So you‘re fascinated by those sleek, gullwinged stainless steel beasts made famous in Back to the Future? Welcome, dear reader, to the wild story behind the short-lived DeLorean Motor Company and how they crashed harder than a DMC-12 hitting 88 mph!
From Grand Vision to Epic Failure
First, let‘s rewind and talk about DeLorean‘s promising origins. Legendary automobile executive John Z DeLorean founded his eponymous company in 1975 with ambitions of doing things differently as an ethical, independent automaker. Riding high off successful stints turning around Pontiac and Chevrolet, DeLorean dreamed big.
He wowed investors with plans for the DMC-12, an innovative V6-powered sports car featuring Italian design and stainless steel construction. With nearly $200 million in startup capital secured, he began building an advanced factory in Northern Ireland to produce his radical brainchild.
But mere years after that auspicious start, DeLorean spectacularly imploded – done in by debt obligations, poor early sales, and highly-publicized drug charges against its founder before a single car reached showrooms. By 1982, with barely 9,000 vehicles made, the company was bankrupt. So what happened?
DeLorean‘s Downfall – By the Numbers
| Year | Cash Burn Rate | Units Sold | Total Revenues |
|1981| $17.65 million | 3,000 units | $4.6 million
|1982| $220,000 per day | 5,000 units | $14.5 million
|1983| Bankrupt | N/A | Bankrupt
In a nutshell, the above financial trajectory tells the tale. Expenses overwhelmingly outpaced sales as losses snowballed – a cash burn even a solid gold DeLorean couldn‘t outrun. But the reasons behind the monetary meltdown reveal the real lessons here for aspiring automakers. Let‘s shift gears and diagnose what drove DeLorean off a cliff after seemingly blasting off.
Reason 1 – Maverick Mismanagement
John DeLorean fancied himself an iconoclastic industry rebel. But the leadership style that earned him notoriety as a rising exec proved disastrous running his own show. DeLorean consolidated power and ignored other executives‘ advice. Early bad decisons came home to roost.
For example, in a 1979 interview with the New York Times, leaders from DeLorean‘s logistics and manufacturing teams voiced concerns that the Northern Ireland production facility was plagued with delays and eating up cash. DeLorean barreled ahead anyway. Quality issues also emerged early on, indicating lapses in oversight.
This autocratic approach caused high management turnover and low staff morale even before cars started rolling off the line. Combined with uncontrolled expenditures, the environment was primed for financial catastrophe once early demand failed to materialize.
Reason 2 – Recession Slams Brakes on Sales
By early 1981, the first DMC-12s emerged blinking into daylight. The radical sports cars stood out from competitors, generating real buzz. But the dilapidated economy offered roadblocks at every turn. As quality auto journalist Brock Yates wrote in 1983:
"With high interest rates strangling the economy, the sports/specialty car market took a brutal pounding from which it did not recover."
After an initial burst, sales slowed to a crawl. DeLorean needed volume to achieve profitability. Instead, a three year industry recession meant most couldn‘t even consider an untested $25,000 sports car when unemployment hit 10.8%.
Reason 3 – Debt Load Speeds Race Toward Disaster
Buried under liabilities and the high costs of low production runs, DeLorean desperately needed influxes of capital to stay solvent. Their precarious position left no margin for error.
But toxic headlines soon tainted the company‘s image among investors. Cocaine trafficking charges filed against John DeLorean tanked lingering hopes of a bailout. The British government requested their loans back just as bankruptcy proceedings started. It was a financial checkmate.
Lasting Legacy – Silver Screen Icon
Though DeLorean Motor Company quickly faded into a footnote of automotive history after its early 80s collapse, the DMC-12 secured its place as an enduring pop culture icon.
Immortalized by Back to the Future in 1985 as an irresistible time machine, the DeLorean endures today as a symbol of 80s retrofuturism and subject of perennial nostalgia. Doc Brown‘s glowing tribute sums it up:
"The way I see it, if you‘re gonna build a time machine into a car, why not do it with some style?"
Indeed, the DeLorean had style to spare. Harsh lesson learned though – it takes far more than flash to reach 88 mph and not crash into oblivion months later. Strong business fundamentals matter, people!
Key Takeaways – Substance Over Style
While DeLorean‘s failure had many authors, the root cause was valuing sizzle over substance. Bedazzled by tantalizing design drawings and his own outsized dreams, John DeLorean forgot that actually producing profitable automobiles takes discipline and sound management strategy.
Don‘t just chase flash and headlines like DeLorean. Build a balanced business on practical execution or risk your venture abruptly running out of road too. Strong fundamentals combined with vision – that‘s how you architect something built to last versus ending up a brief shining spectacle.
Ok, pep talk over! Questions on this wild ride of early 80s automotive history? Happy to shift back to 1st gear and discuss more over a drink. Just maybe leave the cocaine and bankrupt companies talk behind this time!
