THE STUDEBAKER MERGER
Packard’s 1954 models were a holding action, another mild facelift of the 1951 body shell. The new V-8 was still not ready, so the old flathead straight eight got one last airing. For the senior cars, it was bored out to 359 cu. in. (5,880 cc) and fitted with an aluminum head and 8.7:1 compression ratio, giving it 212 hp (158 kW). That was competitive with the OHV V-8s of most rivals, but the lack of a V-8 was becoming a serious sales obstacle.
Further hampering the 1954 cars was the weakness of Packard’s dealer network. By May of 1954, Packard was down to about 1,200 dealers, from about 1,700 in early 1953. Each dealer was also ordering fewer cars, particularly since there were still large stocks of unsold 1953 Packards. Rather than lay off large numbers of workers, Ray Powers put production on an on-again, off-again schedule early in 1954, anticipating the customary spring sales boom. The boom did not materialize and the erratic schedule drove up costs.
Packard’s competition had shifted as well. In 1952, Cadillac dropped its entry-level Series 61, meaning that its cheapest model was now in the same price bracket as Packard’s most expensive. The move initially cost Cadillac about 20,000 sales, but it recovered quickly and by 1955 was selling more than 140,000 units a year. Packard, meanwhile, had rolled out a stripped-down base Clipper in an attempt to bridge the price gap between Clipper and Buick. Nance had reluctantly accepted that Buick, Lincoln, and Chrysler were more realistic short-term targets than Cadillac was, at least until Packard was able to introduce an all-new senior car. Packard and Cadillac were moving in opposite directions.
The mid-priced market was tougher, too. Aside from the ongoing impact of the price war, both Buick and Oldsmobile were all new for 1954, while Packard’s Clipper was an obvious facelift of a three-year-old design. The entry-level Buick Special now had a V-8 and even the basic Special series included trendy pillarless hardtops, which Packard offered only in the pricier Clipper Super series. Packard’s sales for the 1954 model year dropped to around 31,000, lower than Nance’s worst fears.
By January 1954, the Packard board believed that merger was the only way to avoid eventual bankruptcy. (Hudson had come to same conclusion; on January 14, they merged with Nash to form AMC.) In March, Packard began formal negotiations with Studebaker, brokered by Lehman Brothers of New York.
The decision to court Studebaker rather than Nash is another often-criticized decision. It appears that it was primarily the board’s decision, not Nance’s — in February, the board refused to hear George Mason’s proposal for a merger with AMC. The Packard board felt that Studebaker’s product line better complemented Packard’s and were attracted to Studebaker’s larger dealer network and traditionally higher sales volume. However, Studebaker’s financial problems were deeper than even Studebaker realized. While Jim Nance had recognized early on that the market was in trouble, Studebaker’s Paul Hoffman and Harold Vance were slow to realize their peril, steadfastly maintaining that sales would return to normal in 1954. In the spring of 1954, while negotiations were still ongoing, Walter Grant estimated that Studebaker’s losses for the year would be nearly $39 million before taxes, $24 million after.
Nonetheless, both companies were desperate enough to overlook many things. The Packard board was so impressed with Lehman Brothers’ rosy projections of the merger’s potential financial benefits — including operations and tooling cost savings of $15.6 million a year and much-improved profit potential — that Packard did not even request an independent audit of Studebaker’s books.
Nance remained interested in AMC, with tenuous plans to combine Studebaker and Packard with Nash and Hudson. Although the Packard board had rebuffed him, Mason had left the door open to that possibility. The obstacle, at least as far as Nance was concerned, was George Romney. Romney was seven years younger than Nance, but just as bright and every bit as ambitious. The AMC merger had made Romney an executive vice president, which meant that he and Nance would be direct rivals in any future alliance. Nance reportedly had little respect for Romney, whose initial role at Nash had been to shadow Mason as a sort of catchall executive assistant; his interactions with Romney were frequently tense. (We’re not sure if Nance was aware that Romney had previously been a strong candidate for the presidency of Packard, which would probably have contributed to his hostility.)
Romney, for his part, felt that by leasing the Conner Avenue plant, Nance had reneged on the reciprocal agreement even though Nash still had a contract to buy Packard engines. Our sources are ambiguous on how formal the reciprocal agreement was, but in any event, Romney took it as a sign of bad faith. The death of George Mason in October ended what little chance there was for detente between Nance and Romney and any real prospect of a Studebaker-Packard/AMC merger.
Negotiations for the Studebaker merger dragged on throughout the summer, but both boards approved the deal by September. On October 1, 1954, the two companies became the Studebaker-Packard Corporation. Paul Hoffman became chairman of the new board of directors while Harold Vance became head of the executive committee. Jim Nance was named president. For better or worse, the merged company was now his responsibility.
PACKARD GOES FROM BAD TO WORSE
The fall of 1954 was extremely difficult for Packard. The cost savings that Lehman Brothers had estimated for the merger assumed a complete integration of the two companies, including shared parts and tooling — something that would take years even in a best-case scenario.
Worse, those projected savings were based on hopelessly unrealistic assumptions about the two companies’ production volume and costs. At the time of the merger, Studebaker’s proxy statement had claimed a break-even point of a little under 166,000 units. Nance quickly became suspicious of that figure and in mid-October dispatched Walter Grant to investigate. Grant studied the South Bend plant for two weeks and returned to Detroit with the alarming conclusion that Studebaker’s actual break-even point was more than 286,000 units. Combined with Packard’s own 80,000-unit break-even level, Studebaker-Packard would have to sell nearly 370,000 units to show a profit in 1955. Nance was understandably horrified.
At the same time, the transfer of Packard assembly to the Conner Avenue plant, which had begun in September, was turning out to be far more expensive and protracted than expected. Production of the 1955 models did not begin until November 17, weeks after the normal start of the model year, and cars did not reach dealers in significant numbers until well into February. Early production quality was appalling: Cars came off the line with doors that wouldn’t open or other serious problems. Some dealers accepted incomplete cars, hoping to finish assembly themselves, but that led to severe parts shortages. The quality problems weren’t addressed to anyone’s satisfaction until June 1955 and it cost the company more than $80 per car just to get the early cars into salable condition. Packard’s 1955 warranty costs were more than double those of 1954.
Those delays were particularly unfortunate because Packard’s hard-pressed dealers finally had a really competitive product with a new engine, a new transmission, and a remarkable new suspension.
TORSION-LEVEL RIDE AND THE 1955 PACKARDS
Packard’s new suspension was the work of Hudson engineer William D. Allison, who had begun work on an interconnected suspension — with the springs of the front wheels connected to those of the rear — back in 1941. He continued working on it after the war, believing that it would provide an unusually good combination of ride and handling. Ordinarily, Allison’s invention would have belonged to Hudson, but while his employers thought the design promising, they decided that developing it would cost more than Hudson could afford. Rather than shelve the design, Hudson took the unusual step of releasing the rights to Allison and allowing him to shop his design elsewhere.
Allison pitched his concept to various automakers, including Studebaker, but found no takers until he presented it to Jim Graves and Forest McFarland at Packard in 1951. They were intrigued and signed a preliminary deal for Allison to develop his concept for production, giving him a Packard sedan to use as a test mule. Hudson magnanimously granted Allison a leave of absence to pursue the project, which had very promising results. A series of pre-production test cars followed and in early 1954, Jim Nance approved the design for the 1955 model year. The marketing department dubbed the suspension “Torsion-Level.”
Torsion-Level used a more or less conventional double wishbone independent front suspension with a front anti-roll bar and a live rear axle that transmitted acceleration and braking forces via trailing arms; a pair of short lateral stabilizing links provided lateral axle location. Where the suspension departed from convention was in its use of interconnected torsion bar springs. Unlike Chrysler’s later “Torsionaire” suspension, Packard’s torsion bars did not act against the body or the frame. Instead, the main springs were connected at one end to the lower front wishbones and at the other to the rear trailing arms. A second, shorter set of torsion bars ran parallel to the main springs, connected at one end to the rear trailing arms (and sharing the same pivot axis as the main springs) and at the other to a frame-mounted electric compensator motor.
Interconnecting the front and rear suspension in this way meant that a bump affecting the front wheels was transmitted to the rear axle and vice versa. This provided the sort of wafty ride quality normally associated with very softly sprung conventional suspensions without the accompanying sacrifice of body control. Even by the standards of the mid-fifties, no Packard could really be called nimble, but Torsion-Level cars handled with surprising composure that belied their curiously disconnected ride motions.
Torsion-Level’s other signature feature was automatic level control, the “Load Levelizer.” If you loaded an anvil into the trunk, for example, the electric motor would kick in and crank the compensator springs to bring the car’s tail back up to normal ride height. This was not simply a convenience feature; the level control system was the only thing that gave Torsion-Level a consistent equilibrium. (Like any conventional suspension, the torsion bars were preloaded to provide a preset static ride height, but unlike conventional springs, that spring loading could be balanced at a variety of peculiar angles or attitudes, not just straight and level.) The motor cut out automatically if the brakes were engaged and incorporated a 7-second delay to keep the system from overreacting to bumpy pavement and a cut-off switch was provided under the dash so that the compensator would not drain the battery with the engine off.
Torsion-Level was initially offered only on senior models and Clipper Supers, but public enthusiasm eventually led Packard to offer it across the line. It was fairly expensive, at $150, but it had definite showroom appeal. The automotive press loved it, too, with some critics declaring the Torsion-Level Packards the best-handling domestic cars of the year. That was an exaggeration, but Torsion-Level gave Packard much better handling than Buick or Cadillac without the ride harshness of the Chrysler 300.
Torsion-Level was reasonably reliable for a complex new product, although the electric motor and its network of switches could act up and the control box could be damaged by road debris or corroded by salt. Nevertheless, Torsion-Level was less troublesome than Citroën’s early hydropneumatic system or GM’s late-fifties air suspensions.
The same could not be said for the new Twin Ultramatic transmission, which quickly developed an unfortunate reputation. A complete revamp of the 1949-vintage Ultramatic, the new transmission now provided dual drive ranges, one of which started in low and shifted automatically to high rather than depending solely on torque converter multiplication. (The first-generation unit’s novel lockup torque converter was retained.) Unfortunately, the Twin Ultramatic’s torque capacity was sorely tested by the new V-8, so aggressive driving was a prescription for trouble. Technicians’ unfamiliarity with the redesigned transmission didn’t help.
The new V-8 was not nearly as groundbreaking as Torsion-Level, but it finally gave Packard parity with its rivals, welcome news for beleaguered dealers. Packard also sold some of the new engines to AMC, which agreed to underwrite part of the development costs.
Topping off these technical innovations was a new look, courtesy of the ever-inventive Dick Teague, who was now director of styling. The revised styling looked different enough from the ’54s to at least partly disguise the carryover body shell. If the 1955 Packards were not a timeless design, they at least looked and felt relatively fresh.
We use the plural advisedly because Nance was still trying desperately to establish the Clipper as a separate entity despite the fact that Packard still lacked the money to really differentiate it from the senior cars. The main distinction was that the senior Packards had a 5-inch (127 mm) longer wheelbase and bigger engines than the junior models. Seriously challenging Cadillac would have to wait.
The 1955 line was Packard’s best (and possibly last) hope of reasserting itself in the marketplace. Unfortunately, it would not be enough.