The idea of a merger was to bring two entities together, find synergies between the two and eventually create a single path towards success. This is a concept that business students study through cases in their coursework. When it comes to practice, the textbook lesson would get lost in translation. Yet, somehow, the merged entity would find some way to move forward…even backward.
This was the case of American Motors. Born from the merger of the Hudson Motor Car Company and the Nash-Kelvinator Corporation in 1954, AMC's history had its share of twists and turns. The highs and lows of AMC were nothing short of entertaining. It is worth a retelling here.
Prior to the 1954 merger, Hudson and Nash had deep histories of their own. Hudson was the older of the two entities, founded in 1909. It began by producing low priced cars that were solid in quality and design. They had their streaks in innovations, by introducing an eight-cylinder engine in 1930 for low-to-middle priced models. By 1936, Hudson were known to have the largest interior space in its class – 145 cubic feet of volume inside, including a 21 cubic foot trunk. Hudson was also known for making trucks alongside players from Studebaker, General Motors, Ford, Chrysler and International Harvester. They would make a huge splash by the start of the 1950s with their entry into the fledgling NASCAR stock car racing circuit with the Hornet. The formula was right – strong, lightweight bodies and a high torque six-cylinder engine – as the Hornet dominated NASCAR from 1951 to 1954.
Nash Motors started in 1916 before the USA went into World War I. By 1937, it merged with home appliance maker Kelvinator, facilitated by business mastermind George W. Mason. As Kelvinator's chief, Mason took on the task of transforming Nash into an innovator in the automotive industry. By 1941, he facilitated the introduction of unit body construction with the 600 model. By the end of the decade, unibody construction took flight in the “bathtub” Nash Airflytes of 1949 and the compact Rambler for 1950. A couple of years later, two collaborations with British automakers would yield more transformative models. With Healey, Nash co-enlisted Italian designer Battista Farina to create a Euro-American roadster before the introduction of the Chevrolet Corvette. The Nash-Healey was an extension of the identity Mason helped present to the world. With 504 examples made, it was a rare beauty indeed. A few of these cars were used to race in Le Mans and the Mille Miglia. However, the most memorable output of the two Anglo-Nash collaborations that would make it here was the small Metropolitan coupes and convertibles. The Metropolitans took the design features of the Rambler and formed it on a classic Austin frame with a small four-cylinder engine plodding the Metro along. It would be a niche product that was aimed at the growing number of European cars in the American market – though it was fully imported from Britain.
In January of 1954, Hudson and Nash entered into a merger. Actually, it was Nash-Kelvinator that bought Hudson through a stock transfer facilitated by Mason. It was almost a four-way acquisition, but Studebaker and Packard ended up backing out of the deal, while forming their own merger. There were talks of component sharing, especially with Packard's Ultramatic automatic transmissions and V8s being used on AMC products. With Nash and Hudson on board, American Motors hit an early low point in its young tenure. On October 8th of 1954, Mason died. His lieutenant, George Romney became the head of the newly formed automobile firm. If that name sounded familiar, Romney would become Governor of Michigan, as well as the father of former Governor of Massachusetts and Republican Presidential candidate in 2012, Mitt.
Under Romney, AMC began a product consolidation that kept both the Nash and Hudson brands going for a few years. Part of that consolidation was an advance on Nash's unibody construction methodology called Double Safe Single Unit body. This debuted in 1956 in the face of larger and longer body-on-frame products being developed by Detroit's "Big Three" – GM, Ford and Chrysler. However, AMC's products were designed to never match the larger, big volume cars that were selling at astounding rates than since the end of World War II. They could be categorized as "mid-sized," if not smaller. Romney and his AMC cohorts touted the Nash and Hudson models as roomy as the larger competitors, as well as safer.
At the end of the 1957 model year, both the Nash and Hudson brands were eliminated. Instead, AMC concentrated on a single-brand strategy that began with the 1958 Rambler, their mainstream product. In the face of the recession that occurred during that year, Ramblers were considered sensible choices, though smaller than the Big Three's mainstream offerings. AMC continued to import the Metropolitan, now under the manufacture of the British Motor Company. A stretched Rambler was also introduced in 1958 using a well-recognized nameplate from Nash, the Ambassador. This model would continue to be AMC's top-of-the-line product for almost twenty years, providing AMC customers with luxury on the level of a Buick or Chrysler without the enormous size.
In the spirit of the original Nash Rambler, AMC continued to produce compact cars for the marketplace. The recession of 1958 was used as an excuse for other automakers to push development of their smaller vehicles. The successor to the original Rambler arrived, introduced as the 1958 American. It was seen as sleeker than other cars in the AMC lineup, which helped the American's cause in its early years.
During 1960 and 1961, the Rambler lineup placed third place in auto sales. Romney oversaw substantial profits for AMC, as well as a balance sheet that was debt free. That enabled AMC to start work on various innovations that would be the envy of other North American automakers. These were engineering advances in brake force distribution and master cylinder design, as well as automatic transmission quadrant indicator design.
In 1962, Romney resigned from AMC to pursue public office. In his place was Roy Abernethy, who would help develop AMC towards head-to-head competition with the Big Three. Under Abernethy, the Ambassador grew in size to start chasing larger mainstream sedans. The Marlin was introduced in 1965 as a fastback coupe that would challenge the growing segments of muscle cars and personal luxury cars. The Rambler name was being shelved on larger models in order to bring out the AMC name more. However, some decisions made by Abernethy almost began to unravel the success of the company. In 1967, Roy Chapin replaced the ousted Abernethy and tried to right the ship. Though the newly designed 1967 Ambassador was doing well, Chapin had the task of pushing new products that could either help or hinder the company's future. In 1968, Chapin oversaw the debuts of the Javelin and AMX as two entrants in the hot ponycar segment. These first generation coupes would become icons for AMC even decades after their introduction.
Meanwhile, Chapin also had the task of negotiating the purchase of the Jeep brand from the Kaiser Corporation. To do so, Chapin had to sell off the Kelvinator business to make room for Jeep. Getting into the sports utility business was not exactly lucrative at the end of the 1960s. Yet, Chapin felt that by bringing in Jeep to AMC showrooms, they would help build sales by leveraging its heritage as the hero of World War II. Jeep's lineup was seen as the ultimate in vehicular freedom and fostering exploration beyond the highway. By the end of the 1960s, Jeep did not just build the direct ascendant to the military Jeep, the CJ5, it also offered a line of pickup trucks, wagons and fun utility products all based on the same four-wheel drive system. Since AMC did not have a truck to sell, bringing in Jeep actually made sense.
Also at the end of the 1960s, AMC had their own product renaissance going on as Jeeps were starting to fill in their showrooms. The Hornet would replace the Rambler American as its compact car. AMC engineers sliced the rear end of a Hornet to create an angular rear end for their subcompact offering – the Gremlin. For 1971, the Matador replaced the Rebel, while the Ambassador was getting a major update. Even the Javelin received a new, larger body. By 1972, AMC had a full lineup of renewed products that looked very good on paper – and in person. However, there were a few things that were swirling around the new headquarters in Southfield, Michigan and at their plants in Wisconsin, Ohio and in Canada.
The Oil Crisis of 1973 put a damper on the sales of large cars. As a result, AMC discontinued the Ambassador in 1974. Meanwhile, they pushed out two products that would challenge AMC's corporate health – the Matador coupe and the Pacer. Though seen as a solution to the oil crisis, the Pacer offered up more problems than it was worth. For the domestic automakers to compete against a growing number of Japanese automobiles, having a wide, bulbous compact hatchback and wagon would prove to be the wrong product decision for AMC. By 1979, AMC had to do something drastic to stay relevant. They concentrated their entire lineup on what used to be called the Hornet. For "normal" cars, two lines were created – Spirit and Concord. Spirits took over for the Gremlin and were sold as hatchbacks, including a sleeker looking coupe. Concords were sedans and wagons that remained on the Hornet platform, but gussied up to look luxurious. On the same platform would be an innovative new product that would actually predict the future – the Eagle. The Eagle was offered in a sedan, hatchback and a wagon, but with a four-wheel drive system developed from Jeep. One could say this would be the foundation for today's crossover, though Subaru also sold four-wheel drive wagons, sedans and coupes at the same time.
Jeep also had some issues during its time under AMC. Quality was one of them. Though still considered a hero of world wars, Jeep products were seen as benchmarks for other manufacturers to follow. Yet, it seemed that GM, Ford and Chrysler were building better SUVs by the end of the 1970s. Jeep needed something to show they still "wrote the book on four-wheel drive." The Wagoneer had been around since 1964 as family transport for mountain dwellers. Someone at AMC thought it was a great idea to add leather upholstery, high pile carpeting and equip it with every option available to create something that would be commonplace today – the luxury SUV. Originally called the Wagoneer Limited, the Grand Wagoneer would become the staple of well-heeled outdoorspeople way before the arrival of the Cadillac Escalade and the Lincoln Navigator.
A reconstituted product line could not mask the financial problems AMC were experiencing in the late 1970s and early 1980s. The only way AMC could survive was through collaboration with another manufacturer. That came in the guise of Renault, a company that had already done business with AMC going back to the 1950s. In the 1970s, Renault served as importer of Jeeps to Europe and other markets, which they knew were a great asset to possibly control. AMC began selling Renaults in their showrooms to augment slipping sales and market share. By 1982, Renault took control of AMC.
Later in the year, Renault debuted their plan to save AMC. First, to keep Jeep intact, but help develop a new SUV under that brand. Secondly, to revamp the car lineup with American-built versions of Renaults. The result of the latter would be the Renault Alliance and Encore – Americanized versions of the Renault 9 and 11 respectively. AMC would only sell the Eagle, mainly because it augmented the Jeep lineup. Renault continued to sell the Le Car (Renault 5), 18i and Fuego for the time being.
In late 1983, the SUV arrived – the Jeep Cherokee and Wagoneer. They would revolutionize the entire business. Built on a smaller unibody platform, the Cherokee would exhibit the best of Jeep’s legendary capability in a smaller package. This vehicle proved to a huge hit for Renault and AMC. It would also be the focal point of the company's next chapter.
Over at Chrysler, Lee Iacocca and his company were enjoying the fruits of their rebound based on products underpinned by the K-Car platform. They reinvented the automobile by introducing the minivan to the world, while ensuring a tight revenue stream that enabled development off of a few platforms across the company. Yet, they wanted to compete in the Jeep's arena, one that was growing tremendously thanks to the Cherokee. At the same time, Renault was losing face in America. Though the Alliance and Encore were innovative in their own ways, no one was buying them. Renault had a plan to further beef up their car lineup again by importing the new mid-sized 21 as the Medallion and build an all-new large sedan based off of the 25 called the Premier. Another plan was also developed by Renault for Jeep which would further the success of the new Jeep platform – the vehicle would eventually be called the Grand Cherokee.
All of these projects were driven by Renault Chairman Georges Besse, a man who was charismatic and a target of his own workers. At one time, Besse was blamed for the layoff of 25,000 workers in France at Renault. This led to his Besse’s assassination in 1986. From that point, Renault began to lose focus on its own direction – including its operations at AMC.
By 1987, Renault sold their American Motors units to Chrysler. Along with the Jeep brand and some outstanding contracts to sell rebadged Renault products at former AMC dealerships, they also were given keys to the Premier and Grand Cherokee projects – along some of the most innovative engineers and managers in Southeastern Michigan. Those former AMC and Renault employees would play a huge part at Chrysler towards the end of Lee Iacocca's tenure as Chairman. People, such as Francois Castaing, were seen as outsiders to the world of Chrysler. They embodied a potential change in the way Chrysler would develop future vehicles – through integrative teams tasked to work on specific platforms. By being change agents within Chrysler, aided by the championing of then-Chrysler executive Bob Lutz, they prepared the Pentastar towards a future beyond Iacocca prior to the "merger of equals" with Daimler AG. With Castaing and the former Renault and AMC employees, the idea of "cab-forward" design was implemented.
The last vestige of Renault in the United States carried on through the Eagle brand. Eagle was the name given to those former Renault and AMC dealers folded into the Chrysler family. These dealers would continue through 1998 by first selling "legacy" models from Renault, AMC and Mitsubishi. In the end, the joint force of Daimler-Chrysler deemed the brand redundant. The Jeep brand would become a beacon for the Chrysler side of the house and the only remaining asset from the AMC acquisition.
American Motors was the last of the independents. They survived many attritions of the automotive industry, while offering a different kind of product in the marketplace. By being independent, the joint efforts of Nash, Hudson, Jeep and Renault would build a company that offered innovation even if it was not evident for most of its history. Yet, the legacy continues as its vehicles still roam on our roads – in lesser numbers these days. Though that number is actually larger, if you count the innovations brought forward by its former employees onto Chrysler's "cab forward" vehicles – namely the LH platform full-sized sedans.
From merger to acquisition to eventual merger, American Motors was one heck of a ride indeed.