American Motors

American Motors Corporation
Fate Acquired by Chrysler
(March 2 1987)
Successor Jeep-Eagle division of Chrysler
Founded January 14 1954
Headquarters Southfield, Michigan, United States
Key people George W. Mason
George W. Romney
Roy Abernethy
Roy D. Chapin Jr.
Richard A. Teague
Products Automobiles
Military vehicles
Buses and delivery vehicles
Sport utility vehicles
Major home appliances
Commercial refrigeration
Lawn care products
Subsidiaries Kelvinator 1954 – sold in 1968
AM General 1971 – sold in 1985
Wheel Horse 1970s – sold in 1986
Beijing Jeep 1983 – present
(continues under Chrysler)

American Motors Corporation (AMC) was an American automobile company formed on January 14 1954 by the merger of the Nash-Kelvinator Corporation and the Hudson Motor Car Company. At the time, it was the largest corporate merger in U.S. history, valued at US$198 million ($1.44 billion in 2006 dollars). When declining sales and the competitiveness of the United States auto market forced AMC to seek a partner in the late 1970s, the company formed an alliance with France's Renault. This lasted until March 2 1987, when the Chrysler Corporation purchased AMC. Use of the AMC and Renault brand names ceased in the United States. The Jeep line continued; also some Eagle models.

Contents

Formation

In January 1954 Nash-Kelvinator Corporation began acquisition of the Hudson Motor Car Company (in what was called a merger) to form American Motors. The deal was a straight stock transfer (three shares of Hudson listed at 11⅛, for two shares of AMC and one share of Nash-Kelvinator listed at 17⅜, for one share of AMC) and finalized in the spring of 1954, forming the fourth-biggest auto company in the U.S. with assets of $355 million and more than $100 million in working capital.[1] The new company retained Hudson CEO A.E. Barit as a consultant and he took a seat on the Board of Directors. Nash's George W. Mason became President and CEO.

Mason, the architect of the merger, believed that the survival of America's remaining independent automakers depended on them joining in one multibrand company capable of challenging the "Big Three" - General Motors, Ford, and Chrysler - as an equal. The reasons for the merger between Nash and Hudson included helping them cut costs and strengthen their sales organizations to meet the intense competition expected from autos' Big Three.[2] One quick result from the merger was the doubling up with Nash on purchasing and production allowing Hudson to cut prices an average of $155 on the Wasp line, up to $204 on the more expensive Hornet models.[3] After the merger, AMC had its first profitable quarter during second three months in 1955, earning $1,592,307 compared to a loss of $3,848,667 during the same period in the previous year.[4] Mason also entered into informal discussions with James J. Nance of Packard to outline his strategic vision. Interim plans were made for AMC to buy Packard Ultramatic automatic transmissions and Packard V8 engines for certain AMC products.

In 1954 Packard acquired Studebaker.[5] The new Studebaker-Packard Corporation (S-P) made the new 320 cu in (5.2 L) Packard V8 engine and Packard's Ultramatic automatic transmission available to AMC for its Nash Ambassador and Hudson Hornet models. When Mason died in 1954 he was succeeded by George W. Romney. Ironically, Romney had once been offered Nance's job.[6] In 1948, Romney received offers from Packard for the post of chef operating officer and from Nash for the number two position in the company. Although the Packard offer would have paid more, Romney decided to work under Mason because he thought Nash had a brighter future. S-P President James Nance refused to consider merging with AMC unless he could take the top command position (Mason and Nance were former competitors as heads of the Kelvinator and Hotpoint appliance companies respectively), and a week after Mason's death Romney announced, "there are no mergers under way either directly or indirectly."[7] Romney agreed with Mason's commitment to buy S-P products. Mason and Nance had agreed that in return S-P would endeavor to purchase parts from American Motors, but S-P did not do so. As the Packard engines and transmissions were comparatively expensive, AMC began development of its own V8 engine.[8] In mid-1956, the 352 cu in (5.8 L) Packard V8 and TwinUltramatic transmission was phased out and replaced AMC's own new V8 engine, as well as GM's Hydra-Matic and Borg-Warner transmissions.

By 1964 Studebaker production in the United States had ended, and its Canadian operations ceased in 1966. The "Big Three", plus the smaller AMC, Kaiser Jeep, International Harvester, Avanti and Checker companies were the remaining North American auto manufacturers.

Product development in the 1950s

Nash Metropolitan.

American Motors combined the Nash and the Hudson product lines under a common manufacturing strategy in 1955 with the Hudson redesigned to bring it in harmony with Nash body styles and the production of both Nashes and Hudsons combined,[8] while retaining the separately branded established dealer networks. The fast-selling Rambler model was sold as both a Nash and a Hudson in 1955 and 1956. These badge-engineered Ramblers, along with similar Metropolitans, were identical save for hubcaps, nameplates, and other minor trim details. The pre-existing full-size Nash product line was continued and the Nash Statesman and Ambassador were restyled as the "new" Hudson Wasp and Hudson Hornet. Although the cars shared the same body shell they were at least as different from one another as Chevrolet and Pontiac. Hudsons and Nashes each used their own engines as they had previously: the Hudson Hornet continued to offer the 308 cu in (5 L) I6 that had powered the (NASCAR) champion during the early 1950s; the Wasp now used the former engine of the Hudson Jet. The Nash Ambassador and Statesman continued with overhead- valve and L-head sixes respectively. Hudson and Nash cars had different front suspensions. Trunk lids were interchangeable but other body panels, rear window glass, dash panels and braking systems were different. The Hudson Hornet and Wasp, and their Nash counterparts, had improved ride and visibility; also better fuel economy owing to the lighter unitized Nash body.

1958 Rambler sedan

For the 1958 model year the Nash and Hudson brands were dropped. Rambler became a marque in its own right and the mainstay of the company. The slow-selling British-built Nash Metropolitan subcompact continued as a standalone brand until it was dropped after 1962. The prototype 1958 Nash Ambassador / Hudson Hornet, built on a stretched Rambler platform, was renamed at the last minute as "Ambassador by Rambler". To round out the model line AMC reintroduced the old 1955, 100-inch (2,500 mm) wheelbase Nash Rambler as the new Rambler American with only a few modifications. This gave Rambler a compact lineup with 100-inch (2,500 mm) American, 108-inch (2,700 mm) Rambler Six and Rebel V8, as well as the 117-inch (3,000 mm) Ambassador wheelbase vehicles.

While the "Big Three" introduced ever-larger cars, AMC followed a "dinosaur-fighter" strategy. George W. Romney's leadership focused the company on the compact car, a fuel-efficient vehicle twenty years before there was a real need for them.[9] This gave Romney a high profile in the media. Two core strategic factors came into play: (1) the use of shared components in AMC products and (2) a refusal to participate in the Big Three's restyling race. This cost-control policy helped Rambler develop a reputation as solid economy cars. Company officials were confident in the changing market and in 1959 announced a $10 million expansion of its Kenosha complex (to increase annual straight-time capacity from 300,000 to 440,000 cars).[10] A letter to shareholders in 1959 claimed that the introduction of new compact cars by AMC's large domestic competitors (for the 1960 model year) "signals the end of big-car domination in the U.S." and that AMC predicts small-car sales in the U.S. may reach 3 million units by 1963.[10]

American Motors was also beginning to experiment in non-gasoline powered automobiles. In what may seem like an April fool's joke, on April 1 1959, AMC and Sonotone Corporation announced a joint research effort to consider producing an electric car that was to be powered by a "self-charging" battery.[11] Sonotone had the technology for making sintered plate nickel-cadmium batteries that can be recharged very rapidly and are lighter than a typical automobile lead-acid battery.[12]

Changing focus in the 1960s

1969 American Motors AMX

In an effort to stay competitive, American Motors produced a wide range of products during the 1960s. In the early part of the decade, sales were strong. In 1961, Ramblers ranked in third place among domestic automobile sales. Romney's strategic focus was very successful during the early 1960s as reflected in the firm's healthy profits year after year. The company became completely debt-free. However, in 1962, Romney resigned to run for Governor of Michigan. His replacement was Roy Abernethy, AMC's successful sales executive.

Abernethy believed that AMC's reputation of building reliable economical cars could be translated into a new strategy that could follow AMC buyers as they traded up into larger, more expensive vehicles. The first cars bearing his signature were the 1965 models. These were a longer Ambassador series and new convertibles for the larger models. During mid-year a fastback, called the Marlin, was added. Rather than competing directly with Ford's new pony-car, AMC's "family-sized" car emphasized personal-luxury. Abernethy also called for the de-emphasis of the Rambler brand. The 1966 Marlin and Ambassador lost their Rambler nameplates, and were badged as "American Motors" products. The new models shared fewer parts among each other and were more expensive to build. The continuing quest to match the "Big Three" with annual styling changes required large expenditures. A new line of redesigned cars in the full and mid-sized markets was launched in the fall of 1966. The cars won acclaim for their fluid styling, but Abernathy's ideas did not work as they only confused the firm's core customers. Sales of the new Rebel and Ambassador models dropped after their introduction. There were quality control problems, as well as persistent rumors of the company's demise because of its precarious cash flow.

American Motors did not have its own electric car program as the Big Three, and after some negotiation, a contract was drawn in 1967 with Gulton Industries to develop a new battery based on lithium and a speed controller designed by Victor Wouk.[13] A nickel-cadmium battery powered 1969 Rambler station wagon demonstrated the systems that according to the scientist was a "wonderful car".[13] This was also the start of other "plug-in"-type experimental AMC vehicles developed with Gulton - the Amitron and the Electron.

Abernethy was ousted from AMC and damage control fell to the new CEO, Roy D. Chapin Jr. (son of Hudson Motors founder Roy D. Chapin). He quickly instituted changes to AMC's offerings and tried to regain market share. Chapin's first decision was to cut the price of the Rambler to within US$200 of the basic Volkswagen Beetle. Innovative marketing ideas included making air conditioning standard on all 1968 Ambassador models (available as a delete option). This made AMC the first U.S. automaker to make air conditioning standard equipment on a line of their cars, beating out even luxury makes such as Lincoln, Imperial, and Cadillac.

1969 Javelin

The company also introduced exciting entries for the decade's muscle car boom, most notably the AMX; while the Javelin served as the company's entrant into the sporty "pony car" market created by the Ford Mustang. Additional operating cash was derived in 1968 through the sale of Kelvinator Appliance, once one of the firm's core operating units.

The Rambler brand was completely dropped after the 1969 model year in the U.S. and Canada, although it continued to be used in several overseas markets as either a model or brand name, with the last use in Mexico in 1983. From 1970, "AMC" was the brand used for all American Motors passenger cars; and all vehicles from that date bore the AMC name and the new corporate logo. However, the names "American Motors" and "AMC" were used interchangeably in corporate literature well into the 1980s. The branding issue was further complicated when the company's all-wheel drive passenger cars were initially marketed as the "American Eagle".

Chapin also expanded American Motors product line in 1970, through the purchase of the Kaiser-Jeep Corporation (formerly Willys-Overland) from Kaiser Industries. This added the iconic Jeep brand of light trucks and SUVs, as well as Kaiser-Jeep's lucrative government contracts - notably the M151 MUTT line of military Jeeps and the DJ-Series postal Jeeps. AMC also expanded its international network. The military and special products business was reconstituted as American Motors General Products Division, later reorganized as AM General.

1970s product developments

AMC Gremlin (1970-1978)

In 1970 AMC consolidated all passenger cars under one distinct brand identity and debuted the AMC Hornet range of compact cars.

AMC pioneered the practice of sharing a platform among different models, and that of the new Hornet was also used for the AMC Gremlin introduced on April 1 1970. The Gremlin, which was the first American-built subcompact, sold more than 670,000 from 1970 to 1978. The Hornet became AMC's best-selling passenger car since the Rambler Classic, with more than 860,000 units sold by the time production ended in 1977.

The radically styled 1974 Matador X Coupe

Following these successful product launches AMC continued with new product developments. The new mid-sized AMC Matador replaced the Rebel in 1971, AMC playing on the new model's lack of name recognition with an advertising campaign that asked "What's a Matador?"[14] Starting in 1974, the Matador sedan and station wagon were mildly refreshed, with new boxier front ends. The outdated Matador two-door, known as the "flying brick" due to its poor aerodynamics, was replaced at great cost with a sleek, smoothly-shaped, and radically styled two-door coupe. Unfortunately the investment wasn't to pay off, with a little under 100,000 coupes sold over a five year period. After 1975, the sedan and wagon took the place of the discontinued Ambassador as AMC's flagship models. Nash and AMC had made Ambassadors from 1927 to 1974, the longest use of the same model name for any AMC product.

The Matador Coupe shared few components with the sedan other than suspension, drive train, some trim and interior parts. The tooling for the sedans and wagons largely dated from the 1967 Rambler Rebel and had long been paid for. However sales of all large-sized cars fell with the rising gasoline prices.

In 1974 AMC's AM General subsidiary began building urban transit buses in cooperation with Flyer Industries of Winnipeg, Canada. The Metropolitan coach had sold 5,212 units when production ceased in 1978.[15]

1975 AMC Pacer.

The AMC Pacer, an innovative all-new model introduced in 1975 and billed as "the first wide small car", was a subcompact designed to provide the comfort of a full-sized car. Its pre-production development coincided with two changes in U.S. Federal passenger auto laws: first, the reduction in permissible emissions for passenger auto engines, which the Pacer would have met with the Wankel-type engine it was designed for, as the Wankel's compact dimensions allowed space for extensive emission control equipment in the engine bay; second, a tightening of U.S. passenger auto safety laws, which accounted for the Pacer's designed-in safety features, e.g. internal door beams. These, together with the wide body and large glass area, added considerable weight.

With the advent of the Arab Oil Embargo energy crisis of 1973, General Motors aborted the Wankel rotary engine around which the Pacer had been designed, as its fuel consumption exceeded that of conventional engines with similar power. Therefore AMC's existing 232 cu in (3.8 L) and 258 cu in (4.2 L) AMC Straight-6 engines were used in the Pacer instead. Fuel economy was better than a rotary, but still relatively poor in light of the new focus on energy efficiency. Also, as the Pacer shared few components other than drivetrain with other AMC cars, it was expensive to make and the cost increased when sales fell steeply after the first two years.

Development and production costs for the Pacer and Matador Coupe drained capital which might otherwise have been invested in updating the more popular Hornet and Gremlin lines, so that towards the end of the 1970s the company faced the growing energy crisis with aged products that were uncompetitive in hotly contested markets.

The 1977 Gremlin had redesigned headlights, grille, rear hatch and fascia. For economy in the fuel crisis, AMC offered the car with a more fuel-efficient Volkswagen-designed Audi 4-cylinder engine 2.0 L (≈122 cu in). The engine was expensive for AMC to build and the Gremlin retained the less costly but also less economical 232 cu in (3.8 L) as standard equipment.

Also in 1977 the company revived the AMX nameplate. It was little more than a sporty appearance package on the Hornet hatchback, but the AMC AMX had the company's 258 cu in (4.2 L) inline-6 as standard with a choice of 3-speed automatic or 4-speed manual transmissions, and AMC's 304 cu in (5 L) V8 was optional with the automatic transmission.

1977 Matador Barcelona

As all Matadors now received standard equipment that was formerly optional (e.g. power steering, automatic transmission), the "Brougham" package was dropped. Optional on the Matador coupe was a "landau" vinyl roof with "opera" windows, and top-line Barcelonas offered new two-tone paint.

For 1978, the Hornet platform was redesigned with some altered Gremlin panels and renamed the AMC Concord. AMC targeted it at the emerging "premium compact" market segment, paying particular attention to ride and handling, standard equipment, trim, and interior luxury.

Gremlins borrowed the Concord instrument panel, as well as a Hornet AMX-inspired GT sports appearance package and a new striping treatment for X models.

The AMC Pacer hood was modified to clear a V-8 engine, and a Sports package replaced the former X package. With falling sales of Matador Coupes, sedans and wagons, their 304 cu in (5 L) V8 engine was dropped, leaving only the 258 cu in (4.2 L) Inline-6 (standard on coupes and sedans) and the 360 cu in (5.9 L) V8 (optional on coupes and sedans, standard on wagons). The two-tone Barcelona luxury package was offered on Matador sedans, and two-tone red paint introduced as an additional Barcelona option. Matador production ceased at the end of the model year with total sales of 10,576 units.

In 1979 the Spirit sedan replaced the Gremlin. A new fastback version of the car, the Spirit Liftback, proved successful.

In December Pacer production ceased.

Concords received new front end-treatment, and in their final season hatchbacks became available in DL trim. On May 1 1979, AMC marked the 25th anniversary of the Nash-Hudson merger with "Silver Anniversary" editions of the AMC Concord and Jeep CJ in two-tone silver (Jeeps then accounted for around 50% of the company's sales and most of its profits); and introduced "LeCar", a U.S. version of the small, fuel-efficient Renault 5, in dealer showrooms.[16]

Concord and Spirit models were dropped after 1983.

Financial developments, Renault involvement

Late 1970s to early 1980s

In February 1977 Time magazine reported that although AMC had lost $73.8 million in the previous two fiscal years, U.S. banks had agreed to a year’s extension for a $72.5 million credit that had expired in January; that Stockholders had received no dividends since 1974; and that Pacer sales did not match expectations. However Time noted record Jeep sales and a backlog of orders for AM General’s buses.[17]

Also in 1977, Gerald C. Meyers was appointed chairman and chief executive.

In May 1978 the Environmental Protection Agency ordered the recall of all AMC’s 1976 cars (except those conforming to California emissions regulations)—some 270,000 vehicles—plus 40,000 1975 and 1976 Jeeps and mini trucks, for correction of a fault in the pollution control system. Total cost was estimated at up to $3 million—more than AMC had earned the previous quarter.[18]

AMC lost an estimated $65 million on its conventional (non-Jeep) cars for the fiscal year ended September 30 1978, but strong Jeep sales helped the company to an overall $36.7 million profit on sales of $2.6 billion. However, AMC faced costly engineering work to bring their Jeeps into compliance with a federal directive for 4 wheel drive vehicles to return 15 mpg by 1981.[19]

A year later, with its share of the American market at 1.83%, the company struck a deal with Renault, the nationally-owned French automaker. AMC would receive a $150 million cash injection, $50 million in credits, and also the rights to start building the Renault 5 in 1982.[20] (A deal for Renault products to be sold through the AMC-Jeep dealer network had already been made in 1979.[21]) In return Renault acquired a 22.5% interest in AMC.[20] This was not the first time the two companies had worked together. Lacking its own prestige model line in the early 1960s, Renault assembled CKD kits and marketed Rambler cars in France.

In 1979 AMC announced a record $83.9 million profit on sales of $3.1 billion for the fiscal year ending in September—this despite an economic downturn, soaring energy prices, rising American unemployment, automobile plants shutting down, and an American market trend towards imported cars. In October, the company’s car sales surged 37%, while they sank 21% for the industry as a whole.[22]

However a drop in Jeep sales caused by the declining economy and soaring energy prices began to constrict AMC’s cash flow. At the same time, pressure increased on the company’s non-Jeep product lines. The face-lifts and rebranding of AMC’s once-innovative and successful cars were not enough in a competitive landscape that had changed dramatically. No longer was the threat limited to the Big Three automakers (General Motors, Ford, and Chrysler). The Japanese used streamlined production methods such as outsourcing and Just In Time (JIT) supply-chain management. They had new, highly efficient assembly plants in the United States. And now they targeted the heart of AMC's passenger product line: small cars.

While Americans turned to the new imports in increasing numbers, AMC continued its struggle at the inefficient and aging Kenosha, Wisconsin facilities—the oldest continuously operating automobile plant in the world, where components and unfinished bodies still had to be transported across the city.

In early 1980 the banks refused AMC further credit. Lacking both capital and resources for the new, truly modern products it needed to offer, the company turned to Renault for a $90 million loan.[23] By September that year, AMC’s U.S. market share had fallen to 1.7%, and in November sales dropped 19.1%. AMC warned stockholders that the company could be bankrupted if they did not approve a plan for Renault to acquire as much as 59% of the company.[24]

The sinking domestic economy exacerbated AMC's problems, even to the extent that its dealers had to be persuaded to stay open.

In January 1982 the company's former president W. Paul Tippett Jr. replaced Gerald C. Meyers as CEO, and Jose Dedeurwaerder, a Renault executive, became president. Dedeurwaerder brought a broad perspective at this critical time: as an engineer and international business executive with 23 years at Renault, he is credited with streamlining many of AMC's arcane management techniques. He also instituted important improvements in plant layouts, as well as in cost and quality control.[25]

Renault, having increased their stake in the company several times to keep it solvent, eventually owned 49% in 1983. This effectively ended AMC's run as a truly American car company.

New ownership and new management heralded a new product venture for AMC: a line of modern front-wheel drive cars, designed by Renault, to be produced at Kenosha.

1980s product developments

Alliance and Eagle

First product of the AMC-Renault alliance was the 1983 Renault Alliance, a front-wheel drive Renault 9 compact restyled for the American market by Richard Teague and produced by AMC at Kenosha. Marketed as a Renault, with AMC branding confined to decals on the rear windows, it was available as a sedan with two or four doors, a hatchback (introduced in 1984 and badged as Renault Encore), a two-door convertible and, for the final 1987 model year, a higher-performance version of the 2-door sedan and convertible sold as a Renault GTA.

The new model, introduced at a time of increased interest in small cars, won several awards including Motor Trend Car of the Year. Motor Trend declared: "The Alliance may well be the best-assembled first-year car we’ve ever seen. Way to go Renault!" But in a 1986 Consumer Reports survey of five-year owners, the 1983 Alliance scored worst in the ratings for "Engine", "Clutch", "Driveline", "Engine cooling", "Suspension", "Exhaust system", "Automatic transmission" and "Manual transmission".[26] Sales, which had begun well, declined, and Alliance production ended in June 1987.

1981 AMC Eagle Wagon.

Following the 1983 model year, a single model line—the four-wheel drive Eagle—represented the AMC brand. All the company’s remaining output was branded Renault or Jeep.

Introduced in 1980, the Eagle became one of the company's best-known products and is considered one of the first "crossover SUVs". It had a Concord body shell mounted on an all-new platform that had been developed by American Motors in the late 1970s. Featuring an innovative full-time four-wheel drive system, it sold best in snow-prone areas. Sales started strongly but declined over time. The Eagle survived, albeit only in station wagon form, into the 1988 model year. The last one was built on December 14 1987.

Jeep benefits

More beneficial to AMC’s future was the introduction of an all-new line of compact Jeep Cherokee and Wagoneer models in 1983. The popularity of these downsized Jeeps pioneered a new market segment for what later became defined as the sport utility vehicle (SUV). They initially used the AMC 2.5 L (≈153 cu in) OHV four-cylinder engine with a carburetor, and a General Motors-built 2.8 L (≈171 cu in) carbureted V6 was optional. In 1986, throttle-body injection replaced the carburetor on the 2.5 L I4 engines. A Renault 2.1 L (≈128 cu in) Turbo-Diesel I4 diesel was also offered. Starting with the 1987 models a 4.0 L (≈244 cu in) I6 engine, derived from the older 258 cu in (4.2 L) I6 with a new head design and an electronic fuel injection system, replaced the outsourced V6. American Motors' "new" engine was designed with help from Renault and incorporated Renault-Bendix (Renix) parts for fuel and ignition management. One older design was continued: the Grand Wagoneer full-size luxury SUV and the related J-Series pickups, built on the same chassis as the earlier SJ model Wagoneers and Cherokees that dated from 1963, with the AMC 360 cu in (5.9 L) V8. Production of the full-sized pickups ceased after 1987. The Grand Wagoneer and its engine would also be dropped after 1991.

1985 and the final buyout

Changes in the marketplace

1985 was a turning point for the company as the market moved away from AMC's small models. With fuel relatively cheap again, buyers turned to larger more powerful automobiles and AMC was unprepared for this development. Even the venerable Jeep CJ-5 was dropped after a 60 Minutes TV news magazine exposé of rollover tendencies under extreme conditions. AMC also confronted an angry work force. Labor was taking revenge, and reports circulated about sabotage of vehicles on the assembly lines because of the failure to receive promised wage increases. There were rumors that the aging Kenosha plant was about to be shut down. At the same time, Chrysler was having trouble meeting demand for its M-body rear-drive models (Dodge Diplomat, Plymouth Gran Fury and Chrysler Fifth Avenue). They were assembled using the old gate and buck system, so it was easy to move the tools, Chrysler would supply the components and control the quality, while AMC would assemble the car; therefore, Lee Iacocca and Joe Cappy reached an agreement to use some of AMC's idle plant capacity in Kenosha.[27]

Changes in management

These problems came in the midst of a transfer of power at AMC from Paul Tippet to a French executive, Pierre Semerena. The new management responded with tactical moves by selling the lawn care Wheel Horse Products Division and signing an agreement to build Jeeps in the People's Republic of China. The Pentagon had problems with AM General, a significant defense contractor, being managed by a partially French-government-owned firm. The US government would not allow a foreign government to own a significant portion of an important defense supplier. As a result, the profitable AM General Division was sold. Another milestone was the departure of Dick Teague: AMC's design vice president for 26 years, he was responsible for many Jeep and AMC designs including the Gremlin, Pacer, Matador coupe, Rambler American, AMC Javelin and AMX Hornet

Problems at Renault

American Motors' major stockholder, Renault, itself was experiencing financial troubles of its own in France. The investment in AMC (including construction of a new Canadian assembly plant in Brampton, Ontario) forced cuts at home, resulting in the closure of several French plants and mass layoffs. Renault was down to just three alternatives regarding its American holdings: (1) They could declare AMC officially bankrupt thereby lose its investment; (2) They could come up with more money, but Renault management perceived AMC as a bottomless pit; or (3) AMC could be put up for sale and the French could get back part of their investment. Against these detractions, Renault's chairman, Georges Besse, continued to champion the French firm's future in the North American market; pointing to the company's completion of the newest and most-advanced automotive assembly plant in North America at the time at Bramalea -- as well as the recent introduction of the thoroughly modern, fuel-injected 4.0-liter and 2.5-liter engines. In addition, Jeep vehicles were riding an unprecedented surge in demand. It seemed to Besse and others that AMC was on course for profitability.

Assassination of Georges Besse

On November 17 1986, Georges Besse, who had a high profile among French capitalists, was assassinated by Action Directe, a clandestine militant extremist group variously described as communist, anarchist and Maoist,[28] which professed strong sympathies for the proletariat and the aspirations of the Third World. The murder was carried out by members of Action Directe's Pierre Overney Commando (named after a Maoist militant killed by a Renault factory guard).[29] The group stated that the murder was in retaliation for Besse having sacked tens of thousands of workers - 34,000 from the French aluminium producer PUK-Péchiney[30] [31] and 25,000 from Renault.

Sale to Chrysler

Under pressure from Renault executives following Besse's death, Renault's new president set out to repair employee relations and divest the company of its investment in American Motors.

The earlier arrangement between Chrysler and AMC, under which AMC would produce M-body chassis rear-drive large cars for two years from 1986-88, fed the rumor that Chrysler was about to buy AMC. According to the head of manufacturing for Chrysler at the time, Stephan Sharf, the existing relationship with AMC producing a car for a competitor facilitated the negotiations.[27] In March 1987, Chrysler agreed to buy Renault's share in AMC, plus all the remaining shares, for US$1.1 billion. AMC became the Jeep-Eagle division of Chrysler. It was the Jeep brand that Chrysler CEO Lee Iacocca really wanted—in particular the Grand Cherokee, then under development, which proved highly profitable for Chrysler (the nameplate remains in production today). Additional benefits included AMC's recently modernized factories, which offered Iacocca the opportunity to increase his company's production capacity; the AMC dealer network, to strengthen Chrysler's retail distribution (many AMC dealers switched to selling Chrysler products); and AMC's underrated organization and management talent, which Chrysler quickly assimilated (numerous leading Chrysler engineers and executives were ex-AMC).[32]

Ironically the sale came at a time when the automotive press was very enthusiastic about the proposed 1988 lineup of Renault and Jeep vehicles, some even speculating AMC/Renault finally had the products to turn the company around.

The sale marked Renault's withdrawal from the North American market. However the French company renewed its stake there with its subsequent majority holding in Nissan.

Later reuse of the name

A new company was formed in Palmdale, California in 2001 by Ron Simon. Simon registered a new trademark for the monochrome American Motors logo.[33] The company's website specifically claimed no affiliation to the previous American Motors, but used the previous company's logos on its website.[34] The website is now dead, and Simon's trademark expired in 2005.

Continuing business legacy

AMC was forced to constantly innovate for 33 years until it was absorbed by Chrysler in 1987. Moreover, the lessons learned from this experience were integrated into the company that bought AMC. The organization, strategies, as well as several key executives allowed Chrysler to gain an edge on the competition. Even today, the lessons gained from the AMC experience continue to provide benefits to other firms in the industry. There are a number of legacies from AMC's business strategies.

Innovative strategies

American Motors' ability to formulate strategies were often evaluated by industry critics as "strokes of brilliance".[35] According to Roy D. Chapin Jr., AMC realized they were up against the giants of the industry, so to compete successfully; they had to be able to move quickly and with ingenuity.[35] An essential strategy practiced by AMC was to rely on outside vendors to supply components in which they had differential advantages. This has finally been accepted in the US auto industry, but only after each of the Big Three experienced the failure of attempting to be self-sufficient. Another example of AMC's agility was the ability of management to squeeze money out of reluctant bankers, even in the face of bankruptcy. These core abilities helped save the company from collapse and after each obstacle, give it the wherewithal to keep it operating. Ironically, AMC was never stronger than just before its demise.[35]

Anticipate trends

AMC's managers anticipated important trends in the automotive industry.[36] For example, it preached fuel efficiency long before auto buyers demanded it. AMC sought out partnerships in manufacturing and sales worldwide, decades before any of the international consolidations among automobile makers took place. AMC was first in seeking refuge with a foreign automaker, Renault, to keep operating. Although small in size, the company was able to introduce numerous innovations. Even one of AMC's most expensive new product investments (the Pacer) established many features that were later adopted by the auto industry worldwide. These included aerodynamic body design, space-efficient interiors, aircraft style doors, and a large greenhouse for visibility. AMC's four-wheel drive vehicles established the foundation for today's SUV market and the "classic" Jeep models continue to be the benchmark in this field. AMC was also effective in other areas such as marketing by introducing low rate financing. Chapin drew on his experiences as a hunter and fisherman and marketed the Jeep brand successfully to people with like interests. The brand developed a cult appeal that continues.[37]

Reviving Chrysler

According to Robert Lutz, former President of Chrysler, the AMC acquisition was a big and risky undertaking.[38] The purchase was part of Chrysler's strategic "retreat-cum-diversification" plan that he states did not have the right focus. Initially the goal was to obtain the world-renowned Jeep brand. However, Lutz discovered that the decision to buy AMC turned out to be a gold mine for Chrysler.[39] At that time, Chrysler's management was attempting to find a model to improve structure and operations, "something that would help get our minds unstuck and thinking beyond the old paradigms that we were so familiar with".[40] In this transformation, "Chrysler's acquisition of AMC was one of the all-time great moments in corporate serendipity" according to Lutz "that most definitely played a key role in demonstrating how to accomplish change".[40]

According to Lutz (1993), while AMC had its share of problems, it was far from being a bunch of "brain-dead losers". He describes the "troops" at AMC as more like the Wake Island Marines in battle, "with almost no resources, and fighting a vastly superior enemy, they were able to roll out an impressive succession of new products".[41] After first reacting with anger to the purchase, Chrysler managers soon anticipated the benefits. To further solidify the organizational competencies held by AMC, Lee Iacocca agreed to retain former AMC units, such as engineering, completely intact. In addition, AMC's lead engineer, François Castaing, was made head of all engineering at Chrysler. In an unthinkable strategic move, Castaing completely dismantled the entrenched Chrysler groups. In their place AMC's "platform team" were implemented. These were close-knit cross-functional groups responsible for the whole vehicle, as contrasted with Chrysler's highly functional structure. In this capacity, Castaing's strategy was to eliminate the corporate administrative overhead bureaucracy. This move shifted corporate culture and agitated veteran executives who believed that Chrysler's reputation as "the engineering company" was being destroyed. Yet, according to the popular press, by the 1980s Chrysler's reputation was totally shot, and by Lutz's view only dramatic action was going to change that.[41] In summary, Chrysler's purchase of AMC laid the critical foundation to help re-establish a strategy for its revival in the 1990s.

Lessons learned

Perhaps most interesting is that top managers at Chrysler after the AMC buyout appear to have made errors similar to those by AMC. For example, Chrysler invested heavily in new untested models while not keeping up its profitable high-volume lines. After the DaimlerChrysler merger, the combined company also encountered the problem of having too many platforms. Mercedes-Benz managers were protective of their designs and components. This policy increased production costs. They could have observed the experience of the Nash and Hudson merger designed to achieve manufacturing efficiencies and savings from component sharing.

The AMC beat also continued at General Motors. GM recruited a new executive team to turn itself from near bankruptcy. Among the new strategists at GM was Lutz who brought an understanding of the importance of passion in the product design. Lutz implemented a new thinking at GM that incorporated the systems and structures that originated from AMC's lean and focused operations.[42]

Renault implemented the lessons it learned from its investment in AMC. The French firm took a parallel approach as it did with its initial ownership of AMC and applied it to resurrect the money-losing Nissan automaker in Japan.

Legacy of products

Passenger automobiles

Chrysler revived the "Spirit" name dropped by AMC after 1983 for use on one of its A platform cars, (the Dodge Spirit) from 1989 to 1995. The planned Renault Medallion was sold as the Eagle Medallion in 1988 and 1989. A Renault/AMC concept, the Summit (slated to replace the Eagle station wagon), was produced by Mitsubishi Motors beginning in 1989. The planned all-new 1988 Renault Premier, a joint development effort between American Motors and Renault, and for which the Brampton Assembly plant (Brampton, Ontario) was built, was sold by Chrysler as the 1988-1992 Eagle Premier, with a rebadged Dodge Monaco variant available from 1990-1992. The full-sized Premier's platform was far more advanced than anything Chrysler was building at the time. After some re-engineering and a re-designation to Chrysler code LH, the Eagle Premier went on to form the backbone of Chrysler's passenger car lineup during the 1990s as the Chrysler Concorde (another revived AMC model name that was briefly used by Plymouth in the early 1950s), Chrysler New Yorker, Chrysler LHS, Dodge Intrepid, and Eagle Vision. The Chrysler 300M was likewise a Premier/LH-derived car and was initially to have been the next-generation Eagle Vision, until the Eagle brand was dropped after 1998. Hence the much lauded "cab forward" designed that Chrysler took so much credit for in the 90's was actually a modified and sleekly restyled version of the AMC/Renault collaration that resulted in the Premier.

Jeep vehicles

Jeep Comanche.

The American Motors-developed Jeeps survived for a long time under Chrysler. The Comanche pickup truck lasted until 1992, while the Cherokee remained until 2001 in the United States (the XJ Cherokee was produced in China through 2006 as the Cherokee 2500[43]). Although it was not introduced until 1993, the Jeep Grand Cherokee was initially an AMC-developed vehicle. The 1997 through 2006 Jeep Wrangler is really a lightly updated development of the original American Motors-designed Wrangler introduced in 1986 for the 1987 model year.

Other traces of AMC remain within the present-day Chrysler. AMC's Toledo, Ohio plants continue to turn out Jeep Wranglers and Libertys as well as parts and components for Chrysler, Dodge, and Jeep vehicles (although Toledo Machining and Forge is slated for closure as of 2005). AMC's main plant in Wisconsin is still active, albeit heavily downsized, as the Kenosha Engine Plant, producing engines for several Chrysler Group products, including the Wrangler. The 4 L (242 cu in) engine was used until the 2006 model year by DaimlerChrysler in the Jeep Wrangler. AMC's technologically advanced Bramalea Assembly and Stamping Plants in Brampton, Ontario now produce the best-selling LX-cars - the Dodge Charger, Dodge Magnum, and the Chrysler 300.

AM General, sold by American Motors in 1982, is still in business building the likewise American Motors-designed High Mobility Multi-Wheel Vehicle (HMMWV - "Humvee") for the American and allied militaries. AM General also built the now-discontinued civilian variant - the H1 - and still manufactures a Chevrolet Tahoe-derived companion, the H2, under contract to General Motors, new owners of the civilian Hummer brand.

Collectibility

Many AMC models are now considered "future collectibles".

Javelin with "Go" package
Ambassador hardtop wagon

The "collector" AMC models (Javelin, AMX, and performance versions such as the 1957 Rambler Rebel, 1965-67 Rambler Marlin, 1969 Hurst SC/Rambler, 1970 Rebel Machine, and 1971 Hornet SC/360) have always had an enthusiastic following.[44] In January 2007, the AMC AMX was "really taking off in the muscle car market" according to the editors of Hemmings Classic Car, and it had "left its mark among AMC collectors' minds as a great alternative" to higher-priced Hemi-powered muscle cars. [45]

The early Javelin (1968-70) is considered a fun and affordable American classic with a rich racing pedigree and style that will always stand out from the omnipresent packs of Ford, General Motors, and Chrysler pony cars.[46] Car expert Jack Nerad noted in a 2007 article "several fully restored AMX models" listed for sale at "little more than half the price of a comparable Buick Gran Sport, Chevrolet Chevelle, Olds 4-4-2 or Pontiac GTO" in support of the author’s opinion that the 1971-74 Javelin was "clearly an outstanding alternative muscle car for the enthusiast on a budget."[47]

Other "non-muscle" examples include, the 1959 Ambassador 4-door hardtop station wagon of which only 578 were produced, making it a rare and desirable collector car.[48]

Hemmings Classic Car magazine included the 1969-70 AMC Matador Rebel SST four-door sedan and the 1975-1978 Matador coupe in their 2008 list of "dollar-for-pound [weight]" cars that could be bought in show-quality condition for a comparatively modest outlay,[49] The writer also noted that "most of AMC's '70s lineup" qualified for inclusion on the list.

The AMC Gremlin is described to have "a cult-like following in today’s collectible car market"[50], and the 1970s subcompacts are now "quite collectible" because of their increasing scarcity.[51] The Gremlin shares components with some other AMC models its repair and restoration can be relatively inexpensive compared with other "historic cars".[50]

The AMC Pacer, one of the so-called "nerd cars", was increasing in value according to a Pacer owner who is the CEO of a major insurance provider for collector car owners.[52]

There are active Rambler and AMC car clubs in the U.S. and elsewhere.

Epilogue

During its long history, American Motors bought, sold and spun-off many components. Some of these still exist today, albeit in vastly changed forms.

Many of the facilities used to produce American Motors vehicles and sub-assemblies are still in use. These include:

At least one major AMC operation is now completely defunct:

Former Factory Facilities

AMC models and products

Subcompact

* - The Metropolitan was introduced by Nash in 1954.
** - The Gremlin was the company's first modern subcompact.

Compact

Crossover

Mid-size

Full size

Engines used by AMC

Main article: List of AMC engines

Also: Kaiser Jeeps used the AMC 327, Buick 225 ("Dauntless V6"), Buick 350 ("Dauntless V8"), Willys 134 I4 ("Hurricane").

1 AMC contracted with Volkswagen to buy tooling for the Audi 2.0 L OHC I4. Major parts (block, crankshaft, head assembly) were initially purchased from Audi and shipped to the U.S. where final assembly was accomplished by AMC at a plant purchased specifically for production of this engine. Sales never reached numbers to justify taking over total production. AMC made several changes to the engine. They were prevented from using the Volkswagen or Audi names in association with the AMC assembled version by contractual agreement.

Hot Rod Magazine revival April Fool's joke

In April 2008, Hot Rod Magazine released an article claiming that American Motors was in the process of being revived. The vehicles in the works were to be the AMX, Matador, Ambassador, Pacer, and Gremlin. Illustrated with drawings of the concept cars entering production and accompanied by plentiful information, it was an extremely popular article, although it was later revealed to be an April Fools' joke.[64]

Notes

  1. ↑ "Answer from the Hustlers", Time Magazine, January 25, 1954, retrieved on 2008-07-16
  2. ↑ Time Magazine, October 12, 1953, retrieved on 2008-07-16
  3. ↑ Time Magazine, February 7, 1955, retrieved on 2008-07-16
  4. ↑ "Second-Best Year", Time Magazine, August 1, 1955, retrieved on 2008-07-16
  5. ↑ "Merger No. 3", Time Magazine, June 28, 1954, retrieved on 2008-07-16
  6. ↑ Bonsall, Thomas E. (2000). More Than They Promised: The Studebaker Story. Stanford University Press. pp. 287. ISBN 978-0804735865. http://books.google.com/books?id=w67Uhn6bpnsC&pg=PA346&dq=Nance+Romney&ei=jBKKSI7AHYaCjwHbo-GBCA&sig=ACfU3U2nSF-YZ11kEhXGBUqzsZ_6FHbxRg#PPA287,M1. 
  7. ↑ "Changes of the Week", Time Magazine, October 25, 1954, retrieved on 2008-07-16
  8. ↑ 8.0 8.1 "New Entry", Time Magazine, March 22, 1954, retrieved on July 25, 2008.
  9. ↑ Meyers, Gerald C. (1986) When it hits the fan: Managing the nine crises of business. Houghton Mifflin ISBN 0-395-41171-8.
  10. ↑ 10.0 10.1 "Rearview mirror", Ward's AutoWorld, February 1, 2000, retrieved on 2008-07-16.
  11. ↑ "Rearview Mirror" Ward's AutoWorld, April 1, 2000, retrieved on 2008-07-16.
  12. ↑ Russell, Roger. "Sonotone History: Tubes, Hi-Fi Electronics, Tape heads and Nicad Batteries", undated document, retrieved on 2008-07-16.
  13. ↑ 13.0 13.1 Goodstein, Judith (2004) "Godfather of the Hybrid" Engineering & Science, California Institute of Technology, Volume LXVII, Number 3, retrieved on 2008-07-17.
  14. ↑ "Road Test: American Motors Matador X" Road & Track magazine, March 1974. See: the article, retrieved on December 23 2007.
  15. ↑ "Coach Manufacturer History - AM General. By the Ohio Museum of Transportation. Retrieved on January 20 2008.
  16. ↑ "AMC Liaison" Time Magazine, April 10, 1978. Retrieved on January 25 2008.
  17. ↑ “American Motors Hangs In There” Time magazine, February 14, 1977. Retrieved on April 1, 2008
  18. ↑ “AMC’s Almost Total Recall” Time magazine, May 22, 1978. Retrieved on April 1, 2008
  19. ↑ “Money Machine” Time Magazine, December 18, 1978. Retrieved on April 1, 2008
  20. ↑ 20.0 20.1 “French Accent” Time magazine, October 22, 1979. Retrieved on April 1, 2008
  21. ↑ AMX files “Endgame: Renault and Jeep. Retrieved on April 1, 2008.
  22. ↑ “AMC’s Charge” Time magazine, November 19, 1979. Retrieved on April 1, 2008.
  23. ↑ “Detroit’s Uphill Battle” Time magazine, September 8, 1980. Retrieved on April 1, 2008.
  24. ↑ “Detroit’s Road Is Still Rocky” Time magazine, December 15, 1980. Retrieved on April 1, 2008.
  25. ↑ Thomas Derdak, Editor (1988). International Directory of Company History, Volume 1. St. James Press. ISBN 0-912289-10-4. page 136.
  26. ↑ "Motor Trend’s Car of the Year: Be Careful What You Assume About the Award" Troubleshooter.com, consumer information site. Retrieved on April 3, 2008.
  27. ↑ 27.0 27.1 Sharf, Stephan. "Lee Iacocca as I knew him; he was certainly the right man at the right time..." Ward's AutoWorld, May 1, 1996, retrieved on April 26 2008.
  28. ↑ {http://www.britannica.com/EBchecked/topic/164838/Direct-Action Britannica "Direct Action"]. Retrieved on May 18 2008.
  29. ↑ Urban Guerilla "Action Directe" undated document. Retrieved on May 18 2008.
  30. ↑ Sea-us "The Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier". Retrieved on May 18 2008.
  31. ↑ Geocities ABC-GENT files "Short Collective Biography (of) Action Directe Prisoners". Retrieved on May 18 2008.
  32. ↑ "DaimlerChrysler: The 'What Ifs?'", Ward's AutoWorld, June 1, 1998, retrieved on April 26 2008.
  33. ↑ Trademark
  34. ↑ American Motors Corporation Home Page
  35. ↑ 35.0 35.1 35.2 Higgins, James V., "Roy Chapin Jr. mastered how to survive in auto industry". The Detroit News, August 12, 2001
  36. ↑ Lawrence, Mike (1996). A to Z of Sports Cars, 1945-1990. MotorBooks/MBI. pp. 1952. ISBN 978-1870979818. http://books.google.com/books?id=glKW-Kh-lmcC&pg=PA1952&lpg=PA1952&dq=AMC+anticipating+trends&source=web&ots=uDUl-Di8ch&sig=1LGaO-pTHGlUkMKt1NqnebRvLAw&hl=en. .
  37. ↑ Fracassa, Hawke. "Roy D. Chapin Jr., ex-AMC chairman gambled to save Jeep". The Detroit News. August 7, 2001
  38. ↑ Lutz, Robert A. (1999). Guts: The Seven Laws of Business That Made Chrysler the World's Hottest Car Company. John Wiley & Sons. ISBN 0-471-35765-0.
  39. ↑ Lutz, Robert A. (1999), p. 16
  40. ↑ 40.0 40.1 Lutz, Robert A. (1999), p. 31
  41. ↑ 41.0 41.1 Lutz, Robert A. (1999), p. 33
  42. ↑ Taylor III, Alex. "Finally GM is looking good". Fortune, Vol. 145, Nr. 7, 2002, pp. 69-74
  43. ↑ Dunne, Timothy. "Can Chrysler Rebound in China?" Business Week, November 2, 2007, retrieved on 2008-05-24.
  44. ↑ Zuehlke, Jeffrey (2007). Classic Cars. Lerner Publications. pp. 18. ISBN 978-0822559269. 
  45. ↑ Litwin, Matthew. "The Top 21 Hottest Collector Cars", Hemmings Classic Car, January 1 2007. Retrieved on September 28, 2008.
  46. ↑ Blackwell, Rusty. "Collectible Classic: 1968-70 AMC Javelin", Automobile Magazine, undated, retrieved on September 28, 2008.
  47. ↑ Nerad, Jack. "It doesn’t take a mint to buy one of tomorrow’s top collector cars", Driving Today, 2007, retrieved on September 28, 2008.
  48. ↑ Foster, Patrick R. AMC Cars 1954-1957, an Illustrated History Iconografix 2004 ISBN 1583881123
  49. ↑ Koch, Jeff: "Dollar-A-Pound Collectibles" Hemmings Classic Car Vol. 4 No.1 pp 14-19, January 1, 2008. Retrieved on September 28, 2008.
  50. ↑ 50.0 50.1 Kunz, Bruce. "1970 AMC Gremlin- America's first "sub" compact car" St. Louis Post-Dispatch, December 3, 2007, retrieved on September 28, 2008.
  51. ↑ Braybrooke, David. "Automobile history: The AMC Gremlin" undated, retrieved on September 28, 2008.
  52. ↑ Palmeri, Christopher. "Revenge of the Nerd Cars" Business Week. August 23, 2007, retrieved on January 22 2008.
  53. ↑ Hubbert, Christopher J. "The Kelvin Home: Cleveland Heights Leads the Way to: 'a New and Better Way of Living'", Feature Article, Cleveland Heights Historical Society, 2006, retrieved on 2008-11-02.
  54. ↑ Toledo Machining and Forge fact sheet by DaimlerChrysler manufacturing division. Retrieved January 22 2008
  55. ↑ Brampton (Bramalea) Assembly plant Photo of Brampton plant on the Challenger blog. Retrieved January 22 2008
  56. ↑ Brampton Assembly Plant fact sheet by DaimlerChrysler. Retrieved January 22 2008
  57. ↑ | Outline of Bramalea construction project (with photos of the plant and explanatory text) by infrastructure builder EllisDon Corporation. EllisDon completed the Brampton Assembly Plant and associated buildings for AMC in September 1987. Retrieved January 22 2008.
  58. ↑ American Center building overview & specifications page from a skyscraper website. Retrieved January 22 2008
  59. ↑ 59.0 59.1 Summary of AMC Canada operations acquired with the AMC buyout on DaimlerChrysler Canada history page. Retrieved January 22 2008
  60. ↑ Holmes Foundry in Sarnia, ON, Canada. Retrieved January 22 2008
  61. ↑ 61.0 61.1 The Fall of the Packard Motor Car Company, page 124, by James Arthur Ward. Retrieved March 5 2008
  62. ↑ Crackdown in Milwaukee, Time Magazine, December 1, 1961. Retrieved March 5 2008
  63. ↑ Union Stamping and Assembly plant Photo of former AMC stamping plant on Chris DellaMea's "Coalfields Of The Appalachian Mountains" site at www.coalcampusa.com. Retrieved January 22 2008
  64. ↑ "AMC Concept Cars - The Return Of AMC! It's The Biggest Story Of The Year, And No One Saw It Coming". Hot Rod Magazine. Retrieved on 2008-05-10.

References

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