Was the Yugo Really the Worst Car Ever?

A new book explains why the tiny automobile was so reviled.

There is one joke found throughout the world: The one about the socialist automobile. It goes: How do you double the value of Car “X”? Fill the tank. Trawl the world of collectivist car humor and will you find this zinger directed at the Lada, the Skoda, the Trabant, and the Yugo. Only Romania’s Dacia seems to evade this barb, though that may have more to do with its comparative cultural obscurity than any inherent quality. (Tellingly, and hardly auspiciously, the chief boast of its advertising campaign in the United Kingdom was that the car was “very acceptable.”)

As Ben Lewis, author of the study Hammer and Tickle,notes, “jokes were an essential part of the communist experience because the monopoly of state power meant that any act of non-conformity, down to a simple turn of phrase, could be construed as a form of dissent. By the same token, a joke about any facet of life became a joke about communism.” And the car was a peculiar, freighted aspect of Communist life: at once a suspect totem of bourgeois individualism (“Why would a person break his neck over where to keep a car, why take the trouble when there is a better way that answers to the interests of society as a whole and to each citizen?” Khrushchev had asked) and an aspirant benchmark for matching the West in industrial prowess.

Given that socialist car jokes have survived better than the cars themselves, it can be hard to recall the West’s brief, fiery affairs—more of necessity, perhaps, than love—with those cars in countries like Britain and the United States. For a brief time in the 1980s, for example, British dealers of the Soviet Union’s Lada ranked among the industry’s best-performing. And as historian Jason Vuic chronicles in his captivating, unexpected new book, The Yugo: The Rise and Fall of the Worst Car in History, for a fleeting moment amid the clichéd go-go excesses of the 1980s, the $3,995 Yugo—loosely based on a Fiat and produced by a one-time arms manufacturer called Zastava—captured the wallets, if not exactly the hearts, of Americans and introduced some oddball charm and entrepreneurial zest into the staid confines of the U.S. auto market. “I’ve been in the car business my whole life,” one dealer enthused, “and this is the most popular car I’ve ever seen. People are just buying it from a picture in a brochure.” (As with most things bought from a brochure, it was a bit too good to be true, but more on that in a moment.)

Just how did the socialist car make such a splash on the shores of Reagan’s America? Politics was part of it, but Vuic argues persuasively that the more pressing factor was price. In 1980, on the heels of another gas shock, Americans bought a record number of foreign cars—mostly “econo-boxes” like the Honda Civic. With a possible American-import cap on the horizon, Japan responded in 1981 with a “voluntary export constraint”: It would export fewer cars to the United States, allowing American manufacturers to play catch-up on building more fuel-efficient cars. Then the Japanese—eager to reap as much revenue as possible from the few cars they could still export—began to focus on building the more expensive (and thus more profitable) cars that would soon come to dominate the American market: the Accords and the Maximas. The profit margins on the small cars had vanished and hence the market segment. In 1984, Vuic notes, the average compact car cost $9,113 (roughly $19,000 in today’s dollars, according to the Bureau of Labor Statistics).

Into this market vortex came a curious set of forces, and Vuic argues that four in particular were critical. There was Malcolm Bricklin, a serial entrepreneur who seemed to have a gift for bringing companies to or beyond the brink of bankruptcy but coming out ahead financially, trapezing to the next venture. After trying to make the Subaru 360 a sensation in America (Consumer Reports gave it the automotive kiss of death: “Not acceptable”) and dabbling in a number of Italian brands under his International Automotive Importers concern, Bricklin, as Vuic recounts it, was leaving a meeting with British car maker Austin-Leyland when he serendipitously spotted a Yugo 45 sitting on a London street. The second force was Occidental Petroleum, an American oil company that had just signed a “countertrade” deal with Yugoslavia, exchanging shipments of oil for … well, whatever Yugoslavia could produce that would sell in America. Then there was Yugoslavia itself, which had embarked on a determined export-led strategy to reduce its foreign deficit and which targeted cars as a key part of its industrial firmament. Finally, there was Lawrence Eagleburger, former U.S. ambassador to Yugoslavia and Kissinger Associates staffer, brought on board to smooth out any political resistance to importing the cars—of which there wasn’t much, for, as Vuic notes, the United States had been pro-Yugoslavia since 1948, when it fell from the Stalinist orbit.

After overcoming any number of hurdles with production, distribution, and design, all explained rather rivetingly by Vuic, the Yugo finally made it to America, where it went from “Yugomania” media sensation to late-night joke staple almost overnight. (Leno: “Yugo has come out with a very clever anti-theft device: They made their name bigger.”) But it sold. As Vuic writes, the Yugo was the “fastest-selling first-year European import in history.” For some, it was a perfect third car; for others, it was a rare chance to own a new car. The ad campaign bore a cheeky, pragmatic message of thrift (“the Road Back to Sanity”). But as the new-car smell began to fade, Yugo’s reputation began to catch up with it. Consumer Reports panned it, saving the deadliest line for last: “If $4,400 is the most you can spend on a car, we think you’d get better value from a good used car than a new Yugo.”

But was it the worst car in history? No; Vuic’s subtitle is a teaser. First, simply by dint of being approved for sale in America, the Yugo was far from the world’s worst. “Any ranking is relative,” observes Vuic, “but as a rule if an automobile passes U.S. safety and emissions tests it is a relatively decent car.” However bad the Yugo may have been, it was worse in Yugoslavia. And even in NHTSA’s grueling safety tests, Yugo wasn’t the worst performer; that honor fell to Isuzu. Yugo didn’t even have the worst death rate per 10,000 vehicles. A trio of Chevy cars (the Corvette and the Sprint two-door and four-door) held the gold, silver, and bronze in that unwelcome category.

Even if the Yugo wasn’t the worst car in history, it seemed preordained to receive that title. There have been plenty of bad cars in America—Hummer, for example, has fared only somewhat better in Consumer Reports than the vastly cheaper Yugo—but Yugo became the über-bad car. Why? Vuic has a few good theories. There’s the size issue. Americans have long been biased against small cars, even if our vague sense that “big car equals good” and “small cars equal bad” is an oversimplification. (All things being equal, one is safer in a crash in a large vehicle than a small one, but things are rarely equal: Design matters, as do drivers.) Then there’s price. Vuic notes that Americans clearly wanted bargains—Wal-Mart also became a household name in the 1980s—but “cars were a different story. Cars meant status, and if your car was a Yugo, your status was low.”* Or perhaps it was simply that the Yugo was Yugoslavian. “Maybe it was the communist thing,” one dealer reflected.

Had things gone differently—had the quality improved, had more models been rolled out—Yugo might have had a future in America. Bricklin’s once-infamous Subaru, for example, went on to become a juggernaut: Last year it was the only major automaker to post a profit. Yugo’s brief flirtation with success, notes Vuic, let the export dreams of a thousand developing-world makers bloom, as the manufacturers of everything from the Indonesian Lincah Gama to the Greek Desta to the Indian Mahindra briefly dreamed of making theirs the next affordable car option in America. Vuic’s history is a fascinating read, and an instructive one for the present moment. We now live in another time of fulsome transition in the automotive world: A Chinese company purchased Volvo, and the country is set to buy more cars than the United States this year; Saab was nearly bought by the previously obscure Dutch company Spyker, a boutique, loss-making luxury automaker run by a flashy serial entrepreneur and backed by a Russian bank whose owner recently survived an assassination attempt. And we all await the planned 2011 U.S. introduction of the Tata Nano, the budget Indian car that will be, like the Yugo, spiffed up for American market standards. Whether Americans will be any more willing to embrace something small and cheap this time around, in the absence—for now—of high fuel prices, is unclear. But Malcolm Bricklin would surely smile at the proposed cost: The base price will probably be less than half that of the mid-1980s Yugo—the one with the empty fuel tank, that is.

Correction, Jan. 27, 2010: The original version said that Wal-Mart launched in the 1980s. The retail chain did expand considerably in that decade, but the first discount store opened in 1962. (Return  to the corrected sentence.)