At the turn of the 20th century, the automobile entered the American scene. During that period there was a proliferation of car manufacturers. In 1903 alone, 57 companies came into existence and 27 went bankrupt. Over the years, numerous models were introduced that are now a distant memory. Studebaker and Hudson come to mind. But the Cadillac, introduced in 1903 is still going strong. However, at one point it was also on the chopping block, but was saved at the last moment.
The Cadillac was General Motors’ top of the line and most expensive product. But the great depression of the 30s caused the automobile market, as a whole, to shrink drastically and the luxury segment to virtually collapse. In 1928, General Motors manufactured 1,709,763 vehicles of which 41,172 were Cadillacs. By 1933, GM production was down to 779,029 total vehicles. That year only 6,736 Cadillacs were sold, a decline of 84 percent.
Cadillac was losing so much money that it was obvious that management was going to pull the plug. A meeting of the GM Executive Committee was called to do just that. During the meeting a man named Nicholas Dreystadt, who was not invited, knocked on the door and asked to be heard for just 10 minutes. Dreystadt was a gifted mechanic and had been put in charge of GM Service Departments nationwide.
Dreystadt stated that he had a plan to make Cadillac profitable in 18 months. While traveling around the country visiting service departments, he had observed a significant number of African Americans in the service department at Cadillac dealerships. They were members of the tiny African American elite: boxers, entertainers, lawyers, doctors, and ministers. At that time, it was GM’s policy not to allow its dealerships to sell Cadillacs to Blacks. GM felt that it would not be good for the image of their luxury brand.
Dreystadt found out that Blacks were paying white men $300 to purchase the cars for them. Dreystadt urged the Executive Committee to go after this market. Why should a bunch of white men get several hundred dollars each when that profit could go to General Motors? The Board bought his reasoning and in 1934 Cadillac sales increased by 70 percent. On June 10, 1934, Dreystadt was made Head of the Cadillac Division.
Obviously, the purchasing power of African Americans has saved many corporations. Hopefully, one day we will use that purchasing power to save major corporations owned by us.
Mabra Holeyfieid, in his book “Use What You Got,” applies his business experience to offer strategies to address poverty in the black community. Available on Amazon.com.