A shift in the economic climate of the United States combined with mistakes in planning and launching the Ford Edsel to create a major failure for the automobile manufacturer. The Edsel, perhaps unjustly, became an archetypal failed product, symbolizing corporate incompetence in development and marketing.
The Edsel, the Ford Motor Company’s entry into the medium-price range, was introduced to the buying public with the greatest of expectations after years of research. Expectations and the car’s public image degenerated quickly. The Edsel became known as a major business debacle.
The early and mid-1950’s was a period of postwar prosperity. Disposable personal income was rising, and Americans were spending nearly 6 percent of this income on their cars. The car was seen as an extension of the driver; some owners thought that their cars might change their social status.
The automobile market was being upgraded. The medium-priced segment accounted for about one-third of sales. Mercury, Dodge, DeSoto, Chrysler, Buick, Oldsmobile, and Pontiac formed the growth segment of the market. The Ford Motor Company had only the Mercury
Ford Motor Company believed that it needed another entry, positioned near the Mercury, to close the product gap between it and the Lincoln. Ford embarked on building what was thought would be the most magnificently conceived automobile ever. This may have been a good decision that turned out badly as a result of unseen or unforeseeable factors.
Years of marketing
Poet Marianne Moore was enlisted in 1955 to submit suggestions. She submitted numerous names, some quite promising, including Chaparral, Faberge, Silver Sword, Thunder Crester, and Arcenciel. Her more fanciful suggestions were Utopian Turtle top, Intelligent Whale, Resilient Bullet, Mongoose Civique, and Turcotinga.
In the spring of 1956, Ford’s executive committee met to review the surviving names. None was received with any enthusiasm. Ernest Robert Breech, chairman of the board of directors, then pronounced that the car should be named the Edsel. The Ford family had earlier requested that it not be named Edsel, but Breech told Henry Ford II that the name was the choice of the entire executive committee. Ford said that since the name had such strong support among the committee members, he would go along if the other family members agreed, which they ultimately did. After years of work to find the ultimate name, the car thus took on a name that only one person wanted. Ranger, Pacer, Corsair, and Citation were used as model names.
When Edsel Ford had died in 1943, Henry Ford
Breech believed in the Detroit folk wisdom that small cars have small profits and bigger ones have bigger profits. Breech blamed various factors for the failure of the Edsel, including poor planning and failure to acknowledge changes in the purchasing patterns of automobile consumers; the car’s introduction late in 1957, with all the other new cars, instead of in June as first planned; and the styling, which was a combination of the unusual and the accepted. He made no mention of the car’s name as a source of failure.
The Edsel’s styling was likened by some to the beautiful cars of the classic era. It was long and powerful, with automatic everything and gadgets aplenty. A new dealer network was built instead of planning distribution through existing Ford, Lincoln, and Mercury dealers. Establishing another division was more expensive, but the company thought that dealers selling only Edsels would be more aggressive than those selling the Edsel as a second or third product. The twelve hundred dealers selected were placed according to demographic factors and were chosen from forty-six hundred inquiries.
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A decision that is made in the light of careful analysis but that turns out badly because of unforeseen events is still a good decision. When the major planning was done for the Edsel between 1954 and 1955, the U.S. economy was doing well and demand for medium-priced automobiles was increasing. Between 1953 and 1957, five and one-half to six million cars were sold each year, except for the boom year of 1955, which saw almost eight million sales. In 1955, 36 percent of sales were accounted for by Mercury, Dodge, DeSoto, Pontiac, Oldsmobile, and Buick. About 32 percent of 1956 sales went to these makes.
In 1957, the stock market contracted, leading to a recession that extended into 1958. Even though the Edsel was introduced late in calendar year 1957 as a 1958 model, statistics were accumulated on a calendar basis. Ford sold 54,607 in the last quarter of 1957, about half of all sales of the car. Total U.S. car sales in 1957 were 6.1 million units, an increase of 5 percent over 1956, but sales of medium-priced cars decreased by 14 percent from 1956, with their share of the total market decreasing from 32 percent to 26 percent.
In 1956, DeSoto held about 2 percent of the total market; Dodge and Mercury, 4 percent; Pontiac, 6 percent; Oldsmobile, 7 percent; and Buick, 9 percent. Edsel projected capturing 3 to 3.5 percent of the entire market in its startup year, slightly less than the 4 percent Mercury took eighteen years to achieve. That was an ambitious goal. A good business plan should acknowledge that the future is difficult to project and avoid overoptimism. Good entrepreneurs have fallback plans, and they monitor their efforts closely to see if objectives are being met.
Ford Motor Company had so much confidence in its marketing research that no contingency plans were prepared in case reality did not meet expectations. Most of its ideas were based on marketing research done two or more years before introduction of the Edsel. Total car sales in 1955, when the Edsel was in planning stages, were 7.9 million, an increase of 42 percent over the previous year. This was the best sales year so far after World War II. This was also the apex of the medium-priced market. The market changed rapidly from 1955 to 1957, but Ford’s research was not updated.
Another point of concern should have been the inroads that imported cars were making in the United States. Sales of imports were approximately 57,000 in 1955, 107,000 in 1956, 259,000 in 1957, and 430,000 in 1958. Ford’s market research concluded that the people who bought smaller cars such as the Rambler and foreign cars such as the Volkswagen Beetle and Renault were a fringe group that would not have a major impact on the automobile market. Ford’s focus became fixed upward, not downward toward the economy end.
At the end of Breech’s tenure as chairman, the focus would shift with the introduction of the Ford Falcon, an entry into the burgeoning compact car class. It would compete with the Rambler, Chevrolet Corvair, Plymouth Valiant, Volkswagen Beetle, and myriad foreign makes trying to sell to the budget-conscious or antiestablishment segment of the U.S. market. The market shifted from the 1955 model year to 1960, but even by late 1957, the Edsel’s introduction date, the shift either was not recognized, was ignored, or was of concern to some within Ford who were overwhelmed by the weight of the management-by-committee structure.
The debut of the Edsel was originally scheduled for June, 1957, but was pushed back to September because Ford corporate staff believed that 1958 models coming out early would lure buyers away from the 1957 Ford and Mercury lines. The June introduction might have allowed the Edsel to gain sales momentum before the recession made itself felt.
New firms should plan to run lean until added overhead can be paid for out of earnings. The Edsel division had access to funding from Ford, but the principle remains the same. The Edsel division itself was a mistake for a number of reasons. It added fixed costs that raised the breakeven point, or the number of cars that had to be sold before profits began. If the Edsel had been incorporated into one of the existing divisions, the incremental overhead would have been much lower, adding flexibility, requiring fewer sales to maintain profitability, and increasing the probability of survival. With the larger overhead, there was more pressure to make sales quickly after the September introduction. Fifty million dollars was spent for advertising in the second half of 1957, but after this initial rush, there was relatively little left for sustained effort.
In the push to get as many cars to dealers as quickly as possible, quality control was neglected. Edsels got a bad reputation that was difficult to overcome. Raymond Fernand Loewy
Much effort went into the selection of a name, but in the end the name was chosen by one person. “Edsel” had some negative connotations and no positive ones. A fabulous name cannot sell a bad car, and a poor name will do little to hurt a good car, but a better name could not have hurt the Edsel.
One lesson from the Edsel is that the future is difficult to foretell. At the time the Edsel came onto the market, the United States was sinking into a recession that accelerated the development of domestic compact cars and ended the era of the chrome barges of the 1950’s. If the Edsel had been on the market at the time it was being planned, the results might have been different.
Other lessons can be learned from the Edsel’s failure. Planning is important, and contingency plans should be prepared to deal with uncertainties. New products should keep overhead as low as possible to lower the breakeven point and the amount of revenue needed to keep the product viable. Market research must be kept current so as to discern changes in the firm’s environment after initial planning. Finally, quality control is important. It is very difficult to overcome a bad reputation; the Edsel and the Yugo are prime examples.
Just about four years after the Edsel’s demise, Lee Iacocca introduced Ford’s Mustang, designed appeal to the postwar baby boom generation just coming of age. Research showed that buyers in this age bracket wanted a sporty, well-priced car. The Mustang far exceeded its sales expectations and spurred numerous imitations. Its success resulted from sound research and lessons learned, including those from the Edsel, as well as from a little luck, which the Edsel did not have.
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Bonsall, Thomas E. Disaster in Dearborn: The Story of the Edsel. Stanford, Calif.: Stanford General Books, 2002. Includes a comprehensive history of the development and marketing of the Ford Edsel, bookended by a biography of the car’s namesake and a concluding analysis of the causes behind the car’s failure. Bibliographic references and index. -
Brooks, John. The Fate of the Edsel and Other Business Adventures. New York: Harper & Row, 1963. A readable book from this prolific business-book author. -
Frank, Len. “The Edsel: It Really Was That Bad.” Collectible Automobile 1 (July, 1984): 56-64. Argues that the Edsel was poorly designed and executed and deserved its fate. -
Hall, Phil. “Edsel: Was It Really That Bad?” Collectible Automobile 1 (July, 1984): 48-55. The viewpoint of this author is that the Edsel was not a bad car. It might have succeeded had it been introduced a few years earlier or later. -
Hartley, Robert F. “From Monumental Failure to Outstanding Success: The Edsel and the Mustang.” In Management Mistakes and Successes. 7th ed. New York: John Wiley & Sons, 2003. Good summary of the background and planning involved in developing the Edsel. Supplies analysis of the factors contributing to its failure. -
Lichty, Bob. Standard Catalog of Ford 1903-1990. Iola, Wis.: Krause, 1990. Contains a brief history of vehicle specifications for, and current values of, the Edsel as well as other Ford Motor Company products. Useful for collectors; of some interest to business historians. -
Wallace, David. “Naming the Edsel.” Automobile Quarterly 13 (1975): 182-191. Wallace was a manager of marketing research for the Ford Motor Company from 1955 to 1958. This article provides an inside look at the machinations the company went through to choose the right name for the Edsel and how the car got saddled with a name almost no one liked. Educational and entertaining.
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