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Home/Technical Info/ American Motors
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6.0 History - Cars of the 80s


 
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The End - Caught Between the Big Three and Foreign Investors

AMC had finally run out the play. A drop in Jeep sales caused by a rapidly declining economy and soaring energy prices tightened AMC’s cash flow. And at the same time, pressure was increasing on the company’s non-Jeep product lines that were now hopelessly out-of-date. The previous face-lifts and rebranding of AMC’s once-innovative and successful cars were not enough. The landscape had changed dramatically and AMC was way, way behind.

The threat was not merely limited to the Big Three automakers, but now the Japanese, who were using streamlined production methods, were closing in. They had new, highly efficient assembly plants - now constructed in the US. And the Japanese were much lighter on their feet when it came to responding to consumers. They were building small cars - the heart of AMC's passenger product line.

As Americans turned to the new imports in increasing numbers, AMC was stuck in the inefficient and aging Kenosha, Wisconsin facilities that were the oldest continuously operating automobile plant in the world. To make its vehicles, AMC had to use processes from the beginning of the 20th Century - where components and unfinished bodies still had to be transported across the city in order to be assembled.

The recession and tightening lending of the early 1980 pressed AMC to the point that their 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. By September, AMC’s U.S. market share had fallen to a little more than 1.5%, and in November, when new car sales usually boomed, AMC's sales dropped 19.1%! The sinking economy was exacerbating AMC's problems, to the extent that many of its dealers had to be persuaded to stay open.

AMC warned that the company would be bankrupt if Renault did not act on a plan to acquire as much as 59% of the company. In January of 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: he was an engineer and international business executive with over 20 years at Renault. His appointment had a positive impact on a Company that seemed lost. He was credited with streamlining many of AMC's arcane management techniques and instituting important improvements in plant layouts. He was a bear on improving cost and quality control.

By 1983, Renault, having increased their stake in the company several times to keep it solvent, now owned 49%of AMC. At this point, it could be argued that this ended the image of AMC 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.

The Renault/AMC Alliance

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 AMC's Richard Teague and produced at the Kenosha plant. 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 two-door convertible and, later as a hatchback that was introduced in 1984 and badged as the Renault Encore. For the last model year (1987), a higher-performance version of the 2-door sedan and convertible was sold as a Renault GTA.

The new model, introduced at a time of increased interest in small cars, won several awards including the Motor Trend Car of the Year Award. The magazine said: "The Alliance may well be the best-assembled first-year car we’ve ever seen. Way to go Renault!" (note no reference to AMC). But in a 1986 Consumer Reports survey of five-year owners, the 1983 Alliance scored worst in the ratings for its driveline components. Sales, which had begun well, made a steady decline. Alliance production ended in June 1987.

AMC Eagle – All That's Left

By the beginning of the 1984 model year, only a single model line - the four-wheel drive Eagle - represented the AMC brand. All the company’s other products were branded Renault or Jeep.

Introduced in 1980, the Eagle was one of the company's best-known products. It is considered one of the first "crossover SUVs". It used 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. Again, sales started strong, but then declined, mostly because the car's styling dated back to the 1970 Hornet. It did allow the Eagle brand to survive, but only in station wagon form, until 1987 as a 1988 model. The last Eagle was built on December 14, 1987.

Jeep

Most beneficial for any chance of AMC’s survival was an all-new line of compact Jeep Cherokee and Wagoneer models introduced in 1983. These downsized Jeeps pioneered a new market for what later became the sport utility vehicle (SUV) segment.

These vehicles initially used the AMC 2.5 L (153 cu in) OHV four-cylinder engine with a carburetor, with an optional General Motors-built 2.8 L (171 cu in) carbureted V6. In 1986, throttle-body injection replaced the carburetor on the 2.5 L. 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 I6, but introduced with a new cylinder head design and electronic fuel injection, replaced the outsourced GM V6. This 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 - a chassis and sheet metal that dated from 1963. It used the AMC 360 CID V8. Production of the J-Series pickups ceased after 1987. The Grand Wagoneer and its engine would soldier on into the Chrysler era and was finally dropped after 1991.

1985 and Moving Toward the Final Buyout

1985 was a turning point for the Company as the market moved away from AMC's small models - fully embracing the Japanese imports. With fuel relatively cheap again, the remaining buyers turned to the larger more powerful automobiles offered by Ford, Chrysler and GM - and AMC was unprepared for this development, with the Matador gone for almost 10 years. In the midst of this change, the venerable Jeep CJ-5 was dropped after a 60 Minutes TV news exposé of its rollover tendencies under extreme conditions.

At this time, AMC was also confronted by an angry work force, which was falling behind the other US auto workers in wages and benefits - cuts enforced by Renault. 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.

Fortuitously, Chrysler was having trouble meeting demand for its M-body rear-drive models (Dodge Diplomat, Plymouth Gran Fury and Chrysler Fifth Avenue). And as they were assembled using a system that made it easy to move the tooling. A deal was made; Chrysler would supply the components and control the quality, while AMC would assemble the car. As such, Lee Iacocca and Joseph Cappy reached an agreement to use AMC's idle plant capacity in Kenosha.

The declining sales problems came in the midst of a transfer of power at AMC from Paul Tippet to a French executive, Pierre Semerena. The French-based management responded with tactical moves by selling the lawn care division and signing an agreement to build Jeeps in the People's Republic of China.

But at the same time, the US Military voiced a problem with AM General, who was a significant defense contractor, being managed by a French firm. They explained that they could not allow a foreign government to own a significant portion of this important defense supplier. As such, the profitable AM General Division was sold.

Another milestone was the departure of Dick Teague who was AMC's design vice president for 26 years. He had been responsible for many Jeep and AMC designs including the Gremlin, Pacer, Matador Coupe, Rambler American, AMC Javelin and AMX Hornet.

Problems at Renault

Renault was experiencing financial troubles of its own in France. The investment in AMC, which included the construction of the Canadian assembly plant in Brampton, forced cuts at home, resulting in the closure of several French plants and mass layoffs. Renault had three choices: they could declare AMC officially bankrupt thereby lose its investment; they could come up with more money; or AMC could be put up for sale and the French could attempt to get back something on 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

But on November 17, 1986, Georges Besse was assassinated by "Action Directe", a clandestine militant extremist group. The murder was carried out by members of Action Directe's Pierre Overney Commando, who stated that the murder was in retaliation for Besse having sacked tens of thousands of workers - 34,000 from the French aluminum producer PUK-Péchiney, and 25,000 from Renault. With Besse's death, any champions in Renault were silenced.

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 produced M-body rear-drive cars for two years, fed the rumor that Chrysler was about to buy AMC.

In March 1987, Chrysler agreed to buy Renault's share in AMC, plus all the remaining shares, for $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 new Grand Cherokee, then under development. Additional benefits included AMC's recently modernized factories; the AMC dealer network, which would strengthen Chrysler's retail distribution; and last, AMC's then underrated organization and its management talent, which Chrysler quickly assimilated.

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.


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Click on any Images If Below
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1980 Eagle. A good idea - perhaps just too soon.

 

1983 Alliance. It looks dated now, but then it was a breath of fresh air for AMC. Quality problems and recalls killed it - and AMC's reputation.

 

1986 Alliance GT convertible. This was finally a good car, without the quality issues of the earlier versions, but it was too late. Besides, Renault wanted out.

Eagle Station Wagon Ad.

 

 

 

 

 

The 1980 Jeep CJ5. A good vehicle until the Naderites killed it with rollover accusations.

1984 Jeep Cherokee. It was a good seller and a solid design that continued into the Chrysler era - 1996.

1983 Jeep Wagoneer Ad. Again a good seller and a solid design that lasted until 1991.

 

 

 

 

 

   


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