DeLorean is to the time machine what Rambo is to a military doll. The famous DeLorean DMC-12 sports car was supposed to be an imaginative and revolutionary concept that would become a commercial success. Unfortunately, the real reason DeLorean failed is also rife with scandal, intrigue, and tragedy. A true life story on the fringe of society – and the business world.
The car featured gull-wing doors that opened up like an airplane’s wings (which was one of its most iconic features), but what made this car stand out from other cars on the road was its stainless steel body—it wasn’t painted like normal cars are so it could easily be repaired if damaged during an accident or other mishap.
- Year Founded
- John DeLorean
- Car Manufacturer
- Humble, Texas, United States
- Key People
- John DeLorean
- Notable Products
- DeLorean DMC 12
The DeLorean Motor Company went bankrupt just three years after its launch due to poor sales performance despite rave reviews from critics around the world who loved how unique this new vehicle looked compared to all others on the road back then; here’s why:
|Founding Year||1975 – 1982|
|Founder of DeLorean||John DeLorean|
|Headquarters||Humble, Texas, United States|
|Important Product||DeLorean DMC 12|
The History Of DeLorean: What To Know
The DeLorean Motor Company was a sports car manufacturer based in Northern Ireland. It was founded by John Zachary DeLorean in 1975.
In 1981, after spending $150 million and three years building his factory in Dunmurry, Belfast, Northern Ireland, John produced only 9,000 cars — far short of what he needed to recoup this investment.
He was born in Detroit on September 24th, 1925, as John Zachary De Lorean and grew up in northern Michigan before moving to California, where he started working for General Motors at their Pontiac division. He would spend most of his career working for GM until 1973, and it wasn’t until 1975 that DeLorean decided to create his own car company.
The first car produced by DMC was the DeLorean DMC 12, which became popular for its stainless steel body and sleek appearance. It also had a rear-mounted engine and gullwing doors; these features have since become common on sports cars today.
The DMC 12’s success helped revive interest in American automobile production after decades of decline. Despite this success, however, the company struggled financially due to mismanagement by its founder and other factors. In 1982 it went bankrupt and closed down shortly after that.
Many factors contributed to this failure, but overall sales were too slow compared with their competitors’ models and escalating costs.
The Reason Delorian Succeeded
Admittedly, the car was a great design, and it was a good idea to make the car out of stainless steel. It’s also true that making an automobile look like a sports car wasn’t such a bad idea. It would have certainly helped with marketing.
However, there was one other factor that contributed to DeLorean’s success:
- The marketing campaigns were very effective (and by “very” I mean extremely). John was seen by the public as an American legend at that time. He used his status and fame to help get investors.
The movie Back To The Future helped create hype around the cars and bring more attention to them but at that time the company was long gone already. Had the movie been released a few years earlier it might have saved the car company.
The Iconic Movie
The DeLorean was a phenomenal car, and the movie was a commercial success. However, despite these successes, the car failed spectacularly because of how it was marketed by its manufacturer.
As you might remember from watching Back to the Future, the DeLorean had gull-wing doors that opened up, a very high-tech-looking dashboard, and a dismal engine.
However, that didn’t stop the fact that this was the first time traveling car we had ever seen in movies. It was as much of a movie star as the two lead actors.
The Reason DeLorean Failed
The reason DeLorean failed spectacularly was because of poor management and bad timing. That John Z Delorean was a great car designer and engineer wasn’t in doubt. However, he wasn’t an astute businessman. He also had an ego problem that made it difficult for him to collaborate with others.
John insisted on keeping all aspects of production in-house at DMC, even though many other automakers were outsourcing parts of their manufacturing process. This meant that DMC had to pay out more than they took in.
They also thought their product would sell themselves out of sheer novelty alone and didn’t spend nearly enough on design consultants who could help them stand apart from other automakers like Toyota or Ford.
Other car makers like Chevrolet were already selling similar models with more powerful engines and better fuel efficiency ratings than DMC could offer. Sadly the slow Delorean could not keep up, and not just on the roads.
The other manufacturers at that time were doing the smart financial thing. They continuously refreshed their current models to save costs and could sell at lower production costs and enter at a better market price than the DMC.
Signs Of Impending Failure
DeLorean was already in trouble and had been for some time. The company was sued and investigated by the FBI and the SEC before it went bankrupt. By the time DeLorean was ready to start manufacturing cars, it had already taken on significant debt, which made production difficult.
What you may not know is that in 1981, the same year John DeLorean launched his car company and released the DMC 12 to market, the United States experienced one of its most severe economic downturns. The recession had a devastating impact on several industries — including retail and luxury cars.
The late-1970s were a turbulent time for the American auto industry. In 1979, General Motors and Chrysler were bailed out by Uncle Sam after almost collapsing under the weight of their mismanagement and poor planning.
Meanwhile, oil prices skyrocketed thanks to the Iranian revolution (and subsequent Iran-Iraq War). Domestic gasoline production declined significantly, which hurt the economy. The nation was also experiencing an economic downturn that reached its lowest point in late 1982 with extremely high unemployment rates. It was against this backdrop that John Z Delorean first unveiled the car.
The DeLorean Motor Company was already struggling financially and the timing of the release of their car, before they could produce any substantial numbers and while they were already bleeding money, was just too much.
Poor Business Leadership
You can’t lead a company if you don’t know what your customers want. You can’t run a successful business without good employees, investors, and products. DeLorean had none of these attributes, which all came down to bad management.
John DeLorean was not a good businessman, but had no experience running a business or dealing with investors before starting his car company. He didn’t have the right skills to run things well or make smart decisions about how money should be spent. At that time, he decided to do most of the production work in-house, which would be tricky and expensive.
This took up a lot of the investor’s money. And it meant there was not nearly enough money spent on design and engineering. The result? A car that looked great, got some interest, but mechanically was not well designed and, at that time, incredibly slow.
What Did DeLorean Do To Stop Failure?
The last thing you want to do as a leader is to give up. So it’s no surprise that John tried to save the company. Although he did it the wrong way, by trafficking drugs.
In the early 1980s, Delorean was under investigation for trafficking cocaine. The FBI had discovered that the DeLorean Motor Company was engaging in drug money laundering and drug trafficking.
John had been trying to save his company by getting investors from Colombia and Mexico, but he couldn’t find anyone interested in investing in his cars. So instead of finding investors, he decided that he would make some quick cash by selling drugs instead.
The allegations at that time against John were for drug trafficking and money laundering, but these claims have never been substantiated. He was arrested on March 21, 1982, and charged with trafficking hundreds of pounds of cocaine into the United States from Caracas during the early 1980s through his auto parts business. He was acquitted of all charges in 1984 after spending 11 months in jail.
The DeLorean DMC-12 was an iconic car, but it failed spectacularly. It had a lot of hype, but the market crash of the 1980s killed any chance it had at success. The reason Delorean failed is because of poor business leadership. Bad timing, and allegations of drug trafficking also contributed to its demise.
But what stood out most was John T.’s efforts to save the company by trafficking cocaine. Instead, he landed in jail and ended the story of his company.
So why did the DeLorean fail, and what is it missing compared to other supercars? It’s all down to the engine. The leadership and the timing.
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