Kaisers Never Retrench: The History of Kaiser-Frazer, Part 1

THE POSTWAR BOOM

The first production Kaiser and Frazer automobiles came off the Willow Run line on May 29, 1946. The first cars were shipped to dealers on June 22; all were registered as 1947 models. Despite Kaiser and Frazer’s earlier talk of inexpensive small cars, neither model was anything close to a low-priced economy car. The Kaiser Special started at $1,868, nearly $700 more than the cheapest 1947 Chevrolet. The Frazer, meanwhile, started at $2,053, over $100 more than an eight-cylinder Buick Special. Both Kaiser-Frazer products rode well, were reasonably economical, and had nicely trimmed interiors, but they were in no way exceptional.

At almost any other time, that would have been disastrous, but Kaiser-Frazer had the good fortune to roll out its new cars close to the beginning of the postwar automotive boom. Unlike depressed, devastated Europe and Japan, American roads were intact and American buyers, flush with unspent wartime earnings, had money to spend. As soon as civilian production resumed in the fall of 1945, customers began snapping up every new car they could get their hands on. Dealers soon had lengthy waiting lists and automotive “scalpers” became common. Kaisers and Frazers might have been ordinary, but they were new and they had four wheels, which was enough for many buyers.

1947 Kaiser-Frazer
Another early magazine ad for the 1947 Kaiser and Frazer automobiles. The headline alludes to recently rescinded wartime restrictions that had sharply restricted “pleasure driving.” (Ad image: “1947 Kaiser & Frazer Sedans” provided by and used with the permission of Alden Jewell)

In such a seller’s market, it was all Kaiser-Frazer could do to keep up with demand. When Continental couldn’t build engines fast enough, Frazer arranged to lease a plant in Detroit so K-F could build most of the engines itself. Kaiser-Frazer ultimately sold 70,474 Kaisers and 68,775 Frazers in the 1947 model year, giving the company the best market share of any of the American independents. Kaiser-Frazer posted a $19 million profit for 1947 calendar year, offsetting the previous year’s losses.

Graham-Paige, however, was still not pulling its weight. Graham was supposed to build a third of all Kaiser-Frazer cars, but ultimately managed fewer than 9,000. Moreover, Graham-Paige still hadn’t been able to meet its contractual obligation to finance one-third of Kaiser-Frazer’s operating expenses. In February 1947, the Graham-Paige board finally decided to sell its remaining automotive assets to Kaiser-Frazer and get out of the passenger car business once and for all.

Kaiser-Frazer sales remained robust in 1948 despite even higher prices. Demand was still strong enough that buyers didn’t flinch at the $2,460 price of a new Kaiser Custom model or the even-costlier Frazer Manhattan, which actually listed for $27 more than a Cadillac Series 62 sedan. Total K-F sales for the model year amounted to 91,851 Kaisers and 48,071 Frazers, yielding a $10.4 million net profit.

Despite two profitable years, Kaiser-Frazer remained perilously under-capitalized. In January 1948, the company tried to organize another stock offering, underwritten by Allen & Company, First California, and Otis and Company, but the brokers got cold feet and the offering collapsed almost immediately. The main results were a significant drop in Kaiser-Frazer’s share prices and a protracted legal battle between Kaiser-Frazer and Otis and Company’s Cyrus Eaton. Without the expected income from the stock offering, Kaiser-Frazer had to obtain another $20 million loan from Bank of America.

1948 Kaiser Special front 3q © 2008 Bryan Costin (used with permission)
The Kaiser Special was the first Kaiser production car, essentially a stripped version of the first Frazer. Available only as a four-door sedan, it listed for $2,104 in 1947, $2,244 in 1948. A better-trimmed Kaiser Custom was added midway through the 1947 model year, but it accounted for fewer than 10% of 1947-48 sales. (Photo: “‘Still a full year ahead!'” © 2008 Bryan Costin; used with permission)

SCHISM

On paper, Henry Kaiser and Joe Frazer were ideal partners, but there remained a vast philosophical divide between them and the people they recruited for Kaiser-Frazer. The employees and executives Frazer had recruited were, like Frazer himself, primarily Detroit veterans: engineers, production men, and designers who had cut their teeth at other major automakers. Kaiser’s people, who had come primarily from the shipbuilding business and other Kaiser enterprises in California, were outsiders in Detroit and largely ignorant of the auto industry’s established procedures and conventions.

Given those differences, it’s little surprise that there was friction. The Kaiser people tended to regard the Frazer people as stubborn, hidebound, and needlessly resistant to new ideas. The Frazer faction — including treasurer Hickman Price, who became head of Kaiser-Frazer Export in early 1948 — considered the Kaiser people naïve dilettantes with an overinflated sense of their own ingenuity and a tendency to lavish spending that taxed the company’s modest resources.

The Kaisers’ occasional efforts to economize sometimes backfired. For example, when Kaiser-Frazer engineers were preparing the company’s first convertibles, Edgar Kaiser (who had assumed Joe Frazer’s role as general manager in 1946) ordered engineers not to waste time and money reinforcing the frame to compensate for the loss of the roof. Engineers John Widman and Ralph Isbrandt had to build a prototype that way before Edgar would admit he’d been mistaken and authorize the necessary reinforcement. The additional cost of this exercise helped to turn the convertibles from a profitable image booster into an almost $5 million loss.

1950 Kaiser Traveler rear 3q © 2009 Jim Lape (used with permission)
Introduced in 1949, the Kaiser Traveler was a novel hatchback sedan, reportedly suggested by Henry Kaiser himself. Intended primarily for commercial customers, it sold in very small numbers. Kaiser continued to catalog Traveler and Vagabond hatchbacks through 1953, although few were sold. This is a 1950 Traveler, the cheaper base model. This particular car appeared in the 1997 film Telling Lies in America. (Photo: “1950 Kaiser Traveler (hatchback)” © 2009 Jim Lape; used with permission)

The differences between Frazer and Kaiser came to a head at a board meeting regarding plans for 1949. Frazer warned that 1949 was going to be a difficult year for the company. The selling boom was winding down and the Big Three, which had previously been selling warmed-over prewar models, were already unveiling their first true postwar designs. K-F was working on new models, but they were not ready yet, nor was the interim facelift planned for 1950.

As Frazer later described the scene to Richard Langworth, Henry Kaiser wanted to plunge ahead, insisting that the company should increase 1949 production by more than 10% from its 1948 (calendar year) level. Frazer balked; stepping up production in 1948 had increased revenues, but cut profits to barely half their 1947 level and left the company deeper in debt. He argued caution, suggesting instead that Kaiser-Frazer cut production significantly so they could remain profitable while buying time to introduce fresher products.

1951 Kaiser Traveler engine
All full-size Kaisers and Frazers (not including the later Henry J/Allstate or Kaiser Darrin) were powered by the ubiquitous Continental engine, a 226 cu. in. (3,707 cc) flathead six. When the Kaisers first appeared, it had only 100 hp (75 kW) — 112 hp (84 kW) with the optional dual-carb set-up, an extra $50. The best Kaiser ever got out of the normally aspirated engine was 118 hp (88 kW), although in 1954-1955, there was briefly a supercharged version with a claimed 140 hp (104 kW).

Frazer said Henry lost his temper at that point, shouting, “The Kaisers never retrench!” Kaiser argued that the company should seek an additional $40 million loan from the Reconstruction Finance Corporation to bolster the development budget. Frazer staunchly refused and the meeting soon degenerated into name-calling. Since Frazer’s influence in the company had been declining since the Graham-Paige buyout two years earlier, he lacked the votes to overrule Henry’s decision.

(We should note here that while Kaiser’s insistence on continuing to increase production sounds foolhardy, it may have been driven by a well-founded concern about the company’s perception among potential investors and financiers, particularly in the wake of 1948’s failed stock offering. While cutting production as Frazer advised might have staved off another short-term loss, it would also have sent a worrisome message to Wall Street and Washington about Kaiser-Frazer’s long-term viability.)

Not long after the fateful board meeting, Frazer resigned the presidency in favor of Edgar Kaiser. Frazer was given the nominal (and ultimately meaningless) title of board vice chairman and a three-year sales consulting agreement that allowed him to retain his existing salary, but in any real sense, his role in the company was over. He retired from the Graham-Paige board in 1954 and went into other, non-automotive businesses. He died in 1971 at the age of 79.

8 Comments

Add a Comment
  1. “Scalpers” as you call them is an understatement. A big three dealer would rip you off for almost double asking price after the war. My father returning in 1947 bought a K-F Manhattan only because he could get it at ’sticker’ price. He kept it for a few years but do not remember him saying anything wonderful about that car.

    He always had bad judgment when it came to car buying and eventually even bought a Henry J. But will save that story for another time too.

    (The sticker price only came into being in 1958 with the Monroney Act.)

  2. A couple of minor points: first, George Washington had no children (only step-children, who did not carry the Washington name) so Mrs. Frazer must have been descended from a relative of the President’s. Second, the caption under the ad for the 1949 Virginian has both wheelbases identified as Kaiser, rather than one Kaiser and one Frazer.

    1. Thanks for catching that glitch, and for the clarification. Joe Frazer’s mother was part of the same family as George Washington, but obviously not a lineal descendant; I’m a little hazy on the precise genealogy, but I think she was descended from one of Washington’s brothers.

  3. The first car of my family’s that I have clear memories of was a ’49 Frazer. (I have dim memories of a Crosley station wagon.) My father had gotten it used in 1950. Knowing him, he would have bought a car on thoroughly hard-nosed, pragmatic criteria, but I don’t know how that led to this particular car. In 1956 he got tired of chasing wrecking yard parts and got a ’53 Pontiac. I would assume that when he bought the Frazer, he gave the marque too much credit for long-term viability.

  4. You obviously havent seen one in person they are amazing cars and pioneered many things like the drop out power train where you could drop the motor and Trans by a couple of bolts on the bottom and drip them out. And they are great cars and they had the first car to get 30 miles per gallon, and the kaiser Darrin was the first all fiberglass car beating the corvette by a month.

  5. Interested to know more about Jean-Albert Gregoire’s involvement with Kaiser-Frazer though have little information to go on aside from Kaiser-Frazer investigating FWD and considering to build under license either the AFG (that later evolved into the Panhard Dyna X) or a version of the Hotchkiss-Gregoire as a 1946 Kaiser.

  6. I enjoy read this page on history and other webpages

  7. After World War II my family really needed a new vehicle. The first new vehicle was a new Jeep, just like the soldiers used. It was handy on our two farms. The first real car was a Frazer. My parents took the Frazer on a vacation to California. My Dad hated that car. He claimed it got awful gas mileage. After a couple of years he traded it
    for a Studebaker car and pickup truck. Next came a 1955 Packard. Everybody noticed my Mother in her Packard. She hated that. By by Packard and helo 1956 Buick Roadmaster. In the GM camp we then stayed.

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments may be moderated. Commenting signifies your acceptance of our Comment Policy — please read it first! You must be at least 18 to comment. PLEASE DON'T POST COPYRIGHTED CONTENT YOU AREN'T AUTHORIZED TO USE!