While the modern day luxury excellence of Mercedes Benz and the memory of the long defunct and very quirky Studebaker don't have a lot in common these days, it wasn't always the case. If you wanted to test drive a Mercedes in America between 1958 and 1963 there was one place to do it: your local Studebaker/Packard dealership.
Although Mercedes built some of its best know and most revered models in the 1950s, for much of the decade the firm was not very well known in America. In 1954 the company debuted it's 300SL to the world at the International Motor Sports Show in New York. The company had worked with Max Hoffmann who was a famous foreign car importer in the 50s and 60s to create the 300SL and bring it to America.
Hoffman began importing Mercedes to America in 1952 and was the first to do so. The Hoffman influenced decision to debut a car in the United States before Germany was unprecedented. It was clear that behind the American debut was a thinly veiled indication that the company was hoping to expand its American market. Over 1000 of the 1400 300SL coupes produced through 1957 were sold by Hoffman in America. Although these numbers were good, Mercedes ultimately had more in mind; by 1958 the company was looking for different options in America.
Around the same time the 300SL made its American debut, the famed Packard Motor Car Company bought the Studebaker Corporation to form the Studebaker-Packard Corporation. Packard believed they could take advantage of Studebaker's large network of dealers to improve sales. Studebaker believed Packard's cash flow might be able to save the company. It wasn't long after the two companies merged that Packard found out Studebaker had significantly understated their financial woes and accordingly the two companies were in financial trouble.
After a dismal sales year in 1956 made financial problems even worse several large decisions were made in an attempt to save Studebaker-Packard. The company entered into a management agreement with the Curtiss-Wright Corporation. It was also determined that the company would cease to produce individual Packard models. The Packards for 1957 and 1958 were merely rebadged Studebakers. The decision was made that the company would not produce Packards for the 1959 model year.
Studebaker was now left with a dwindling although still large dealer network and without a luxury model. Curtiss-Wright indentified the void left by the fold of Packard and brokered a deal with Mercedes to distribute and sell Mercedes Benz's throughout the Studebaker dealer network. In a deal strikingly reminiscent of the Packard/Studebaker merger a few years earlier, Mercedes hoped Studebakers dealer network would increase Mercedes sales in America while Studebaker would rely on the proceeds from their distributor agreement to keep the company afloat.
(Studebaker's factory in South Bend where Mercedes kept an office until 1964)
Through their agreement Mercedes Benz Sales Inc. was formed as a subsidiary of Studebaker-Packard. Mercedes began appearing at Studebaker dealerships throughout the country. While Mercedes began its slow rise in popularity in America, Studebaker was doing everything they could to stay afloat. At one point they discussed selling Facel Vega's Excellence model under a revived Packard nameplate. Mercedes immediately objected to this idea and, because Studebaker was reliant on the money they received through their distribution agreement plans to revive Packard were scrapped indefinitely.
By the end of 1963 not even the money from the increasingly profitable Mercedes Benz distribution agreement could save Studebaker. The company had tried everything, including diversification to non automotive industries, to save itself. These attempts ultimately proved to be too little too late. On December 9, 1963 Studebaker announced the closure of its South Bend, IN production facility. 11 days later the last car Studebaker ever made in America rolled off the assembly line. The company would continue limited production in Canada through 1966.
The combination of Studebaker closing its American factory and increasing sales popularity in America led Mercedes to terminate the remainder of its distribution agreement with Studebaker in 1964. The company did not want to be associated with the failing company. After a 3.75 million dollar buyout of the remainder of its distribution commitments to Studebaker the company established Mercedes Benz of North America as a separate company. It offered dealership franchises to many of the Studebaker dealerships who were aware of Studebaker's impending fate. The result of this is that many of the oldest and most prestigious Mercedes dealerships in America started out selling Studebakers and Packards.
Pondering the what-ifs of Mercedes and Studebaker-Packard's brief distribution union is especially interesting over 45 years later. What if Studebaker had not folded and their agreement with Mercedes had continued. Would the brand still be viewed as the prestigious luxury car it is today? What if Studebaker had terminated their agreement with Mercedes to revive the Packard? Could it have saved them? Would Mercedes have been able to gain popularity in America if their deal with Studebaker had been terminated early?
While it is impossible to know the answer to any of these speculative questions, one thing is definite. While at the time a little known German company combining forces with a well established cash strapped American company made sense, 45 years after the fact the idea of selling and servicing Mercedes alongside Studebakers is hard to imagine.