station wagons, Roundup, Villager, and Bermuda.
The Recognition Factor
The styling of the Edsel is surely the most remembered aspect of the car. This, too, had a depressing affect on sales. Why did it end up looking the way it did?
The original Edsel took shape in the Ford Design Center and was kept under tight wraps. To begin with, photographs were taken of every new domestic car front-end; although differing to a greater or lesser degree, all had basically the same horizontal design theme. The design chief for the Edsel proposed a vertical theme to give it the recognition factor Ford felt an entirely new car needed to set it apart. Lacey writes, "With concealed airscoops below the bumpers, this first version of the "E" car was original and dramatic -- a dreamlike, ethereal creation which struck those who saw it as the very embodiment of the future."5
It was never to be. When all the concessions were made to accommodate cooling, ventilation, production costs, and a host of opinions, the Edsel that emerged in 1957 is sadly the one we remember today. The front-end was likened to an Oldsmobile sucking a lemon, a horse collar -- even a toilet seat. The rest of the car, both inside and out, was really no better or worse than the other offerings in the late fifties. Ford achieved the recognition factor it was shooting for, but it wasn't positive recognition.
Hype and Substance
To built up interest in the new automobile, public relations director Warnock decided on carefully controlled leaks to the print media. These took place over a two-year period prior to the Edsel's introduction. Both Time and Life made statements to the effect that the mystery car was the first totally new car in 20 years, and that it had been in the planning stages for 10 years. This was patently false. Far from being revolutionary, the Edsel borrowed heavily from both Ford and Mercury components.
In fact, during the first year of production, Edsels were built in Ford and Mercury plants. The Ranger and Pacer Edsels (including the Roundup, Villager, and Bermuda station wagons) were built on Ford chassis, and the Corsair and Citation Edsels were built on Mercury chassis. The Edsel division paid Ford and Mercury for each Edsel built. Every 61st car down the Ford or Mercury assembly line was an Edsel, so workers had to reach for parts in separate bins. Mistakes were made and quality on these hastily assembled cars suffered.
This became painfully apparent when Warnock planned to launch the Edsel. Automotive journalists were to drive 75 Edsels from Dearborn, Michigan, to their local Edsel dealers. The cars had to perform without mishap, and couldn't reveal any defects. After all, the car had been the subject of nearly two years of hype, and expectations were high. After a comprehensive testing procedure that took two months to complete, 68 cars were handed over to journalists and driven to their respective destinations. The other seven had to be cannibalized for parts. The average repair bill for each car came to roughly $10,000, which was more than twice the price of the top-of-the-line Edsel.
The Market Yawns
Ford officially introduced the Edsel in September, 1957. "There has never been a car like the Edsel," the brochure read. Nearly three million curiosity seekers visited Edsel showrooms in the first week. Dealers pumped the car for all they were worth, but many people were underwhelmed. Aside from the radical styling, consumers couldn't understand what all the hype had been about.
Ford's fledgling automobile couldn't have been introduced at a worse time. The fall of 1957 was marked by a recession that had a severe impact on car sales. Compared to the previous year, Desoto sales dropped 54 percent, Mercury plunged 48 percent, Dodge was off 47 percent, Buick 33 percent, Pontiac 28 percent, and so it went. Ford had considered introducing the Edsel in June instead of September, but decided against it. Thus, only a little over 63,000 Edsels were sold in its first year. Some blamed the recession for the Edsel's poor sales, and this was partly true, but another new car, the American Motors Rambler, sold over 100,000 units in 1957 and twice that in 1958. The Rambler was the right car for the market -- the Edsel was not.
Ford made yet another error with regard to the Edsel. They had introduced the snazzy, mid-priced Ford Fairlane in 1956, undercutting the Edsel's market segment. The Fairlane sold for less than the Edsel, and many car buyers wanting a Ford product saw the car as a better value.
In an effort to cut its losses, Ford merged the Edsel division with Lincoln-Mercury and, for 1959, cut back on available models, added an optional six-cylinder engine, and altered the car's styling somewhat. Plans already were in motion to totally revamp the Edsel's look for 1960. Just under 45,000 Edsels were sold in 1959.
Even as the completely restyled 1960 Edsels were rolling down the assembly line, the decision had been made to cease production. Only 2,846 units were sold in its third and last year.
Market Lessons
The Edsel serves as a textbook example of corporate presumption and disregard for market realities. It also proved that advertising and pre-delivery hype have their limits in inducing consumers to buy a new and unproven car. In a free market economy, it is the car-buying public, not the manufacturer, that determines the success or failure of an automobile. A manufacturer cannot oversell a new car, or unrealistic expectations will be built up in the minds of consumers. If the newly introduced car doesn't live up to their expectations, it is practically doomed on the showroom floor.
Ford learned from the Edsel that it couldn't dictate to consumers what they should buy. It hasn't made a similar mistake since. Several years after the Edsel's demise, Ford introduced the Mustang, a brand-new, sporty, affordable car Americans eagerly embraced. More recently, Ford introduced the Taurus, which was in response to the car buyer's needs and wants, and it has proved a tremendous market success. The Edsel will remain an automotive oddity -- the answer to a question nobody asked.
This article is from The Freeman, September, 1989.
Copyright (c) 1988 by Foundation for Economic Education, Inc.
Permission is granted to reprint provided appropriate credit is given and two copies of the reprinted material are sent to the Foundation.
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