Deviating Fortunes

How an ultimately doomed American car manufacturer unwittingly laid the financial foundation of one of today’s most successful sports car makers.

(c) Publications International

Ferdinand Anton Ernst (better known as Ferry) Porsche visited the USA for the first time in his life in December 1951. The 42-year old general manager of Porsche AG; his father Ferdinand Senior having passed away earlier that year, was there to carry out consulting work on a military vehicle project for the US Army as well as to discuss sales and distribution with Max Hoffman, Porsche’s importer and distributor for North America.

During that meeting Hoffman suggested to Porsche that providing consultancy services for American carmakers might be a lucrative idea for the enterprising young firm. Shortly before, Hoffman had met with longtime Studebaker executive Richard A. Hutchinson to discuss the future of the American car market and he suggested that Studebaker should offer a true economy car, a kind of American Volkswagen, instead of trying to match the big three line ups.

Of course Hoffman knew just the company to help them do it: the ones who had designed the original Volkswagen. Even though at that time the VW Beetle was not yet selling in great numbers in the USA, the shrewd Hoffman knew that Hutchinson would be open to the idea, for he was aware that shortly after the second world war the Studebaker executive already had one of the first VWs shipped to the South Bend facilities for evaluation and pushed for Studebaker to become the sole US agent for Volkswagen. However, Studebaker President Harold S. Vance decided against the idea. It was therefore not surprising that Hutchinson agreed to meet with Porsche.


In May of 1952, a Porsche delegation including Ferry Porsche, Karl Rabe, Leopold Schmidt and designer Erwin Komenda were invited to South Bend. The Germans had brought along the Porsche Typ 530, in essence a prototype 4-seater 356. Even though the first impressions were not very favourable – the ride was much too harsh for American tastes – they jointly defined new specifications and a consultancy agreement was signed that same month.

Instead of the simple rear-engined car Porsche initially suggested to Studebaker the South Bend firm wanted a larger, front-engined car. In response Porsche proposed a monocoque-bodied sedan, to be powered by three possible V6 engine configurations: water-cooled, air-cooled and a mixed cooled version (aircooled cylinder heads, watercooled cylinders). Displacement was 186.3 Cubic inches or approximately 3000 cc and the vee angle of these engines was an at the time novel 120 degrees.

The watercooled version developed 98 bhp, the aircooled version slightly more- 106 bhp. The complex mix-cooled variant was abandoned early on, leaving only the 542L (Luft/Air) and 542W (Wasser/Water) V6s to be
considered for further development.

The finished prototype, Typ 542 (known as Z87 within the Studebaker organisation), was secretly shown to the Studebaker management in Geneva in march of 1954, on the eve of the Motor Show. Typ 542 had a pontoon-type monocoque body and a wheelbase of 111 inches, four less than the Studebaker Champion. The transmission (a three speed with overdrive), brakes and steering gear were all Studebaker-sourced items.

Porsche had fitted the Typ 542 with independent rear suspension, not primarily in the interest of better ride and handling but rather to enable a smaller and lower driveshaft tunnel. Since Studebaker had no experience with aluminium engine production, they insisted – against Ferry Porsche’s suggestion – on cast iron for the engine block. The pistons and cylinder heads of both V6 engines were to be made of aluminium however.

After Studebaker’s people had returned home having given their blessing for further development, the prototype faced tough testing during that summer over the steep and winding Tyrolean mountain roads that Porsche liked to use to test their own cars.

In the autumn of 1954, the now near-final Typ 542 arrived in the USA. Since their visit to Switzerland, Studebaker’s interest in the car had waned considerably however because by now the oldest American car manufacturer was in serious trouble.

The beautiful all-new 1953 Loewy/Bourke designed models had tarnished Studebakers quality image considerably as they were plagued by a plethora of teething defects, substandard build quality and poor finish. To make matters worse GM, Ford and Chrysler had initiated an enormous sales promotion push that year to increase their market share and with any luck push the independents out once and for all.

The low sales figures of 1954, reflecting the public’s loss of confidence in Studebaker’s long term chances against the big three, were disastrous for the bottom line. Later that year Studebaker would enter into a merger with equally troubled Packard- an alliance that was described by one pundit at the time as “Two drunks trying to hold each other up”- a harsh but sadly apt description.


Nevertheless, the Typ 542 still underwent a full evaluation at the South Bend proving grounds with both engine configurations being tested. The overall verdict was positive although the ride was still deemed too hard for the average American driver, and both the amount of oversteer in hard cornering and sensitivity to crosswinds still needed work. The 542 was also somewhat overweight, and by 1955 its styling was starting to look dated.

Lack of finances first and foremost, but also loss of confidence and perhaps even a bit of the ‘not invented here’ syndrome ultimately kept the Typ 542/Z87 from being released for production however.

But this was not quite the end of the story. Earlier that year Studebaker had initiated a marketing survey in order to find out what would be the American car buyer’s ideal small(ish) economy car. The results indicated that the vast majority favoured a light, simple, easy to service, rear engined and aircooled car. In other words: a Volkswagen Beetle.

Ferry Porsche knew of the survey and its results and proposed a smaller vehicle, the Typ 633. This was a notchback two-door sedan, powered by an aircooled flat four engine in the rear. Alas, the Typ 633 would remain just an idea on paper as by that time Studebaker simply lacked the financial resources to make it a reality even if it had wanted to.

Even though both its prototypes were ultimately rejected, the project would turn out to be hugely beneficial for Porsche. In the early postwar years, Porsche was working from a few converted wooden sheds in the Stuttgart suburb of Zuffenhausen. The increasing demand for his cars prompted Porsche to design a new, state of the art car assembly plant. However, the banks were unwilling to provide credit to the still young firm.

The Studebaker project in 1952 however earned Porsche around 2 million Deutschmarks, which changed the banks’ mind. Before the end of that year the first cars would roll out of Porsche’s brand-new factory. For Studebaker the story did not end so well. After a temporary revival of sales in 1959 with the clever compact Lark an inexorable decline set in, resulting in Studebaker closing its South Bend operations in 1964 (the 542 prototype is presumed to have been destroyed at that time along with several other experimental vehicles).

They would survive for two more years in exile in Canada but after 1966 there would be no more cars built bearing the name of America’s oldest car manufacturer.

Author: brrrruno

Car brochure collector, Thai food lover, not a morning person before my first cup of coffee

14 thoughts on “Deviating Fortunes”

  1. Fascinating – many thanks indeed for sharing this episode, of which I’d been completely unaware, Bruno!

  2. Likewise, thank you Bruno for sharing a fascinating story. Who would have thought that Studebaker inadvertently helped Porsche grow in that way? I really like the Typ 542. It has a smooth functionalism, but might have been a bit too austere for American tastes in the late 1950’s.

  3. “entrepreneurs purchased the tooling and name to manufacture small numbers of increasingly modified variants of the car, including the Avanti II, through 2006. “

    1. The Coupé is definitely among my favorite American cars as far as looks are concerned- subsequent model years had improved quality but the 1955 model had a heavy-handed front end facelift unfortunately. After that came the faux Mercedes grilles which were OK but not as pure as the 1953/54 cars.

  4. Thank you, Bruno – I’ve learned something new (yet again).

    Studebaker seems to be the automotive equivalent of the ‘Six degrees of Kevin Bacon’ game* – they have many connections to other manufacturers and industry figures.

    For example, links via a merger to Packard to John DeLorean to GM; to Hillman, via Loewy design studios, and so on.

    As has been noted on DTW before, Studebaker so nearly invented the Corvair. I wonder if they would have made a better job of it; possibly not, based on the evidence above.

    * A game where you name an actor and then try to find the fewest number of links, via other actors and films, back to Kevin Bacon.

  5. How financial tides can change…
    Excellent work, detective Bruno. Another quality lesson from the DTW School of Wonders Never Ceasing.

  6. The Type 633 was to apparently feature an 83 hp 2-litre flat-4 engine with styling elements appearing to find their way to the later Volkswagen Type 3 notchback, along with the Ford Cardinal project (and a hypothetical Flat-4 powered Type 3/4-sized sub-Corvair model by GM) it seems such a car would have been a serious threat to the Volkswagen Beetle.

    A pity Studebaker’s own issues prevented it from bringing the Type 542 and Type 633 into production, along with making the company a weaker partner and financial black hole when it merged with Packard.

    The same goes with the unbuilt 3-litre 120-degree V6 not amounting to anything, the only other example of a potential road-going 120-degree V6 which immediately springs to mind would be the Zaccone Mina designed 3-4-litre 120-degree quad-cam V6 planned for the Lancia Gamma (that may or may not have also been temporarily considered for the Fiat 130).

  7. Although as the child of Holocaust survivors I am no fan of German marques, particularly Volkswagen and Porsche, I am a fan of defunct American marques and have written about this story on my blog. History is replete with “What Ifs?”

    Studebaker was hampered by blinders in its thinking, not unusual for a company of its age and culture. Later, it was simply in too much red ink to consider a partnership with Porsche.

  8. Thank you all for your positive comments- I am glad you enjoyed reading about this!

  9. I knew about the Studebaker connection, but forgot it completely. Thank you for reminding.

  10. Here’s an example of why I check in on DTW almost every day. I like to think I have a pretty esoteric knowledge of cars and automotive history, but this is completely new to me, and fascinating. Thanks, brrrruno!

  11. Studebaker released this sketch of a 4-5 seater sub-compact car planned for future introduction in 1961 with rear air intake fins, which called for a Flat-Four air-cooled rear engine of 65-75 horsepower and 100-inch wheelbase much shorter than the Lark.

    However it was a conventional styled 4-door unlike the Type 3 notchback looking 2-door Type 633 sketch, the latter does seem like it would have been pretty well suited for an Avanti-inspired styling theme had Studebaker resolved its own issues.

    Thinking about it only the Type 542 V6 would have been useful for Studebaker’s needs a replacement for the Skybolt Six OHV, which was only stymied because it was said to have cost almost as much as Studebaker’s own V8 to produce.

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