Innovation & Wealth › Mass production & the consumer age › Mass production and the consumer economy
General Motors under Alfred Sloan
Sloan president 1923–1937· Company or fortune· Companies & fortunes
Well documentedSolid records, texts or physical evidence.
Alfred Sloan built General Motors into the world's leading carmaker with a brand ladder, annual models and divisional management.
See it on the Innovation & Wealth map →What happened
Sloan (1875–1966), an MIT-trained engineer, became GM's president in 1923. He ran GM as semi-independent divisions under central financial controls and lined up brands by price, from Chevrolet to Cadillac: 'a car for every purse and purpose.' Yearly styling changes, led from 1927 by designer Harley Earl, and installment loans through GMAC made upgrading easy. GM passed Ford for good in 1931 and held roughly 40–50% of the US market in the 1950s. His GM shares made Sloan rich.
Impact on society and the economy
His model of divisions run against profit targets became the standard for big corporations worldwide. Consumers got choice and credit; critics saw planned obsolescence. His fortune endowed the Sloan Foundation.
How we know
Sloan's memoir My Years with General Motors (1964), Peter Drucker's study Concept of the Corporation (1946), Alfred Chandler's Strategy and Structure (1962), and annual sales data.
Still debated
Whether Sloan's financial controls later made GM rigid and slow as it lost ground to Toyota from the 1970s is debated by business historians.
Connections (4)
▸Henry Ford was overtaken by General Motors under Alfred SloanWell documented
The connection
Ford kept selling one basic car, the Model T, black only from 1914 to 1925, while buyers grew richer and wanted variety. GM offered a price ladder of brands, yearly styling and installment credit. When Ford shut its plants for months in 1927 to retool for the Model A, Chevrolet took the lead, and GM led for good from 1931.
When and how
US car market, 1921–1931; Henry Ford, Alfred Sloan, and William Knudsen, a former Ford production chief who ran Chevrolet from 1924.
How we know
Annual sales and registration figures show Ford's share falling from over half in the early 1920s; Sloan's 1964 memoir describes GM's strategy against Ford.
Debates
Historians weigh Ford's stubbornness against GM's strategy and easy credit; Ford's brief Model A rebound in 1929–30 shows the outcome was not inevitable.
▸Mass production and the consumer economy was refined with annual models by General Motors under Alfred SloanMostly agreed
The connection
Ford's mass production made one product cheaply; Sloan adapted it to varied tastes. GM brands shared bodies and many parts behind the scenes, while styling changed every year so last year's car looked dated. Trade-ins and installment credit through GMAC let customers move up the brand ladder. Historians call this 'flexible mass production.'
When and how
Detroit, 1920s–1950s; Alfred Sloan, stylist Harley Earl, whose Art and Color Section opened in 1927, and engineer Charles Kettering.
How sure are we?
GM records, Sloan's 1964 memoir, Drucker's 1946 study, and sales data showing GM's lead from the 1930s through the 1970s.
Debates
Did annual models serve buyers or waste resources through planned obsolescence, as critic Vance Packard argued in 1960? Toyota later challenged the whole approach.
▸General Motors under Alfred Sloan dominated the car market of Postwar boom and the rise of the middle classWell documented
The connection
Alfred Sloan built GM around 'a car for every purse and purpose,' from Chevrolet to Cadillac, with yearly model changes and installment credit through GMAC. As postwar families bought cars in record numbers, GM took about half the US market. Its 1950 'Treaty of Detroit' contract with the UAW gave workers rising wages, pensions and health coverage.
When and how
Detroit, 1946–1973; GM held roughly half of US car sales in the 1950s–60s, and in 1955 became the first US company to earn over $1 billion in a year.
How we know
Sales and market-share data, GM annual reports and the 1950 UAW contract are all on record.
Debates
Did GM's dominance breed the complacency that let Toyota overtake it later? Many historians think so; others stress the oil shocks and retiree health and pension costs.
▸Toyota Production System (lean manufacturing) outperformed the methods of General Motors under Alfred SloanMostly agreed
The connection
GM's system ran on big batches, large inventories, separate quality inspectors and frequent styling changes. By the 1980s Toyota built cars with far fewer labor hours and defects. GM learned this firsthand at NUMMI, a 1984 joint plant in Fremont, California, where Toyota methods turned a closed, troubled GM factory into one of its best, with mostly the same workers.
When and how
Fremont, California, 1984–2010 (NUMMI); MIT's study found Toyota's Takaoka plant needed about 16 labor hours per car versus 31 at GM's Framingham plant.
How sure are we?
MIT's International Motor Vehicle Program measured plant productivity and quality directly; NUMMI's results are well documented. Toyota passed GM in global sales in 2008.
Debates
Why GM failed to spread NUMMI's lessons to its other plants for decades is debated: culture, union rules or management incentives. GM went bankrupt in 2009.