The Near Merger of Ford and General Motors: A Historical Perspective

Mergers happen all the time in the automotive industry. Well, maybe not all the time, but frequently enough that they don’t usually come as that much of a surprise when they do happen. In fact, it was more of a shock when Nissan and Honda called off their merger than it was when the two automakers announced their plans to potentially join forces in the first place.

On the list of mergers and acquisitions that almost happened, there are probably none that would have been as big a deal as General Motors and Ford, and this was something that nearly took place more than once. Just imagine, a world where the Silverado and the F-150 never went head-to-head. The first time Ford and GM discussed a possible merger was all the way back in the first decade of the 20th Century, meaning that the whole automotive landscape would look totally unrecognizable today had Henry Ford wound up signing on the dotted line. Here’s what you need to know about how the deal almost went down…

A Lawsuit Almost Pushed Henry Ford Right Into The Arms Of General Motors

The first attempt to bring Ford into the fold was back in 1908. Then-president of Buick Motor Co, Billy Durant, received a phone call from his colleague, Benjamin Briscoe Jr, the president of the Maxwell-Briscoe Co, later the Maxwell Motor Company. Briscoe came to Durant with an ambitious idea, backed by one of his financiers, a partner at JP Morgan, to form a merger of more than a dozen automakers, essentially monopolizing the industry.

Durant thought that was ridiculous. The idea of getting almost every automotive CEO in the country under one roof, satisfying the enormous egos in the room and getting them to agree on a cohesive vision for the company? It simply wasn’t going to happen, but… if you’re talking two or three automakers, catering to the mid-market buyer with mass-produced cars, that was another story.

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So they got in touch with Ransom E Olds, who was in charge of the Reo Motor Company at the time, and Henry Ford. The group held a meeting at the Pontchartrain Hotel in Detroit, which wound up with Olds and Ford both wanting at least $3 million in cash for their respective companies. Durant and Briscoe were fine with the asking price, but the deal fell apart when it was reported that the International Motor Co – valued at $25 million – would be the first major automotive conglomerate in America, and Briscoe’s financier pulled their support.

Durant Soon Took Another Shot At The Deal

Durant couldn’t shake the idea of a big merger, and he would eventually get in touch with Olds Motor Works to talk about merging with Buick, with both companies to be owned by a new holding company, being none other than General Motors.

Durant couldn’t have chosen a better time to make the call. Olds Motor Works was in a bad way since Ransom E Olds had left the company, and the decision-makers at the company were eager to make the deal. The merger was made official, and Durant went on a buying spree, acquiring Okland Motor Car Co, Cadillac, Albert Champion Co, and countless others. Durant’s vision would ultimately prove to be far more ambitious than the one Briscoe had first presented nearly a year prior.

Despite his success in acquiring half the industry, Durant still wanted Ford Motor Co in his portfolio, and Henry was more than happy to talk turkey. Around this time, Ford was being sued by George Selden, a patent lawyer who had been granted a patent for the automobile. Selden formed the Association of Licensed Automobile Manufacturers, demanding a 0.75% royalty on every car sold in the US. The problem was, you had to go through ALAM for a license to sell cars in the first place. ALAM didn’t want to issue a license to Ford, and Ford kept making cars anyway.

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The rest of the industry was playing ball, and it was looking like Ford was primed to lose the case. If Henry could get the backing of General Motors, the whole problem could be trivialized. He only asked for $2 million in cash, $2 million in stock, and another $4 million to be paid out over the next three years at 5% interest.

The deal was approved on GM’s end, but the price was a bit steep, so Durant went to the National City Bank of New York for a loan of two million bucks. And that’s where the deal falls apart, again. The bank saw the automotive industry as unstable, and they didn’t have much faith in General Motors, declining the loan.

Henry Ford would go on to beat Selden on appeal and dominate the automotive industry with the Model T, and the rest was history… until it almost happened again.

A century after General Motors almost acquired Ford, Ford almost acquired General Motors. This took place in the late 2000s, now, if we refer to the “economic crisis of the 2000s,” you’ll probably ask “which one?” Well, we mean the one that had most of the American auto industry on the ropes. What people tend to forget about this period in American history is that Ford did not have to be bailed out alongside their competitors, thanks in large part to a line of credit, to the tune of $23.6 billion, according to the New York Times.

This story is pretty simple: General Motors went to Ford to talk about a merger and Ford said no.

Okay, so “almost acquired” might be a stretch this time, but Ford did give the idea some serious consideration, holding internal meetings on the matter, but the auto giant ultimately decided that buying General Motors would have been “unnecessary baggage,” and it would be wiser to hoe their own row, as it were. A year later, GM would file for Chapter 11 Bankruptcy, leading to a $49.5 billion investment from the United States Department of the Treasury.

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What Would The Automotive Landscape Look Like If The Deal Had Gone Through?

We can only guess what the world looks like in the timeline where GM successfully bought Ford, but there are some pivotal moments in automotive history that we can be certain would have played out a little differently…

• We might not have ever heard of Lincoln Motors. GM already owned Cadillac, and it seems unlikely that they would have needed to cut into their own market share with another line of premium luxury cars by buying Lincoln.
• The Ram 1500, not the Silverado, would likely be the F-150’s chief rival, as there wouldn’t be much reason to produce a second full-size truck to compete with your flagship.
• Jeep might not have the seven-slot grille. The original Army Jeep was a collaboration between Bantam, Willys, and Ford, with the seven-slot grille having been designed for the civilian model to avoid infringing on Ford’s copyright for the nine-slot grille. Had the collaboration been handled under the GM banner, the company might have simply bought Willys out and retained the original design.

This is all wild speculation, of course. For all we know, Ford would never have become the household name it is today had Henry not been given the freedom to run the company as he saw fit. In any event, it’s interesting to consider how much history can hinge on a single bank loan.

Sources: New York Times, The Detroit Bureau, Ford.