REO was founded by Ransom E. Olds in August 1904 (the name of the founder also lived on in the Oldsmobile). Olds held 52 percent of the stock and the titles of president and general manager. To ensure a reliable supply of parts, he organized a number of subsidiary firms like the National Coil Company, the Michigan Screw Company, and the Atlas Drop Forge Company.
The company's name was alternately spelled in all capitals REO or with only an initial capital as Reo, and the company's own literature was inconsistent in this regard, with early advertising using all capitals and later advertising using the "Reo" capitalization. The pronunciation, however, was as a single word (like "rio"), never as letters (like the band "R.E.O. Speedwagon").
By 1907, REO had gross sales of $4.5 million and the company was one of the top four automobile manufacturers in the U.S. After 1908 however, despite the introduction of improved cars designed by Olds, REO's share of the automobile market shrank due in part to competition from emerging giants like Ford and General Motors.
REO added a truck manufacturing division and a Canadian plant in St. Catharines, Ontario in 1910. Two years later, Olds claimed he had built the best car he could, a tourer able to seat two, four, or five, with a 30-35 hp (22-26 kW) engine, 112 in (2845 mm) wheelbase, and 32 inch (81 cm) wheels, for US$1055 (not including top, windshield, or gas tank, which were US$100 extra); self-starter was US$25 on top of that. By comparison, the Cole 30 and Colt Runabout were priced at US$1500, Kirk's Yale side-entrance US$1000, the high-volume Oldsmobile Runabout went for US$650, Western's Gale Model A was US$500, a Brush Runabout US$485, the Black started at $375, and the Success hit the amazingly low US$250.
In 1915, Olds relinquished the title of general manager to his protégé Richard H. Scott and eight years later he gave up the company's presidency as well, retaining the position of chairman of the board.
Perhaps the most famous REO episode was the 1912 Trans-Canada journey. Traveling 4,176 miles (6,720 km) from Halifax, Nova Scotia, to Vancouver, British Columbia, in a 1912 REO special touring car, mechanic/driver Fonce V. (Jack) Haney and journalist Thomas W. Wilby made the first trip by automobile across Canada (including one short jaunt into northeastern Washington State when the Canadian roads were virtually impassable.)
From 1915 to 1925, under Scott's direction REO remained profitable. In 1925, however, Scott, like many of his contemporaries/competitors, launched an ambitious expansion program designed to make the company more competitive with other automobile manufacturers by offering cars in different price ranges. The failure of this program and the effects of the Depression caused such heavy losses that Olds came out of retirement in 1933 and took control of REO again, but resigned in 1934. In 1936, REO abandoned the manufacture of automobiles to concentrate on trucks.
The Flying Cloud was the first car to use Lockheed's new hydraulic internal expanding brake system and featured styling by Fabio Segardi. While Ned Jordan is credited with changing the way advertising copy was written with his "Somewhere West of Laramie" ads for his Jordan Playboy, Reo's Flying Cloud - a name that provoked evocative images of speed and lightness - name changed the way automobiles would be named in the future. The final REO model in 1936 was a Flying Cloud.
The 1931 Reo Royale was a trendsetting design, introducing design elements that set the stage for true automotive streamlining in the American market. The model was built until 1935. Beverly Kimes, editor of the Standard Catalog of American Cars, calls the Royale "the most fabulous Reo of all". In addition to its coachwork by Murray, the Royale also provided buyers with a straight-eight with a nine bearing crankshaft, one shot lubrication, and thermostatically controlled radiator shutters. The Royale rode upon factory wheelbases of 131 and ; a 1932 custom version rode upon a wheelbase. The Royale also featured REO's semi-automatic transmission, the Self-Shifter.
Meanwhile, the corporate shell reorganized in the 1930s after a bankruptcy and the end of automobile manufacturing went through a series of transmutations into the nuclear medicine and prefabricated housing businesses before becoming today's steel company Nucor.
James Thurber, "MY LIFE AND HARD TIMES: The Car We Had To Push," The New Yorker, July 15, 1933, p. 13