Rearview Mirror: William Durant and General Motors

Salesman built an automotive empire, but costly mistakes forced him out – not once, but twice

SHARE STORY

When the auto industry was new, virtually all companies were started by men who invented their vehicles, and then built the business around them.

General Motors was different. It was created by William Durant, a salesman who had little interest in turning a wrench, but who thought there was promise in these new horseless carriages. Ultimately, he would build a huge corporation, but lose his top position twice.

Durant was born in Boston in 1861 and moved to Flint, Michigan, where he worked for lumber and cigar companies. In 1886, he and a friend bought a carriage business, which they named Durant-Dort. Eighteen years later, they had several factories and were making 150,000 wagons a year.

Meanwhile, a plumber named David Buick decided he could build an automobile. His car was good, but he wasn’t much of a salesman, and his fledgling company almost went bankrupt. Its investors asked Durant to come aboard. Three years later, under the master salesman’s hand, it was second only to Ford as the country’s top-selling automaker.

But Durant wanted more, and on September 16, 1908, he filed incorporation papers for a new company. His lawyers thought International Motors wasn’t a good name for a domestic company, and United Motors was taken. Next on Durant’s list: General Motors.

Buick came under GM’s umbrella two months later. Durant then purchased Oldsmobile, and in 1909, bought Cadillac and Oakland. That latter brand would eventually be dropped in favour of its hot-selling Pontiac model.

Through his company, Durant met Sam McLaughlin, son of a prominent carriage builder in Oshawa, Ontario. Most Canadian automakers made versions of established American brands, and when McLaughlin switched from horse-drawn to horseless, he based his on a Buick. In 1918, his company became General Motors of Canada.

Determined to be the biggest and best, Durant went on a spending spree, buying more than 30 companies. Some purchases were solid, such as AC Spark Plug, Harrison Radiator, and the Rapid and Reliance truck companies that would be combined to form GMC. But he also wasted considerable cash buying unsuccessful automakers like Welch and Elmore, and lost $12 million on a light bulb patent that turned out to be fraudulent.

general motors history 2 Rearview Mirror: William Durant and General Motors
Louis Chevrolet drives a 1910 Buick race car General Motors

By 1910, his company was in trouble, and Durant went from bank to bank, trying to raise funds. One came to the rescue, but the terms were harsh: Durant would still be a director, but would take a leave of absence, and would no longer be GM’s president.

And that, of course, wouldn’t do, so he left. Durant went straight to Louis Chevrolet, the lead driver for Buick’s racing team, and asked him to design a car. Chevrolet created a large six-cylinder model. When Durant added a smaller model, Chevrolet wanted no part of a cheaper car, and he left. Durant didn’t care. He had what he wanted.

Sam McLaughlin bought shares in the new venture, and after determining it wouldn’t affect his contract with Buick, formed Chevrolet Canada, with Durant as majority shareholder. Chevrolets were made in independent factories in the U.S., but Canada built Buicks and Chevrolets together under the same roof before the American factories did.

By mid-1915, Chevrolet was making a ton of money, and with it, Durant went back to General Motors. Working with GM chairman Pierre duPont, he traded Chevrolet stock for GM stock. Chevrolet now owned a majority of General Motors, and on June 1, 1916, Durant was once again president of GM.

As soon as he was back, Durant started buying again. He brought Chevrolet in as a GM company in 1918. He also bought Delco, Fisher Body and Frigidaire, but lost millions on a failed tractor company. The shaky financing and a recession hit the company hard. DuPont’s chemical company rescued it, and in 1920, for the second and final time, Durant was out.

His remaining stock would have left him a millionaire for life if he’d retired, but it wasn’t in Durant to do that. Within six weeks he was planning a new car company, and in five months, he had two factories and $13 million in orders. Intending to compete with GM’s multi-brand strategy, he offered several marques, including Durant, Star, and Flint.

To get around tariffs, he founded Durant Motors of Canada in Toronto’s east end in 1921. The plant made the medium-priced Durant and lower-priced Star for Canada, and the Rugby for export to British Commonwealth countries.

In the U.S., Durant’s brands faced stiff competition and sales were never spectacular, but they did very well in Canada. The U.S. factories temporarily stopped production in 1927, and when Durant put up the Toronto factory as collateral for funding, he lost it. It became an independent Canadian company and lasted until the Depression took its toll in 1933.

Durant’s American company had closed the year before. He declared personal bankruptcy in 1936, but he never complained about being broke. His last venture was a bowling alley. A stroke left him unable to work, and GM execs paid his bills until his death on March 19, 1947. He never built a car, but he certainly could build companies.

We encourage all readers to share their views on our articles using Facebook commenting Visit our FAQ page for more information.