RF stopped by to respond to our story, “Pat Foster barks up wrong tree by lauding an AMC Gremlin GT with a 360 V8.” Well, sort of. He seemed to be more interested in answering a meta question than addressing the article’s specific topic. Thus, I thought I would present RF’s comment as a separate post. And because it raises some interesting auto history questions, I’ll offer my take afterwards:
“What would have saved AMC?
1. Industry-leading rust resistance.
2. Front-wheel drive.
3. Four-cylinder engine.
4. Industry-leading fuel economy, including with an automatic.
5. Industry-leading reliability.
6. Quiet comfortable non-chintzy interior.
7. Adequate cargo space that’s easy to access, without overall size bloat.
8. Headroom and legroom for tall drivers, without overall size bloat.
9. Air conditioning as a standard feature (economy of scale).
10. Industry-leading safety.
11. Value pricing.Doing all that without the budget nor infrastructure was impossible.”
What does it really mean to ‘save’ an automaker?
Indie Auto presents a fair number of counterfactuals, but I try to avoid stark “X would have saved” pronouncements. For one thing, my sense is that the course of automotive history does not tend to pivot on one neat trick.
In addition, coming up with a winning formula can be quite complex. An automaker can design a car that appears to check many of the right boxes but ends up not selling as well as expected because the styling, marketing or initial manufacturing quality missed the mark. Or perhaps the timing of the car’s introduction was off.
By the same token, if one’s goal is serious historical analysis rather than barstool philosophizing, then we should define more specifically what we mean when we talk about “saving” an automaker in a constantly evolving industry.
Also see ‘Joe Ligo’s third AMC episode suffers from analytical weaknesses’
As a case in point, one could reasonably argue that American Motors did not have strong prospects of remaining an independent automaker into the 1990s while still entertaining the idea that passenger-car sales might have been much less likely to collapse in the late-70s if the roughly $100 million spent on the Matador coupe and Pacer (Foster, 1993) had instead gone to an expanded lineup of compacts based upon an updated Hornet platform.
I also tend to be skeptical of scenarios that imply that there was only one best way for an automaker to be successful. For example, I would question the conventional wisdom that AMC needed to switch to front-wheel-drive subcompacts.
The automaker might have instead tried to move its rear-wheel-drive compacts somewhat upmarket as a more affordable American BMW, albeit with a greater emphasis on all-wheel-drive crossover variants. A 1977 Pacer minivan concept car hinted at the interesting possibilities (Appel, 2021).
Manufacturing capacity was as important as car design
Another factor that doesn’t tend to get as much attention as it deserves is economies of scale in production facilities. I suspect that one of the most important steps American Motors could have taken to remain financially viable through the turbulent late-70s and 1980s would have been to integrate its passenger-car and truck production into one main plant. That might have also led to more component sharing between passenger cars and Jeep trucks.
This might seem like a nerdy subject to car buffs focused on product attributes, but how American Motors structured its manufacturing operations played a major role in its financial struggles from 1975 onward. For example, in 1980 the automaker lost a then-catastrophic $208 million on North American sales of around 203,000 passenger cars (including Renaults) and 67,000 Jeeps (Foster, 2013).
The financial picture during down years such as 1980 might have looked very different if Jeep production had been moved out of its Toledo, Ohio plant to the automaker’s Kenosha, Wisconsin facility. That might have constricted capacity during peak years, but American Motors could have used its Brampton, Canada plant to backfill as needed. And if that still wasn’t enough, lost sales during peak years were arguably less damaging than debilitating losses during down years.
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Appel, Tom; 2021. “Forgotten Concept: AMC AM Van.” Consumer Guide Automotive. Posted March 8.
- 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.
ADVERTISEMENTS & BROCHURES:
- oldcarbrochures.org: AMC Eagle (1983); Jeep (1980); Renault Alliance (1985)
With better product and fewer outlandish risks like the Pacer I think AMC might have made it a bit longer as an independent. Even a successful AMC would eventually gotten absorbed or merged into another car company.
I would argue that if AMC had adopted the Toyota Production System in the early ’70s, that could have been a real game-changer. Firstly because the big three were vulnerable to market share erosion in the Consumer Reports era. Secondly because the productivity gains would compensate for the smaller production volume.
I saw a raised 4wd 1st gen Javelin Sunday. so between how well it was done and reading this, it gave me a thought or two. (disclosure, my then wife drove a pea soup green 258 Hornet when I met her and we kept it until around ’92. I have also owned multiple Subarus.)
IMO, AMC was on the verge of success with the the 4wd Eagle, which could have gone up against Subaru and their 4wd vehicles as a ‘Murikun alternative. AMC really should have had just 3 vehicles, all playing to their strengths: The Spirit 2wd/4wd (compact), the Jeep CJ (fun) and the Cherokee 2wd/4wd (family truckster). They needed to be a niche player instead of taking on The Big 3 and their resources. Be where they aren’t.
Improvements were critically needed in both vehicle reliability, build quality and paint if they were to compete. The Tonka plastics would have been the first thing that had to go. They’d lost their ‘reliable cheap car’ rep by the mid 70s. Someone would have had to pay for a lot of retraining, investing in new equipment and new paint means of application. I’m not sure who or if the money was even there. Next would have been vehicle handling, ride and noise. AMC will need more cash than before. And they will have to have a gimmick warranty like 50,000 B2B and a million warranty repairs if they have a prayer of working on their reliability and service rep.
Would it have worked?
Of course, the only honest answer is, “Who knows?” However, I suspect that improving quality wasn’t so much a money issue as it was a matter of corporate prioritization. Joe Ligo’s AMC series suggests that improving labor-management relations could have helped.
It’s fun to focus on the speculative aspects of counterfactuals, but I think that their main value is to help us more easily recognize the underlying assumptions that color our historical analysis (which, in turn, can restrict how we look at today’s auto industry). A paradox of historians who dismiss counterfactuals is that their writing can be just as colored by assumptions — except that they tend to go unacknowledged.
Pat Foster said in one of his books that the two cars most responsible for the ultimate failure of AMC were the 1974 Matador and the 1975 Pacer; they both faded quickly and wasted scarce capital that should’ve gone towards redesigning the (whole) Matador line and the Hornet, which were both getting stale and needed replacement quickly. Although I do agree with this assessment, I believe nothing could have ultimately saved AMC once the 1979 fuel crisis and the 1980 recession kicked in; AMC was simply too small to absorb the enormous losses virtually all of the automakers suffered during those years. I might add that Chrysler, although several times larger than AMC, only survived by the skin of its teeth and then only because they managed to acquire loan guarantees from the US government.
Would agree they should have jumped head first into the all wheel drive option for all vehicles. Upgrade engines to modern fuel injection would have helped. They would be a niche automaker with Jeep on board to help off set perhaps the difference in profits till AMC righted ship. I still think in the end they are bought by Chrysler but stay independent longer. When raw materials cost you more than GM or Ford cause you’re not ordering in larger quantities/manufacturing in high production numbers than your set costs hinder your chances from the very start.
The what if is interesting but in the end Chrysler still buys AMC maybe with at a higher cost with AMC in better financial shape.
IIRC the Eagle was fading by the mid 80s. The problem with hitting the big 3 where they ain’t is they ain’t there for a reason. See: Matador,1974; Pacer, 1975. And when they do find a sweet spot like the 1950s Rambler the big 3 will fill the niche. They just end up beta testing for the big 3. Heads they win (compacts) tails you lose (pacer). By the mid 80s they did have the range pared down to the Eagle and Jeeps, with an FWD Hornet replacement almost ready to go in Brampton. Unique cars all, SUVs CUVs and high end midsize sedans. Pretty much the bread and butter of all carmakers today. Yet still AMC went nowhere. I checked a couple things for this reply. The Wagoneer body was over 20 years old. If maybe AMC put the Matador and Pacer effort to redesigning the Wagoneer instead?
The Eagle was fading in the mid-80s because by then AMC was a zombie brand and the lineup had a badly obsolete body, e.g., the wagon didn’t even have a full liftgate. I think that hitting them where they ain’t was the only viable strategy for an independent automaker, but you still had to be smart about it. As a case in point, the Matador coupe and Pacer were truly boneheaded moves. Just from an economies-of-scale standpoint they should have never seen the light of day.
Your point about the Wagoneer is an important one that has been under-discussed. American Motors invested remarkably little money into updating the Jeep brand while the automaker was still independent. In all honesty, management shamelessly cannibalized Jeep. They could have instead come up with a new Wagoneer platform in the late-70s that shared at least some parts with an updated Hornet platform and moved production from Toledo to Kenosha. That would have been a Romneyesque move that meaningfully improved economies of scale — and made it easier to navigate recessions.
With the right points of divergence such as acquiring Kaiser-Jeep earlier (along with maybe another companies), the best bet for AMC would be an early more equal alliance with Renault circa mid/late-1960s instead of what actually unfolded in the late-1970s when AMC were in a significantly weaker position.
It might be a short or long term alliance yet it would suffice for a stronger AMC to better weather the turbulent 70s before they either attempt to monkey branch from Renault to ally with another company or try to strike it out on their own.
The question is which companies beside Renault and Chrysler would have been interested in entering a partnership or outright acquiring AMC?
The last two episodes of Joe Ligo’s PBS series on AMC reinforce my sense that Renault didn’t understand the American market well enough to be a good partner regardless of when the partnership began. Renault didn’t show the capacity to adapt to American tastes like the Japanese automakers did. I suspect that Subaru would have been a more compatible partner, at least if sales of AMC’s domestic-designed passenger cars hadn’t collapsed.
What do you think would have been the benefit of American Motors acquiring Jeep earlier? That would have diversified the automaker’s product line but given it a whole new set of problems — and fixed costs to manage during some already difficult years in the late-60s. In addition, the SUV market wasn’t as big back then.
An earlier AMC acquisition of Jeep would have indeed diversified the automaker’s line-up amongst other things in spite of its obvious pitfalls.
And Jeep’s involvement with Renault would have potentially allowed AMC more involvement / input with projects like the 1965 Kaiser Jeep et Renault Model H Concept as well as Willys of Brazil’s Renault 12-based Project M aka “Ford” Corcel, Renault Project 114 4/6-cylinder and Renault-Peugeot Project H V8 saloon models.
The Renault-Peugeot Project H V8 in particular was part of the wider Renault-Peugeot joint-venture that soon included Volvo and encompassed other projects (with the V8 becoming the PRV V6, etc) that may or may not have benefited AMC.
The second generation Jeep Cherokee, introduced in 1984, in my view was AMC’s greatest, and sadly last, success.
That vehicle sold well and long and likely made the company attractive enough to be bought by Chrysler.
Despite this great success the company was beyond saving as an independent concern.
I remember the reports at the time were saying that Chrysler’s real interest in AMC was about the Brampton plant and not the productline. Only later would Jeep turn into a cash machine.
I don’t think it’s really possible for a small independent manufacturer to make it in the environment that’s developed over the last few decades. (At least not with mass-market products.) What’s amazing is that AMC lasted as long as it did, and could probably have hung on longer if they had updated their core products instead of embarking on the risky adventures of the Matador Coupe and Pacer. However they would have ultimately had to merge with a larger company in order to survive.
For an independent to survive past the early ’60s, it would need to an “Ace” product planning department. One significant mistake would likely not cause catastrophe, but two big ones in succession would cause much more serious problems and real long term difficulty on a road to possible recovery.
For the independents to be right 100% of the time was of course impossible. The much deeper resources of the big 3 made GM/Ford/Chryco much more stable – and able to erase the niche advantages that the independents were able to exploit, if only for a short time.
It was almost inevitable that things would “go south” for Studebaker and AMC. And although it may be hard to convince a Mustang/Camaro/Barracuda enthusiast, automotive history and analysis is much richer for the presence of the little guys that hung on.
While the end of a small US independent may have been inevitable, there are models of success for niche makers – Volvo is one that is very relevant. In the early 60’s AMC was the American Volvo, but they walked away from this in part by relying on gruesomely obsolete technology (kingpin suspension, vacume wipers) along with pretty lousy assembly quality. Add in the above discussed waste of resources on Pacer and Matador, but AMC could have possibly returned to thier roots with focus on basics and niche products like AWD. The Alliance was initially lauded and sold well until the horrendous quality (exploding heater cores for one) snuffed that one out; it was however potentially right for the times ala the Chrysler K car.
I worked at Chrysler at the time and post merger, the stories of horrendous arrogance of the Renault execs (along with many stories of awful physical comportment) made this a failure in the making. The American market is littered with the bodies of smug Europeans who though they knew how to do better than the locals. The recent experience with Stellantis trashing the US Chrysler cash cow comes readily to mind here.