Despite having been around for more than 100 years by the time it shut its doors in 1967, Studebaker simply didn't innovate enough to keep up with the competition.
Studebaker was a company which already had a long history of building vehicles by the time it would build its first car, and by the time the last Studebaker was built, the company was more than 100 years old. But all of this history and heritage wouldn't save the company from a series of bad business decisions compounded by the regular difficulties of a small automaker. Nevertheless, Studebaker did have its glory days, and for a time was a seriously competitive company.
Studebaker was founded in 1852 in South Bend, Indiana, as a manufacturer of carriages. Success for the company came when it became a wagon supplier to the Union Army during the Civil War. As many such businesses did at the turn of the twentieth century, Studebaker moved into building cars in 1902. The company became Studebaker Electric, a manufacturer of electric cars, until 1911. At this point, admitting defeat to the internal combustion engine, Studebaker Electric folded. But Studebaker had been making internal combustion cars in partnerships with other companies, like Garford and E-M-F, for years.
With the loss of the electric car manufacturing, Studebaker's efforts were simply turned to building internal combustion cars of its own. Studebaker acquired its former partner, E-M-F, and sued those facilities to begin producing Studebaker-branded cars in 1912. The change in branding was essential, as Studebaker's cars were actually quite rugged and well-built, but the old E-M-F machines had become famous for their poor quality. It was in 1913 that Studebaker employed the first use of monobloc engine casting for its six-cylinder models, just in time for the technology to be adopted for the construction of the vehicles used in WWI.
These powerful six-cylinder engines proved important to Studebaker's newly-formed truck line, which included busses and fire engines. Interestingly, during this period, the company still hadn't ceased the building of horse-drawn carriages, only finally bringing this to a close in 1919. The company continued to grow during the Twenties, expanding to a total of seven manufacturing facilities by the end of the decade, including one in Canada. The Great Depression hit Studebaker hard, and this was soon compounded by a series of terrible ideas. The company's president, Albert Russel Erskine, first rolled out a new model, the Rockne, in an effort to shore up sales.
This wasn't a bad car, but the depression was a time when only the very cheapest and the very most expensive cars did well, and the Rockne was neither of these. Sales plummeting, Erskine decided to buy the White Motor Company at a hugely inflated (essentially pre-depression) price, and in cash. By 1933, Studebaker was on the brink of ruin, and tragically driving Erskine to take his own life. In the aftermath of its chief's death, the company went to Harold Vance and Paul Hoffman, who borrowed still more money, but fortunately would manage to turn the company around by 1935.
In 1939, Studebaker rolled out the Champion, the model which once again made the company a real contender. This was a very advanced car and engine for its day, and the result was excellent gas mileage during a period when penny-pinching was still the norm. Production would cease during WWII, but a second-gen Champion would debut after the war, along with a halo car of sorts in the Starlight Coupe. But while the first few years after the war had gone well for Studebaker, the company entered the Fifties headed up by some of the industry's most conservative business thinkers, and Studebaker would take on almost no risks or innovations for several years.
But during this time, the rest of the industry was changing and innovating rapidly, and Studebaker was fast being left behind. The rising development costs for postwar cars were also hitting the company hard, and in 1954, it merged with the more prosperous Packard. Rather than turning Studebaker around, however, the merger instead just dragged Packard down with it. The 1959 debut of the Lark compact car was well-timed for the economic slump of that year, and things were briefly looking up again. But soon the Big Three brought out their own compacts, and all of them were quickly and completely undone by the VW Beetle.
The 1962 Aventi sports car was a breath of fresh air, but would ultimately prove to be too little too late. Studebaker would shut down in 1967, partially a victim of competition with much bigger companies, but also driven under by its own bad thinking. And so spelled the end of yet another American automaker.