To the surprise of many, Bolivia is now Latin America’s fastest growing economy. At a 5 percent growth rate it now outstrips once dominant but now stagnating regional competitors like Brazil and Peru. Furthermore Bolivia boasts some very impressive macrofundametals: its level of international reserves are the highest in all of Latin America, it has slashed its government debt, and its inflation rate stands at a respectable 5 percent. This accompanies a 307 percent increase in average income and a 25 percent reduction in the poverty rate since 2001.
For those who have watched the demise of Venezuela and Argentina — the paragons of Latin American “21st century socialism” — Bolivia’s undeniable economic improvement appears to confound the expectation that socialism inevitably leads a country to ruin. Indeed the socialist policies of Evo Morales, Bolivia’s president since 2006, are based on exerting state control over natural resources and increased welfare spending. But, he’s credited with bringing about the turnaround.
Has the “Third Way” Worked in Bolivia?
Should the naysayers therefore reexamine their beliefs, and accede to the possibility of a “third way,” where a managed economy run by nice guys like Evo can bring about a positive outcome in people’s lives? Is Evo’s system superior to that which might prevail in an unregulated market?
Well, there may not be any great mystery to Bolivia’s success, if we take into account the fact that it is actually riding high on the wave of a commodity boom, particularly in natural gas, which alone constitutes around 45 percent of Bolivia’s exports. Such is the reliance of Bolivia on this commodity that when the price falls, as has begun to happen this year, a rehash of the classic plot line of a Latin American government’s gravy train coming to a crunching stop would not be surprising.
Government bureaucrats will be laid off, social programs will be shut down, and civil unrest will ensue. The only question is whether it will play out as a short drama or a long telenovela of the Venezuelan variety, with the government first running down its international reserves and then resorting to creating currency out of thin air ushering in the grand finale of hyperinflation.
For some however, the very fact that Bolivia hasn’t played out like that in Venezuela and doesn’t seem likely to in the near future, would suggest that socialism is viable if it is well managed and trimmed of its more radical excesses.
In fact, Evo’s tenure has undoubtedly been one of pragmatism. It is true that since 2005 he has expropriated just over twenty companies, but the level of expropriations in no way compares to that taking place in the culture of government impunity rife in Venezuela where 1,168 foreign and domestic companies were expropriated between 2002 and 2012. The infamous nationalization of foreign oil and gas fields is not one of complete state control, but is rather about gaining a controlling share of the profits made by foreign companies which can then be diverted into various social programs.
All this would suggest, as the mainstream business press gleefully point out, that Evo is no old-style Latin American socialist. Instead, they claim, what he’s doing in Bolivia is really run-of-the-mill Nordic-style social democracy in a Latin American setting.
The business press narrative however, ignores the genuinely significant and even transformative things that have occurred under Evo’s presidency, which despite the rhetoric they are couched in, have nothing to do with socialism and everything to do with advancing true freedom and enterprise.
Rejecting US Control, the IMF, and the World Bank
First among these is Morales’s rejection of the international financial system and its pillars, the IMF and World Bank. In left-wing lore, this position is consistent with the continent-wide popular struggle against neoliberalism and “free-market fundamentalism” that brought Evo to power. But in reality, the IMF and World Bank interventions are about building an infrastructure of financial control and corporate patronage that is the complete antithesis of the free market.
The modus operandi of these institutions is to go to a developing country already struggling under a mountain of debt and, colluding with its domestic elites, sign it up for a loan, usually to fund a transport or utilities development. This strategy is a win for the lenders, the western corporations given the development contracts, and anyone else who can benefit from this web of state-backed international corporatism. It is a loss for the recipient country (i.e., the taxpayers) who must service the crushing interest payments and make “structural adjustments” to their economy which are stated conditions for providing the loan.
This is precisely what happened in Bolivia when by the early 80s its corrupt elites racked up around $3 billion in debt to foreign banks. The IMF stepped in offering a series of loans to cover the balance of payment crisis and “modernize” its infrastructure. Defenders of the free market might approve the fact that as a condition of the loans, over the next few decades, state enterprises were sold off to foreign corporations and government spending was restricted.
Though we can always expect efficiency benefits from a state-run industry being run as a private concern, morally speaking, the state has no right to sell its stolen property to third parties, especially when they are corporations with state enforced privileges inaccessible to private citizens like limited liability and even guaranteed rates of profit. There is also nothing free market about the way taxes were increased on the poor to meet the demands for deficit reduction, or the way the whole emphasis of the IMF’s plan in Bolivia was to develop it as a commodity exporting country. This meant recommending measures like currency devaluation and creating an artificial export infrastructure dominated by western corporations.
Morales’s Benign Neglect of the Informal Economy
Without the IMF, Bolivia now has the chance to develop on its own terms instead of under the rule of technocrats. Of course, government control of the commanding heights of the economy is hardly conducive to organic growth. However, we should keep in perspective the fact that there is a division between this higher productivity part of the Bolivian economy and an informal and semi-informal sector that provides the vast majority of economic activity and employment. These latter sectors are also made up of mostly indigenous Indians, and it is in these areas where the true significance of Evo’s presidency can be felt.
As Bolivia’s first indigenous leader, Evo Morales’s presidency has given the marginalized and poor a new found sense of pride. Refusal to cooperate in the US war on drugs and a decidedly laissez-faire attitude to informal and small-to-medium enterprise means that the state’s presence as an antagonistic force in the lives of ordinary people is at a historical low. This, in combination with a banking system flush with savings and low debt has been key to the bursting on to the scene of small enterprises run by indigenous entrepreneurs who have successfully leveraged their culture and trading channels to climb their way into the burgeoning middle class.
In Bolivia, like neighboring Peru, even the poorest of the poor have the means to turn a stall into a small business and a small business into something larger. Where once his ancestors were turfed off their land and forced to work it for their colonial masters, an indigenous Indian can now open a textile factory and attain a level of wealth that surpasses that of the descendants of those who expropriated his forefathers.
All over cities like La Paz, colorful mansions known as cholets (a term combining “cholo” the discriminatory term for someone of Indian descent, with the word chalet) are springing up, constructed in Andean style architecture, often five stories high, with the lower levels turned into businesses: living and breathing monuments to entrepreneurialism that have transformed the urban landscape.
The reaction of the eurocentric elite is one of barely concealed horror: seeing their positions of managers and administrators of an economy based on resource extraction and patronage of western corporations become vulnerable, they instinctively oppose Evo, and collate around a conservative opposition that favors clamping down on the “informal” economy, resumption of the drug war, and alignment with US foreign policy objectives.
Though it is right to oppose nationalization, it is hard to take seriously the argument that were Evo not in power, and Bolivia left in the hands of the “business friendly” opposition, the country would be necessarily better or conducive to genuine free enterprise. A great levelling of the playing field has occurred under Evo, not through forceful redistribution of wealth, but rather through standing back and letting freedom and entrepreneurialism of the people run unchecked. It is this that has made Bolivia a tangibly different country to what it was ten years ago, and it is the hope of all those who care about freedom, that this will be the enduring legacy of the Morales years, long after the commodity boom ends.
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Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
An economy car is an automobile that is designed for low-cost purchase and operation. Typical economy cars are small (compact or subcompact), lightweight, and inexpensive to buy. Economy car designers are forced by stringent design constraints to be inventive. Many innovations in automobile design were originally developed for economy cars, such as the Ford Model T and the Austin Mini.Gordon Murray, the Formula 1 and Mclaren F1 designer, said when designing his new Murray T.25 city car: "I would say that building a car to sell for six thousand pounds and designing that for a high-volume production, where you have all the quality issues under control, is a hundred times more difficult than designing a Mclaren F1, or even a racing car. It is certainly the biggest challenge I've ever had from a design point of view." The alternative approach, other than innovating to build a low-cost car, is to build a stripped-down, no-frills version of a conventional car.
The precise definition of what constitutes an economy car has varied with time and place, based on the conditions prevailing at the time, such as fuel prices, disposable income of buyers, and cultural mores. In any given decade, there has generally been some rough global consensus on what constituted the minimum necessary requirements for a highway-worthy car, constituting the most economical car possible. However, whether that consensus could be a commercial success in any given country depended on local culture. Thus in any given decade, every country has had a rough national consensus on what constituted the minimum necessary requirements for the least expensive car that wasn't undesirable, that is, that had some commercially attractive amount of market demand, making it a mainstream economy car. In many countries at various times, mainstream economy and maximum economy have been one and the same.
From its inception into the 1920s, the Ford Model T fulfilled both of these roles simultaneously in the U.S. and in many markets around the world. In Europe and Japan in the 1920s and 1930s, this was achieved by the much smaller Austin 7 and its competitors and derivatives, although it failed to be accepted on the U.S. market even in the middle of the depression. From the 1940s and into the 1960s, the Volkswagen Beetle played both roles throughout much of the world—in Germany and Latin America particularly—but it was let down by relatively high fuel consumption, such that British, French, Italian, and Japanese models, all with better fuel economy, could capture the maximum-economy position in their home countries (which was also mainstream there). Meanwhile, in the U.S., the Beetle and other imports could command the maximum-economy position, but the mainstream-economy position was commanded by cars that would seem more like mid-range or luxury models in some other markets. By the 1960s a new wave of front-wheel-drive cars with all independent suspension had been launched. By the 1970s the hatchback had become the standard body type for new economy car models. In 1960-1994 the Soviet Union (and then - Ukraine) was selling economy car Zaporozhets (at the end of the 80s - its successor, ZAZ-1102, and VAZ-1111 made by AvtoVAZ) on the world market, at subsidised prices for hard foreign currency. Many of these cars were seen as the best value proposition, because they were generally larger cars, for the same price as small western models; in the case of the Lada they were let down by very poor fuel economy. In the mid-1980s, the YugoslavianZastava Koral (Yugo) (a rebodied 1971-83 Fiat 127), was sold as the cheapest new car on the U.S. market, South Korea's Hyundai models also sold well in the U.S., and have gone on to be successful around the world. Since the 1990s, the automotive industry has become extensively globalized, with all major manufacturers being multinational corporations using globally sourced raw materials and components, with a trend for moving assembly to the lowest labour cost countries. Today, every major manufacturer offers economy cars, including at least one truly small car that may fall into subclassifications such as subcompact car, supermini, B-segment; city car; microcar; and others.
Features that in one decade were considered luxury items (for example, power steering, power (servo assisted) brakes, air conditioning, electric windows) would in later decades be viewed as appropriate as standard equipment even in economy models.
The History of the automobile after many experimental models dating back at least a hundred years, started with the first production car - the 1886 Benz Tricycle. This began a period that was later known as the Brass era which is considered to be from 1890 to 1918 in the U.S. In the UK this is split into the pre 1905 Veteran era and Edwardian era to 1918. The U.S. Veteran era is pre-1890.
In the 1890s and into the first decade of the twentieth century; the motorized vehicle was considered a replacement for the carriages of the rich, or simply a dangerous toy, that annoyed and inconvenienced the general public. The period children's book Wind in the Willows, pokes fun at early privileged motorists. The Automotive industry in France were the world leaders during this period. The Red Flag Act had obstructed automotive development in the UK until it was mostly repealed in 1896. The high wheeler was an early car body style virtually unique to the United States. It was typified by large-diameter slender wheels, frequently with solid tires, to provide ample ground clearance on the primitive roads in much of the country at the turn of the 20th century. For the same reason, it usually had a wider track than normal automobiles.
The first car to be marketed to the (well off but not rich) ordinary person and so the first 'economy car', was the 1901–1907 Oldsmobile Curved Dash - it was produced by the thousands, with over 19,000 built in all. It was inspired by the buckboard type horse and buggy, (used like a small two-seat pickup truck) popular in rural areas of the U.S. It had two seats, but was less versatile than the vehicle that inspired it. It was produced after a fire at the Oldsmobile plant, when the prototype was saved by a nightwatchman named Stebbins, (who later became the Mayor of Detroit), and was the only product available to the company to produce, to get back on their feet.
Although cars were becoming more affordable before it was launched, the 1908–1927 Ford Model T is considered to be the first true economy car, because the very few previous vehicles at the bottom of the market were 'horseless carriages' rather than practical cars. The major manufacturers at the time had little interest in low-priced models. The first 'real' cars had featured the FR layout first used by the French car maker Panhard and so did the Model T.
Henry Ford declared at the launch of the vehicle -
I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be low in price that no man making a good salary will be unable to own one - and enjoy with his family the blessing of hours of pleasure in God's great open spaces.
The Ford Model T was a large scale mass-produced car; that very innovation, along with the attributes it required a simple inexpensive design, that allowed it to be the first car to exemplify the ideals of the economy car. Although it followed the Panhard mechanical layout, it used an epicyclic gearbox more like later automatic gearboxes, rather than the Panhard type manual gearbox, which in a developed form is still in common use today. The innovations involved in making it a successful design were in its production and materials technology; particularly the use of new vanadium steel alloys. Model T production was the leading example of the Taylorism school of scientific management, (also known as Fordism), and its production techniques evolved at the Highland Park Ford Plant that opened in 1910, after it outgrew the Piquette Avenue Plant. The River Rouge Plant which opened in 1919, was the most technologically advanced in the world, raw materials entered at one end and finished cars emerged from the other. The innovation of the moving assembly line, was inspired by the 'dis-assembly' plants of the Chicago meat packing industry, reduced production time from twelve and a half hours, to just an hour and thirty-three minutes per car. Black was the only colour available because it was the only paint that would dry in the required production time. The continuous improvement of production methods, and economies of scale from larger and larger scale production, allowed Henry Ford to progressively lower the price of the Model T throughout its production run. It was far less expensive, smaller, and more austere than its hand-built pre-first world war contemporaries. The size of the Model T was arrived at, by making its track to the width of the ruts in the unsurfaced rural American roads of the time, ruts made by horse-drawn vehicles. It was specifically designed with a large degree of axle articulation, and a high ground clearance, to deal with these conditions effectively. It had an under stressed 177 cu in (2.9 L) engine. It set the template for American vehicles being larger than comparable vehicles in other countries, which would later on have economy cars scaled to their narrower roads with smaller engines.
In 1912 Edward G. Budd founded the Budd Company, which initially specialized in the manufacture of pressed-steel frames for automobiles. This built on his railroad experience. In 1899 he had taken his knowledge of pressed steel to the railroad industry. He worked with the Pullman Company on a contract for Pennsylvania Railroad, building the first all-steel railcar.
In 1913 in the UK, the 1018 cc "Bullnose" Morris Oxford was the first model launched by Morris Motors. Only 1302 were made. The Oxford was available as a two-seater, or van but the chassis was too short to allow four-seat bodies to be fitted. It made extensive use of bought in components, including many from the U.S. to reduce costs. The 1915-1919 Morris Cowley (about 1400 produced) powered by a new US Continental engine was a bigger stronger better finished version of the first Oxford. The post–First World War Oxford was a deluxe version of that, now made plainer, 1915-1919 Cowley. They were larger cars with 50% bigger engines than the 1913 Oxford. By 1925 Cowleys and Oxfords were 41 per cent of British private car production and limousine and landaulet bodies for 14/28 Oxfords were supplied ex-factory. Morris then added a commercial vehicle operation and bought Wolseley Motors the following year. Cecil Kimber, a Morris employee, founded MG (Morris Garages) aiming to sell more Morrises. After the Second World War Morris Motors, having swept in Riley, merged with the Austin Motor Company together forming the British Motor Corporation.
In 1913 the British Trojan company had its prototype ready for production. It had a two-stroke engine with four cylinders arranged in pairs, and each pair shared a common combustion chamber - a doubled-up version of what would later be called the "split-single" engine. The pistons in each pair drove the crankshaft together as they were coupled to it by a V-shaped connecting rod. For this arrangement to work, it is necessary for the connecting rod to flex slightly, which goes completely against normal practice. The claim was that each engine had only seven moving parts, four pistons, two connecting rods and a crankshaft. This was connected to a two-speed epicyclic gearbox, to simplify gear changing, and a chain to the rear wheels. Solid tyres were used, even though these were antiquated for car use, to prevent punctures and very long springs used to give some comfort. Before production could start war broke out and from 1914 to 1918, the company made tools and gauges for the war effort.
In 1914 Ford was producing half a million Model Ts a year, with a sale price of less than US$500. This was more than the rest of the U.S. auto industry combined and ten times the total national car production of 1908, the year of the cars launch. Also in that year Ford made headlines by increasing the minimum wage of his workers from $2.83 for a nine-hour day to $5.00 for an eight-hour day, to combat low workforce morale, and employee turnover problems because of the repetitive and stressful nature of working on the production line, and more radically, to turn his semi-skilled workers into potential customers.
The Ford Model T was the first automobile produced in many countries at the same time. It was the first 'World Car', since they were being produced in Canada and in Manchester, England starting in 1911 and were later assembled in Germany, Argentina, France, Spain, Denmark, Norway, Belgium, Brazil, Mexico, and Japan.
At the New York Motor Show in January 1915, William C. Durant the head of Chevrolet (and founder of GM), launched the Chevrolet Four-Ninety, a stripped down version of the Series-H, to compete with Henry Ford's Model T, and went into production in June. To aim directly at Ford, Durant said the new car would be priced at US$490 (the source of its name), the same as the Model T touring. Its introductory price was US$550, however, although it was reduced to US$490 later when the electric starter and lights were made a US$60 option. Henry Ford responded by reducing the Model T to US$440.
In 1916 Edward G. Budd's first big order for the Budd Company was from the Dodge brothers, who purchased 70,000 bodies, mounting the steel bodies onto conventional chassis frames.
During the 1920s Edward G. Budd's pressed steel bodies were fast replacing traditional coachbuilt bodies all around the world. These were fully closed roofed bodies, until this time open tourer bodies were the standard body on the market. Budd envisioned pushing his technology even further, and in 1924 he found another visionary in André Citroën. By 1934, they had developed the Citroën Traction Avant, the first unibody, pressed-steel automobile. Budd also pioneered the use of electric arc welding in automobile manufacturing. It would be the 1930s before this technology was generally applied to economy cars.
The cyclecar was an attempt in the period before 1922 in the post-First World War austerity period, as a form of "four-wheeled motorcycle", with all the benefits of a motorcycle and side-car, in a more stable package.
In 1920 Trojan in Britain made its first series of six cars from a works in Croydon and the final revised production version was shown at the 1922 London Motor Show. An agreement was reached with Leyland Motors to produce the cars at their Kingston upon Thames factory where work on reconditioning ex RAF wartime trucks was running down. This arrangement would continue until 1928 when Leyland wanted factory space for truck production. During the nearly seven years of the agreement 11,000 cars and 6700 vans were made. The car known as the Trojan Utility Car went onto the market at £230, reducing to £125 in 1925, the same as a Model T Ford. Nothing was conventional. Rather than a chassis the car had a punt shaped tray which housed the engine and transmission below the seats. This is a similar idea to the chassis-less design of the contemporary 1922 Italian Lancia Lambda luxury car. The transmission used a chain to drive the solid tyre shod wheels. The 1527-cc engine to the ingenious Hounsfield design was started by pulling a lever on the right of the driver. To prove how economical the car was to run, the company ran the slogan "Can you afford to walk?" and calculated that over 200 miles (320 km) it would cost more in shoes and socks than to cover the distance by Trojan car.
The astronomical success of the Model T accelerated after the First World War, and by the time Ford made his 10 millionth car, half of all cars in the world were Fords. It was so successful that Ford did not purchase any advertising between 1917 and 1923; more than 15 million Model Ts were manufactured, reaching a rate of 9,000 to 10,000 cars a day in 1925, or 2 million annually, more than any other model of its day, at a price of just $240. The need for constant reductions in price through the 1920s reflected increasing competition from newer designs for the relatively unchanged and increasingly obsolescent Model T.
In 1923 Chevrolet developed a new car to compete with the Model T, the Chevrolet Series M 'Copper-Cooled', air-cooled car, designed by General Motors engineer at AC Delco Charles Kettering, (who invented the points/condenser ignition system that was in use until the 1980s). It was a rare failure for him, due to uneven cooling of the inline four-cylinder engine.
The most development of small economy cars occurred in Europe. There was less emphasis on long-distance automobile travel, a need for vehicles that could navigate narrow streets and alleys in towns and cities (many were unchanged since medieval times), and the narrow and winding roads commonly found in the European countryside. Ettore Bugatti designed a small car for Peugeot. The 1911 Peugeot Bébé Type 19. It had an 850 cc 4-cylinder engine. The Citroën Type A was the first car produced by Citroën from June 1919 to December 1921 in Paris. Citroën had been established to produce the double bevel gears that its logo resembles, but had ended the First World War with large production facilities, from the production of much needed artillery shells for the French army. Andre Citroen was a keen adopter of U.S. car manufacturing ideas and technology in the 1920s and 1930s. Andre Citroen re-equipped his factory as a scaled down version of the Ford River Rouge Plant, that he had visited in DetroitMichigan. It was advertised as "Europe's first mass production car." The Type A reached a production number of 24,093 vehicles. The Opel 4 PS, Germany's first 'peoples car', popularly known as the Opel Laubfrosch (Opel Treefrog), was a small two-seater car introduced by the then family owned auto maker Opel, early in 1924, which bore an uncanny resemblance to the little TorpedoCitroën 5 CV of 1922.
On an even smaller scale, European cars, such as the 747 cc Austin Seven, (which made cyclecars obsolete overnight.) The Austin 7 was considerably smaller than the Ford Model T. The wheelbase was only 1,905 millimetres (6 ft 3 in), and the track only 1,016 millimetres (40 in). Equally it was lighter - less than half the Ford's weight at 360 kilograms (794 lb). The engine required for adequate performance was therefore equally reduced and the 747 cubic centimetres (45.6 cu in) sidevalve was quite capable with a modest 7 kilowatts (10 bhp) output. It would also start to catch on in Japan during the same time period, as a Datsun Type 11 that may have been pirated, at the start of their own automobile industry. It was also produced as a BMW Dixi and BMW 3/15 in Germany, Rosengart in France with French styled bodywork, and by American Austin Car Company with American styling, (later American Bantam) in the U.S. It displaced the motorcycle and sidecar combination that was popular in Europe in the 1920s. It spawned a whole industry of 'specials' builders. Swallow Sidecars switched to making cars based on Austin Seven chassis during the 1920s, then made their own complete cars in the 1930s as SS. With the advent of Nazi Germany the company changed its name: to Jaguar. The Seven continued to be produced until the late 1930s along with an updated and restyled closed body, known as the "Big Seven" until World War II, but still on the early 1920s running gear, but with a slightly enlarged chassis and widened track.
In the late-1920s, General Motors finally overtook Ford, as the U.S. new car market doubled in size, and fragmented into niches on a wave of prosperity, with GM producing a range of cars to match. This included a Chevrolet economy car that was just an entry level model for the range of cars. It was only a small part of the marketing strategy - "A car for every purse and purpose" of GM head Alfred P. Sloan. Harley Earl was appointed as head of the newly formed GM "Art and Color Section" in 1927. Harley Earl and Alfred P. Sloan implemented planned obsolescence and the annual model change to emphasise design as an engine for the success of the company's products. This moved cars from being utilitarian items to fashionable status symbols - that needed regular replacement "to keep up with the Joneses." Later in 1937, the Art and Color Section was renamed the Styling Section, and a few years afterward became one of the GM technical staff operations as the Styling Staff. It was funded by high interest/low regular payments consumer credit, as was the 1920s boom in other consumer durable products. It marked the beginning of mass market consumerism, that had been enabled by the efficiency of mass production and the moving production line. Until this time, manufacturers of consumer goods were concerned, by the possibility that the market would be fulfilled and demand would dry up. Henry Ford was wrong-footed by staying with the production oriented one size fits all, "any colour you like as long as it's black", Model T for far too long. The seller's market in new cars in the U.S. was over. Customers wanted choice. The 'one model' policy had nearly bankrupted the Ford Motor Company. By the end of production in 1927 it looked like a relic from another era. It was replaced by the Model A. The Ford Model T was voted Car of the Century on December 18, 1999 in Las Vegas, Nevada.
In 1929 Chevrolet replaced the 171 cu in (2.8 L) straight-4 engine that dated from 1913, with the 194 cu in (3.2 L) straight-6 engine or "Stovebolt 6" that was to last until the 1970s as Chevrolet's base engine. A few years later Ford developed the Model 18 with the 221 cu in (3.6 L) flathead V8. The same car was available with a slightly reworked Model A engine, marketed until 1933 (in U.S.) as the Model B. In Europe, it remained in the Ford lineup, as the Ford V8 in Britain in the 1930s which was re-styled and relaunched as the post-war Ford Pilot. They were viewed as large cars in Europe. The 1932 Ford V8 (Model 18) coupe became the car of choice for post-war hot rodders. It was the first V8 engine in a low priced car, and along with the Chevrolet 6, showed how the U.S. was diverging from the rest of the world in its ideas about what constituted a basic economy car.
In 1928 Morris launched the first Morris Minor (1928) in Britain to compete with the Austin Seven. Also that year German motorcycle manufacturer DKW launched their first car, the P15, a rear-wheel-drive, wood-and-fabric bodied monocoque car, powered by a 600 cc inline two-cylinder two-stroke engine.
Also, in the 1920s, Ford (with the Model T in Manchester, England), General Motors (who took over Opel in Germany and Vauxhall in Britain), expanded into Europe. Most Ford and GM European cars, especially economy cars, were technologically conservative and all were rear-wheel-drive to a smaller European size, with improvements focused mainly on styling, (apart from the introduction of the 1935 monocoque Opel Olympia, and the Macpherson strut by Ford in the 1950s), until the late 1970s and early 1980s.
In 1931 the DKW F1 was launched. This was the first successful mass-produced front-wheel drive car in the world. It was priced at 1,700 Reichsmarks . (The British 1928-30 Alvis cars 'FWD' models had handling problems and only 150 were made. The British 1929 BSA was a three-wheel competitor to Morgan and the motorcycle combination market, the 1931 four-wheeler was very short-lived. The 1929 U.S. Cord L-29 having been seriously flawed, production ended at 4,429. The 1930 U.S. Ruxton made about 500, production lasted for only four months.) The F1 featured a front-engine, front-wheel-drive layout using a water-cooled 494 cc or 584 cc transverse two-cylinder two-stroke engine with chain drive. This was developed through the 1930s into the 1938 F8 model and the F9 that was not put into production because World War II started, 250,000 were made. By this time DKW had become the largest manufacturer of motorcycles in the world. Their two-stroke engine technology was to appear in the postwar products of Harley-Davidson, BSA, Trabant, Wartburg, Saab, Subaru, Piaggio, Puch, Kawasaki, Mitsubishi, Mazda, Daihatsu, Honda, and Suzuki. The DKW type of two stroke engine was replaced with four strokes in western economy cars by the 1960s, but lived on in stagnating and cash strapped Communist East Germany's Trabant and Wartburg and Communist Poland's FSO Syrena until the 1980s.
In the late 1920s in Germany, Josef Ganz independent car engineer/inventor and editor of Motor-Kritik magazine had been a fierce opponent of the status quo of car design. He became a consultant engineer to Adler in December 1930. In the first months of 1931, Ganz constructed a lightweight economy car or peoples car, prototype at Adler with a tubular chassis, a mid-mounted engine, and swing axleindependent rear suspension. After completion in May 1931, Ganz nicknamed his new prototype Maikäfer (German for cockchafer) which is a species of beetle. In July 1931 he was also consultant engineer to BMW on the 1932-34 BMW 3/20 successor to the BMW 3/15 model. It featured transverse leaf independent front and rear suspension and an updated overhead-valvecylinder head version of the Austin 7 based engine. After a demonstration of the Adler Maikäfer by Ganz, the German Standard Fahrzeugfabrik company (unrelated to the British 'Standard' company), then purchased a license from Ganz to develop and build a small car according to his design. The prototype of this new model, which was to be called Standard Superior, was finished in 1932. It featured a tubular chassis, a mid-mounted engine, and independent wheel suspension with swing-axles at the rear. At about the same time from 1931, two years prior to Hitler's accession to power, Ferdinand Porsche founded Dr. Ing. h. c. F. Porsche GmbH - the Porsche company to offer motor vehicle development work and consulting. Together with Zündapp they developed the prototype Porsche Type 12 "Auto für Jedermann" ("car for everyone"), which was the first time the name "Volkswagen" was used. Porsche preferred a 4-cylinder flat engine, but Zündapp used a water-cooled 5-cylinder radial engine. In 1932 three prototypes were running but were not put into production. All three cars were lost during the war, the last in 1945 in Stuttgart during a bombing raid.
In Berlin in February 1933, the first production model of the Standard Superior was introduced at the IAMA (Internationale Automobil- und Motorradausstellung). It had a 396 cc 2-cylinder 2-stroke engine. Because of some criticism of the body design, not in the least by Josef Ganz in Motor-Kritik, it was followed in April 1933 by a slightly altered model. In November 1933, the Standard Fahrzeugfabrik introduced yet another new and improved model for 1934, which was slightly longer with one additional window on each side and had a small seat for children or as luggage space in the back. This car was advertised as the German Volkswagen. During the early 1930s German car manufacturers one by one adopted the progressive ideas published in Motor-Kritik since the 1920s. In the meantime in May 1933, the Jewish Josef Ganz was arrested by the Gestapo on trumped up charges of blackmail of the automotive industry, at the instigation of those that he had ferociously criticized. He was eventually released, but his career was systematically destroyed and his life endangered. He fled Germany in June 1934 – the same month Adolf Hitler gave Ferdinand Porsche the brief for designing a mass-producible car for a consumer price of 1,000 Reichsmark. Production of the Standard Superior ended in 1935. The Standard company was forbidden by the Nazis from using the term 'Volkswagen'.
The Volkswagen Beetle would be the longest-lasting icon of this 1930s era. Adolf Hitler admired the ideals exemplified by the Ford Model T, (even though he didn't drive himself), and sought the help of Ferdinand Porsche to create a 'peoples-car' - literally Volks-Wagen, with the same ideals for the people of Germany. This car was to complement the new Autobahns that were to be built. They had been planned under the Weimar Republic, but he stole the credit for them. Many of the design ideas were plagiarised from the work of Hans Ledwinka, the Tatra T97 and Tatra V570 with the Czechoslovakian Tatra (car) company. It was also suspiciously similar in many ways to the Josef Ganz–designed cars, it even looked very similar to the Mercedes-Benz 120H prototype of 1931. The Nazi Kraft durch Freude (German for Strength through Joy, abbreviated KdF) "KdF-Wagen" or "Strength through Joy - Car" project ground to a halt before serious production had started because of World War II. The KdF, was the Nazi state organisation to promote leisure activities of the population, approved of, and monitored by, the state. When the German car industry was unable to meet Hitler's demand that the Volkswagen be sold at 1,000 Reichsmarks or less, the project was taken over by the German Labour Front (Deutsche Arbeitsfront, DAF). Now working for the DAF, Porsche built a new Volkswagen factory at Fallersleben, called "Stadt des KdF-Wagens bei Fallersleben" (Wolfsburg after 1945), at a huge cost which was partly met by raiding the DAF's accumulated assets and misappropriating the dues paid by DAF members. The Volkswagen was sold to German workers on an installment plan where buyers of the car made payments and posted stamps in a stamp-savings book, which when full, would be redeemed for the car. Due to the shift of wartime production, no consumer ever received a "Kdf-Wagen" (although after the war, Volkswagen did give some customers a 200 DM discount for their stamp-books). The entire project was financially unsound, and only the corruption and lack of accountability of the Nazi regime made it possible. The Beetle factory was primarily converted to produce the Kübelwagen (the German equivalent of the jeep). The few Beetles that were produced went to the diplomatic corps and military officials. After the war, the Volkswagen company would be founded to produce the car in the new democratic West Germany, where it would be a success.
From 1936 to 1955, Fiat in Italy produced the advanced and very compact FR layoutFiat 500 "Topolino" or "little mouse", the precursor of the 1950s Fiat 500, it was designed by Dante Giacosa. The inline four cylinder 569 cc 13 1⁄2 hp engine was placed right at the front of the chassis with the radiator behind it. This allowed for a sloping front and good legroom when combined with lowered seating. This also allowed Fiat to lower the roofline. Although nominally a two-seater more were often squeezed in behind the seats. Initially it had quarter elliptic leaf springrear suspension, but with an axle locating trailing arm, that was upgraded to stronger semi-elliptic to cope with overloading by customers. The front suspension was independent and was used as the basis of the suspension of the first English Cooper racing cars in the 1940s that became successful in the 1950s. It had a four speed gearbox (when three was common) and all hydraulic brakes. It was a similar size to the Austin Seven but much more advanced. It was exported all over the world and produced at the NSU factory in Germany, Steyr-Puch in Austria and Simca in France. It was facelifted with American influenced 'full width styling' of the frontal panels after the war, with headlights integrated into the wings/fenders.
The Fiat 1100 was first introduced in 1937 as an updated version of the 508 "Balilla" (its real name was the 508C) with a look similar to the 1936 Fiat 500 "Topolino" and the larger 1500, with the typical late-thirties heart-shaped front grille, with styling by the emerging designer, Dante Giacosa. It was powered by a 1,089 cc four cylinder overhead-valve engine. Drive was to the rear wheels through a four-speed gearbox, and for the period, its comfort, handling, and performance were prodigious, making it "the only people's car that was also a driver's car".
The Steyr 50 streamlined small car was introduced in 1936 by the Austrian manufacturer Steyr-Puch. The car had a water-cooled four-cylinder boxer engine driving the rear wheels through a four-speed transmission. It had a similar engine and radiator layout as the Fiat Topolino that was launched at about the same time. To save room and weight a dynastarter was used, which doubled as the axle of the radiator fan. It was regarded as the "Austrian Peoples' Car" and was affectionately referred to as the Steyr "Baby". Professor Porsche had, despite rumors, not been involved in the design or production of the 50. Moreover, the little Steyr offered better seating and luggage space than Porsche's Volkswagen with shorter overall length, a large sheet metal sliding roof and was available with hydraulic brakes (instead of the early Volkswagens' cable-operated ones). In early 1938, the car was revised. It got a more powerful engine and a longer wheelbase. The new model was called the Steyr 55 and went on sale in 1940. A total of 13,000 Steyr "Babies" were sold. The production of Steyr cars was discontinued during World War II, after bombing of the factory. After the war, the factory was rebuilt and specialized in Austrian versions of the Fiat 500 and Fiat 1500. Today the Steyr factory produces the BMW X models for Europe.
The pre-war European car market was not one market. Trade barriers fragmented it into national markets, apart from luxury cars where the extra cost of tariffs could actually make cars more exclusive and desirable. The only way for a car maker to enter another national market of a major European car making country, (and their colonial markets of the time), was to open factories there. For example, Citroen and Renault opened factories in England in this period. This situation only really changed with the post-war growth of the EEC (European Community) and EFTA. The British RAC (Royal Automobile Club) horsepower taxation system had the secondary function of excluding foreign vehicles. It was specifically targeted at the Ford Model T, which the then government feared would wipe out the fledgling indigenous motor industry. It crippled car engine design in Britain in the inter-war period, causing British car makers to produce under-square, low revving, long stroke engines. It was abolished after World War II as part of the British export drive for desperately needed, hard foreign currency, because it made British cars uncompetitive internationally. The technologically conservative 1930s Morris Eight, Ford Eight (Ford Model Y which was related to the German Ford Köln), and Standard Eight (Standard, later became Triumph) were named after their RAC horsepower car tax rating. The Ford Model Y had replaced the Model A in Europe in 1932 and ran until 1937. It was a much smaller and lighter car weighing a third less, with an engine two thirds smaller in capacity than the Model A. The basic Model Y 'Popular' was an important milestone in British economy cars, being the first steel-bodied four-seater saloon to sell for £100; previously the only four-wheeled car to sell for that price had been the two-seater tourer model of the Morris Minor. The Model Y was reworked into the more streamlined Ford 7Y for 1938-1939. This was restyled again into the 1939 launched Ford Anglia. Initial sales in Britain actually began in early 1940. Production was suspended in early 1942, and resumed in mid-1945. Production ceased in 1948 after a total of 55,807 had been built. The Anglia was restyled again in 1948. Including all production, 108,878 were built. When production as an Anglia ceased in October 1953, it continued as the extremely basic Ford Popular entry level car until 1959. The Ford Prefect was a differently styled and slightly more upmarket version of the Anglia launched in October 1938 and remained in production until 1941, returning to the market in 1945. The car was face lifted in 1953 from its original perpendicular or sit-up-and-beg style to a more modern three-box structure. It was sold until 1961. The Anglia, Popular and Prefect sold well for a long time despite their old fashioned technology using transverse leaf springs and beam axles for front and rear suspension, side valve engines and only partly synchromeshed three speed gearboxes. They sold on price because of limited car supply on the used car market due to the Second World War, and new car market because of the British government's post war policy of exporting cars. The Morris Eight, introduced in 1935, was a deliberate close copy of the Ford and served as a lower cost, more profitable replacement for the 1928-vintage Morris Minor which had not achieved the hoped-for success. Prices for the Morris started at £112 and it offered more equipment than the Ford and a much more modern design than the ageing Austin Seven, which meant it became the UK's bestselling car by 1939.
Crosley, a U.S. appliance manufacturer, from 1939 (switching to war production in 1942-45) to 1952, produced small economy cars of a European rather than American scale. These featured a variety of innovative in-house designed engines of less than one litre capacity. They were popular in the 1940s due to their high fuel economy during fuel rationing because of the war. There were a wide variety of two-door body styles; Sedan, Convertible Sedan, Coupe, Convertible Coupe, Covered Wagon, and Station Wagon. Also, there was a successful sports car, the Crosley Hotshot. The styling of 1951 Crosley Super Sport is very similar to the 1958 Frogeye/Bugeye Austin-Healey Sprite. Production peaked at 24,871 cars in 1948. Sales began to slip in 1949, as the post war American economy took off, and even adding the Crosley Hotshot and a combination farm tractor-Jeep-like vehicle called the Farm-O-Road in 1950, could not stop the decline. In 1952, only 1522 Crosley vehicles were sold. Production was shut down and the plant was sold to the General Tire and Rubber Company.
In anticipation of a repeat of the post First World War economic recession, GM started the "Chevrolet Cadet" project (a compact car intended to sell for less than US$1,000), that ran from 1945 to 1947, to extend the Chevrolet range downwards in the U.S. new car market. Chevrolet head of engineering Earle S. MacPherson was in charge of development. It had a unibody structure, an over-square over head valve engine, a strut-type front suspension, small-diameter road wheels, a three-speed gearbox, brake and clutch pedals suspended from the bulkhead rather than floor-mounted, and integrated fender/body styling. It was light and technically advanced, but GM's management cancelled it, stating that it was not economically viable. The anticipated post Second World War U.S. car market recession hadn't materialised. The MacPherson strut, probably the world's most common form of independent suspension, evolved in the GM Cadet project by combining long tubular shock absorbers with external coil springs, and locating them in tall towers that directed the vertical travel of the wheels and also formed the "king pin" or "swivel pin axis" around which the front wheels could turn. It was elegantly simple, with just three links holding the wheel in place - the strut itself, the single-piece transverse lower arm, and the anti-roll bar that doubled as a drag link for the wheel hub. MacPherson took his ideas to Ford instead. They were first used in the French 1948 Ford Vedette. Next in the 1950 British Ford Consul and Zephyr (British mid-size cars, the same size as the Cadet), which owed more to the Cadet than just the MacPherson strut suspension, and caused a sensation when they were launched. In 1953, a miniaturised economy car version, the Anglia 100E was launched in Britain.
As Europe and Japan rebuilt from the war, their growing economies led to a steady increase in demand for cheap cars to 'motorise the masses'. Emerging technology allowed economy cars to become more sophisticated. Early post-war economy cars like the VW Beetle, Citroën 2CV, Renault 4CV, and Saab 92 looked extremely minimal; however, they were technologically more advanced than most conventional cars of the time.
The 4CV was designed covertly by Renault engineers during the World War II German occupation of France, when under strict orders to design and produce only commercial and military vehicles. Between 1941 and 1944, Renault was under the Technical Directorship of a francophile German installed former Daimler Benz engineer called Wilhelm von Urach who turned a blind eye to the small, economy car project suitable for the period of post war austerity. The design team went against the wishes of Louis Renault who in 1940 believed that post-war Renault should concentrate on mid-range cars. Only after a row in May 1941 did Louis Renault approve the project. In October 1944 after the liberation, Louis Renault who was imprisoned on charges of collaboration, died in suspicious circumstances. In January 1945, newly nationalised Renault had officially acquired a new boss, the former resistance hero Pierre Lefaucheux, (he had been acting administrator since September 1944). Lefaucheux had been arrested by the Gestapo in June 1944, and deported to Buchenwald concentration camp. The Gestapo transferred him to Metz for interrogation, but the city was deserted because of the advancing allied front, the Germans abandoned their prisoner. In November 1945 the French government invited Ferdinand Porsche to France looking to relocate the Volkswagen project as part of war reparations. On 15 December 1945, Porsche was invited to consult with Renault about the Renault 4CV. Lefaucheux was enraged that anyone should think the almost production-ready Renault 4CV was in any way inspired by the German Volkswagen, and that the politicians should presume to send Porsche to advise on it. The government insisted on nine meetings with Porsche which took place in rapid succession. Lefaucheux insisted that the meetings would have absolutely no influence on the design of the Renault 4CV, and Porsche cautiously went on record saying that the car would be ready for large scale production in a year. Lefaucheux was a man with contacts, as soon as the 4CV project meetings had taken place, Porsche was arrested in connection with war crimes allegations involving the use of forced labour including French in the Volkswagen plant in Germany. Ferdinand Porsche, despite never facing any sort of trial, spent the next twenty months in a Dijon jail. The 760 cc rear-mounted four-cylinder engine, three-speed manual transmission 4CV was launched at the 1946 Paris Motor Show and went on sale a year later. Volume production with the help of Marshall Plan aid money, was said to have commenced at the company's ParisianBoulogne-Billancourt plant a few weeks before the Paris Motor Show of October 1947, although the cars were in very short supply for the next year or so. On the 4CV's launch, it was nicknamed "La motte de beurre" (the lump of butter); this was due to the combination of its shape and the use of surplus paint from the German Army vehicles of Rommel'sAfrika Korps, which were a sand-yellow color.
The VW featured a 1.1-litre, air-cooled flat four, rear engine with rear-wheel drive, all round fully independent suspension, semi monocoque construction and the ability to cruise on the autobahn for long periods reliably. This cruising ability and engine durability was gained by high top gearing, and by restricting the engine breathing and performance to well below its maximum capability. Production was restarted after the war by the British ArmyRoyal Electrical and Mechanical Engineers, under Major Ivan Hirst after it was dismissed as valueless for war reparations by the Western Allies. In 1948 Hirst recruited Heinrich Nordhoff to run Volkswagen GmbH and in 1949 ownership was handed over to the West German government. The Volkswagen Type 1 'Beetle' was to become the most popular single design in history. Its production surpassed The Ford Model T on February 17, 1972. It was withdrawn from the European market in 1978.
The 375 cc Citroën 2CV had interconnected all round fully independent suspension, rack and pinion steering, radial tyres and front-wheel drive with an air-cooled flat twin engine and four-speed gearbox. It was some 10 to 15 MPG (Imperial)[clarification needed]