— From Palm Beach Confidential 2017 January Issue
In 1896, the Duryea Motor Wagon Company was the largest automaker in the country.
Twenty years later, it was out of business…
You may not have heard of them, but brothers Charles and Frank Duryea were pioneers in the auto industry. In 1895, on a cold, snowy day in Chicago, the Duryea brothers won America’s first car race.
The “Duryea automobile” became the first ever commercially built car in America.
By 1896, the U.S. produced 300 cars per year. The Duryea Motor Wagon Company was the largest carmaker in the country… with a stunning output of 13 cars compared to only two cars produced from 1893–1895. Costing anywhere from $1,000–2,000, these were toys for the rich. (At the time, average American households were only making $390 per year.)
Three short years later, 30 more manufacturers sprang up. And annual U.S. output increased to 2,500…
In 1919, the industry was booming with over 500 car manufacturers in the United States alone. Total output swelled to 1.4 million.
A decade later, only three carmakers remained.
And what of the Duryea brothers?
They went out of business in 1917.
What caused such massive consolidation of the auto industry?
One man by the name of Henry Ford.
While the Duryea brothers lovingly crafted their vehicles by hand… Ford began making thousands of vehicles on his high-efficiency production assembly lines.
Ford bought car components in massive volume, allowing him to buy parts cheaper than anyone else.
And thanks to his efficient production lines, he could produce a greater number of vehicles—with more uniform quality and at a lower cost.
When you can mass produce a product as complex as a car—especially a product with growing demand—your costs drop dramatically, which allows for higher margins. Meanwhile, with increasing demand for cars, sales skyrocketed.
Ford quickly scaled his business, selling an average of 416,000 automobiles per year by 1916. Compare that to Duryea’s 1916 production of just six cars, and you can understand why it had no shot of survival.
By 1918, half of all the cars made in America were Fords. At its peak in the 1920s, Henry Ford’s net worth was estimated at $1.2 billion. (His net worth would be equal to around $200 billion today.)
Ford became one of the richest men in America because he understood how big the auto market would be in the future. And he knew that if he could make cars affordable, virtually everyone would buy one.”