5 Things to Know about the Ford/Dodge Rivalry
How much do you know about the origins of Dodge as it related to the Ford Motor Co.? Read up on their rivalry here.
1. Dodge v. Ford Motor Company
In 1919, the Ford Motor Company was sued by its shareholders because of Henry Ford's strategy of wanting to employ more men, pay them more, increase production, and decrease car prices, essentially "spreading the benefits" of the industrial system. This was problematic for the shareholders, particularly for brothers John and Horace Dodge who owned 10% of the company and were among the largest shareholders. The Dodge brothers argued that special dividends for the shareholders should be paid out, whereas Ford wanted to use the money to invest in new plants to rapidly increase production.
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2. Ford Threatened to Start Another Company
When the Michigan Supreme Court sided with the shareholders, stating that Ford could not turn a for-profit corporation into more of a charitable company by withholding dividends from shareholders, Ford threatened to start a rival company to compete in the market. His intention was to try to get the shareholders, including the Dodge brothers, to sell their shares back to him so that he could gain more control over how the money was spent. Ford suspected that the Dodge brothers were trying to start their own car motor company through the use of their dividends earned from Ford, which ended up being true. The Dodge Brothers were earning around $1 million in Ford stock annually. Ford ended up paying the Dodge brothers $25 million after the suit was settled.
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3. Dodge Brothers Company Origin
Ford was absolutely correct in his suspicions that the Dodge brothers wanted to start producing their own cars, and they expanded by using both their dividends from their stakes in Ford Motor Co. as well as their settlement money from the lawsuit in 1919. The Dodge Brothers Company actually came about in 1900 as a machine shop, when they got their real start making engine and chassis components for the Ford Motor Co. Talk about biting the hand that feeds you!
In 1914, John Dodge was apparently quoted as saying, “Someday, people who own a Ford are going to want an automobile." Shade was thrown and there was no going back; a rivalry had officially begun. That same year, they introduced a "more upscale" competitor to the Ford Model T, the four-cylinder Dodge Model 30. It ranked them in second in U.S. sales by 1916, which is when Ford really began paying attention, and the lawsuit followed after he refused to keep paying dividends that they were using to fuel their company. Ford wanted the Dodge Brothers out of the company for good.
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4. The Competition Fizzles
The Dodge Brothers both died in 1920 from illnesses, and their company was never able to out-sell Ford Motor Co. Throughout the '20s, Dodge lost its ranking as the third best-selling car maker and dropped down to seventh in the U.S. by 1927. Their company was sold in the next year to Chrysler. Their styling didn't appeal to consumers as much as Ford's did.
Years later, in 1954, Chrysler borrowed $250 million to go partially towards upgrading the style of their cars. They hadn't benefited from the postwar boom nearly as much as Ford had. By the 1973 Oil Crisis, Dodge had to move slowly to downsize their largest cars to offer more efficiency, whereas Ford was able to make the change quickly due to better financial standing.
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5. No Contest
Fast forward to 2009, when Chrysler filed for bankruptcy following the bursting of the housing bubble and received a bailout from the U.S. government. Bankruptcy "wasn't an option" for Ford Motor Co., despite their inevitable struggles amidst the financial crisis at the time. Instead, they requested a credit line to help safeguard against the economic uncertainty of the market, and basically got lucky when credit default swaps erased billions of dollars in liabilities for them.
Since then, the demand for Ford trucks have gone up and up, easily beating out its competitors' sales. According to investors.com, total U.S. sales for Ford rose 5% from last year, with F-Series sales jumping 11% alone. In contrast, Chrysler's sales plummeted by 47%, and even though Ram Truck sales rose by 12%, Dodge sales went down 21% overall. Sorry, Dodge — you'll never outrank Ford!
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