Chrysler Deal Seen as Best Break in 3 Decades for ‘Little Guy’ AMC
Chrysler’s decision to buy American Motors Corp., a perennial also-ran among domestic auto makers, may be the best news for AMC since the Rambler car became a runaway best seller in the late 1950s, experts said Monday.
After American Motors was formed in 1954 from the merger of two money-losing companies--Hudson Motor Car Co. and Nash-Kelvinator Corp.--the Detroit-based auto maker always has seemed on the verge of collapse, only to rise again on the strength of a successful new product or business acquisition.
“Every 15 years or so . . . the company seems to have a stay of execution,” said Don Sherman, editor of Car and Driver magazine.
Never capturing more than 7.5% of the American car market, AMC has “been known for being the little guy on the block who had a much more difficult time in weathering downturns in the market,” said Chris Cedergren, an analyst at J. D. Power & Associates automotive consulting firm in Westlake Village. Times grew especially tough in the 1970s, Cedergren said, when the flood of imports made the American car market more competitive.
Whether AMC’s prized Jeeps, its dealers and its employees will thrive as part of Chrysler remains to be seen. But top former company officials on Monday applauded Chrysler’s move, as did the United Auto Workers union.
“I think this Chrysler acquisition is a good thing,” said George Romney, former governor of Michigan and president of AMC from 1954 to 1962. “The Chrysler purchase will put the company (AMC) in a position to save jobs.”
“It’s a brilliant idea that capitalizes on the strength of both organizations,” said Gerald C. Meyers, chairman and chief executive of AMC from 1978 to 1982.
UAW President Owen Bieber issued a statement Monday welcoming Chrysler’s bid for AMC, which has a history of poor labor relations with the UAW. “We believe our members’ interests can be well served within the Chrysler family, and we are committed to making that happen,” Beiber said.
AMC’s origins date to 1902 when the Thomas B. Jeffery Co. of Kenosha, Wis., built a one-cylinder Rambler automobile that sold for $750.
Charles W. Nash, who had been president of General Motors, bought the Jeffery company in 1916 and renamed it Nash Motors. In 1937 his company merged with Kelvinator, a Detroit refrigerator maker.
Hudson had been launched in Detroit in 1909 with a $10,000 investment from department store magnate Joseph L. Hudson, said John Conde, an automotive historian who worked for AMC for 32 years before retiring in 1977.
But by the time Hudson agreed to merge with Nash to form AMC in 1954, both companies were drowning in so much red ink that Conde said employees termed the transaction, “one loser buying another loser.”
Only months later, however, the future brightened when Romney introduced a new Rambler as an alternative to what he termed were “gas-guzzling dinosaurs” of General Motors, Ford and Chrysler. He successfully marketed the Rambler as a second “compact” car.
However, AMC was unable to keep the compact car market to itself. Ford soon offered the Ford Falcon, and General Motors unveiled the Corvair.
AMC tried selling larger “luxury” cars but met with dismal results. Between 1966 and 1971, although the company had some profitable quarters, overall it lost $118 million during the period.
Once again foundering, AMC found another niche in 1970 when it purchased Kaiser Jeep from Kaiser Industries. It restyled the Jeep, put in a V-8 engine and promoted it as a recreational vehicle.
But within four years, gasoline shortages were hurting recreational vehicle sales and AMC again was facing losses.
Rumors flew that the company was going to abandon car production and concentrate on Jeeps and trucks, but AMC decided to stick it out, finally attracting the attention of the French group Renault, which acquired the 46.1% interest Chrysler is buying.
But Renault was never able to turn things around at AMC, perhaps because it had no other American automotive operations in which AMC could be integrated. As a stand-alone company, AMC was too small to compete with the Big Three and the imports, and so became an almost endless cash drain for Renault.
Main story, Part I, Page 1
