A 1980 Motor Trend story on the tie up between American Motors and Renault had a few intriguing wrinkles scattered among all the puffery.
For example, Fred M. H. Gregory reported that AMC was close to signing an agreement with another automaker when Renault made a last-minute pitch. “The arrangements with the original prospect — [AMC head Gerald] Meyers won’t say who it was — were shelved, and negotiations with Renault began. It didn’t take long to reach an agreement” (1980, p. 28).
Who was the spurned suitor? Patrick Foster later reported that the automaker AMC had been negotiating with was Peugeot. An almost-consummated deal would have included distribution of its French-built cars in the U.S. but “no manufacturing, no technology sharing, no Jeep distribution” (2013, p. 161).
Meyers told Motor Trend that a Renault partnership was attractive because it allowed AMC to stay competitive as a domestic producer of passenger cars by drawing upon Renault’s pipeline of modern, fuel-efficient small cars. That would “save the enormous development costs necessary” to update AMC’s lineup (Gregory, 1980; p. 28).
That’s a positive way of putting it. However, the flip side was that AMC would all but inevitably become little more than the American arm of Renault.
Also see ‘Automotive News treats Gerald C. Meyers’ tenure at AMC with kid gloves’
Meyers also argued that the tie up protected American Motors from corporate predators. “I became concerned about that, and the easiest way to put away an attack is to put yourself in a position where no one would think of it” (Gregory, 1980; p. 28).
Was that really a meaningful fear? Foster reported that American Motors had turned down a proposal by John Z. DeLorean to merge with his fledgling company and install him as its leader (2013, p. 154). So perhaps there was a theoretical possibility of a takeover attempt. However, that narrative still strikes me as an excuse.
AMC needed Renault to stay in business — full stop
The primary reason why Meyers was seeking a tie up was because passenger car sales had collapsed and there was no longer enough money left to revive the lineup because management had squandered more than $100 million on the ill-fated Matador coupe and Pacer (Foster, 1993).
That amount of money presumably wasn’t large enough to fund a switch to a front-wheel-drive platform, but it could have been more than enough to keep AMC competitive in the second half of the 1970s if it had been been spent on updating and expanding its line of compacts.
Also see ‘An AMC four-cylinder engine was Roy D. Chapin Jr.’s last big mistake’
I grant you that this is not a universally accepted theory. As a case in point, Marc Cranswick has argued that AMC’s fundamental problem was that “a small independent US automaker, largely reliant on the domestic market, couldn’t survive producing normal passenger cars” (2022, p. 308).
This may very well have been true 10 years down the road, but AMC’s failure to be competitive in the 1970s arguably had more to do with a remarkably long string of bad management decisions.
Not that you’d see such a harsh critique in Motor Trend’s article, which ends with an upbeat quote from Meyers. “This is our ticket to the big time . . . because here are the assets we’ve been looking for. That means we are going to be among the survivors, and be a factor as we go into the ’80s” (Gregory, 1980; p. 28).
Alas, Renault didn’t have what it took to be successful in the U.S. and in 1987 sold what was left of American Motors to the Chrysler Corporation. Which raises the question: Should AMC have not tied its fate to the French automaker?
Also see ‘Is Patrick Foster right that AMC’s biggest mistake was not buying Jeep earlier?’
Going with Renault seems like a better move than Peugeot, who wouldn’t have helped AMC maintain its passenger-car manufacturing capacity or update its Jeep lineup with the downsized 1984 Cherokee.
I suspect that a better move would have been a tie up with Subaru, whose narrow range of two- and four-wheel-drive subcompacts could have been more compatible with AMC’s than Renault’s larger but more generic lineup. Perhaps most importantly, Subaru better understood how to succeed in the United States, e.g., its cars were more reliable.
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Cranswick, Marc; 2022. The Legend of American Motors. Veloce Publishing.
- Foster, Patrick R.; 1993. American Motors: The Last Independent. Krause Publications, Iola, WI.
- ——; 2013. American Motors Corporation: The Rise and Fall of America’s Last Independent Automaker. MBI Publishing Co., Minneapolis, MN.
- Gregory, Fred M. H.; 1980. “A Tale of Two Companies.” Motor Trend. August issue: pp. 27-28.
ADVERTISING & BROCHURES:
- oldcaradvertising.com: AMC Gremlin (1978)
- oldcarbrochures.org: Renault Alliance (1985)
AMC and Renault already had a previous relationship, with Renault assembling Ramblers for European distribution in the 60’s. At the time AMC was negotiating with Renault, AMC was concerned about producing cars, not crossovers. 4×4’s were Jeeps and not until the Eagle line was released in 1980 did the two cross paths. Even then, just after the 1979-1980 Energy Crisis, it wasn’t really a sure bet that a jacked up Hornet with Jeep running gear was going to sell well. It was a gamble, like the Pacer and the Matador before, that the buying public would be interested. As it turns out, only the wagon and the four door sedan made any real headway in the market. The two door sedan and the SX-4 were retired rather early in the run.
I’m having a hard time imagining any synergies between Subaru and AMC. AMC was still a very conventional automobile company in the 1970’s and the success of the Eagle line was not assured. Subaru was not the company it is today, it was very niche in it’s product offering. There were only the 4×4 cars you could not get from other companies, both foreign and domestic. The idea of an all wheel drive car was still pretty unusual, particularly in the era when front wheel drive was ascendant. Front wheel drive was ascribed all kinds of powers that it really didn’t have, but marketing uber alles. It would take another decade or so before people would pony up for that kind of capability.
I think that GM would have been a good partner for AMC. Not as a merger, but a dedicated partner that would share chassis and cars with AMC, much like Renault did. The GM based AMC cars would not share styling with GM cars, but utilize their chassis and drivetrain components. Maybe this would allow AMC to survive as a niche player in North American markets (present day USMCA) and benefit Jeep with GM technologies for global markets. Ultimately, were this to have taken place, GM would absorb AMC and Jeep would be a global GM brand instead of a present day Stellantis global brand. But frankly, GM didn’t need another brand to support, either.
My logic chain on an AMC-Subaru partnership goes like this:
1) Pretty much any Japanese automaker would have given AMC access to better-quality subcompacts than a European or American automaker.
2) The only Japanese automakers that were plausibly within reach were third tier, such as Subaru and Suzuki.
3) Subaru was the better fit because management mostly understood that it was too small to compete model for model against first-tier imports and instead needed to pioneer new niches.
4) Subaru’s increasing focus on four-wheel-drive subcompact passenger cars would have been a very nice fit with AMC’s lineup. And AMC’s dealer network could have helped Subaru grow much more quickly in the U.S.