AMC, Last of Its Kind, Fades Into Auto History
American Motors, the perennially troubled auto maker that will perhaps be remembered best for giving the world such odd cars as the Pacer and the Gremlin, ceased to exist Wednesday.
It is now the Eagle-Jeep division of Chrysler.
At a special meeting here at AMC headquarters Wednesday morning, shareholders overwhelmingly approved Chrysler’s previously announced acquisition of the company, accepting roughly $1.2 billion, or $4.50 worth of Chrysler stock for each AMC share outstanding.
Soon after the shareholder meeting, Chrysler Chairman Lee A. Iacocca announced at a press briefing that AMC will immediately become the Jeep-Eagle division, Chrysler’s third sales arm, to go along with the firm’s Chrysler-Plymouth and Dodge divisions.
Chrysler hasn’t had three distribution networks since DeSoto went out of business in 1959.
Jeep-Eagle will handle the marketing, sales and product engineering for AMC’s former car and Jeep truck lines.
Chrysler’s acquisition of AMC marks the end of the line for the last of the small American auto makers that sprang up earlier in this century and which competed on the fringes of the Big Three.
Dozens of firms like Studebaker, Packard and Duesenberg flourished for a time, sometimes turning out remarkable cars. But eventually, they were ground under by the enormous resources of General Motors, Ford and Chrysler.
Founded 33 years ago out of the merger of two even weaker auto makers, Hudson Motor Car Co. and Nash-Kelvinator Corp., AMC had been the last of that breed. But it, too, found that it couldn’t afford to compete against its bigger domestic rivals, let alone the Japanese. After failing to find a successful niche with funny subcompacts like the bubble-top Pacer or the oddly shaped Gremlin, AMC turned for its salvation to French auto maker Renault in 1978.
Renault eventually acquired more than 46% of AMC and turned it into a North American distribution arm for its passenger cars. But by the mid-1980s, it was clear that AMC couldn’t make it on its own, and Renault, suffering huge losses of its own in France, began to look for ways to get out. In March, it agreed to sell its huge stake to Chrysler, paving the way for Wednesday’s acquisition.
Now, Renault passenger cars, which had been built and distributed by AMC, will switch over to the Eagle brand, while Jeep trucks will continue under their current brand. AMC dealerships will begin to change their names over to Jeep-Eagle today, Chrysler officials said.
AMC’s factories, including four assembly plants in the United States and Canada, will be merged into Chrysler’s manufacturing operations, and Chrysler will assume AMC’s labor agreements with the United Auto Workers.
Still, Chrysler and AMC officials insist that a number of key aspects of the merger have yet to be resolved. Although Chrysler first announced its bid for AMC last March, company officials said Wednesday they still don’t know, for instance, how many AMC managers and hourly employees Chrysler plans to retain. AMC employs 22,500 workers in the United States, compared to 98,500 for Chrysler.
Chrysler has also not announced whether it will close any AMC assembly plants and consolidate production in its existing facilities. But there have been widespread reports in Detroit that Chrysler will eventually shutter the Jeep assembly plant in Toledo, Ohio, and move Jeep production to a Chrysler plant in Detroit that is scheduled for a modernization program.
At his press briefing, Iacocca made only a short statement and refused to answer any questions about the merger. But Joseph Cappy, AMC’s president who will now become a Chrysler group vice president in charge of the Jeep-Eagle division, said that all the details of the merger will probably not be sorted out until the end of the year.
One big problem that Chrysler has evidently not solved is how to streamline AMC’s ragtag dealer network, which is considered far too big for AMC’s sales volume. Under state franchise laws, Chrysler will be prohibited from merging the AMC dealer network into the Chrysler-Plymouth or Dodge franchise systems. At the same time, Cappy noted that most franchise laws will prohibit Chrysler from selling its cars and trucks through Jeep-Eagle outlets unless it changes the designs of those products.
