Historiography: The Original Franco-American Affair

If divine foreign intervention did not come in time for an American automaker, the company in question would have probably ceased to exist by 1982.

It is an audacious statement to make where history was thwarted to save a company from extinction. We've seen this many times over the past 30 years where Detroit-based automakers sought alliances and acquisitions with other automakers around the globe. To recall each one would be a massive effort to digest and analyze. Yet, most of the readers of this site have probably forgotten the scenario that put American Motors on the brink before Renault came in to assist them through most of the 1980s.

Ah, yes, AMC. Remember them? Let me refresh your memory…

In 1954, a new company was established as the result of a marriage between the spun off automotive division of the Kelvinator Corporation and an aging, but strong small Detroit automaker. As Nash and Hudson combined operations and product lines, AMC thought to have the innovation and the forward thinking to outsmart the remaining "Big Three." This notion was expanded when AMC purchased the Kaiser Corporation’s last remaining automotive division in 1970 – Jeep.

In the midst of AMC's consolidation, the American auto industry paid their last respects to the Studebaker Corporation in 1966. It was thought that Detroit would remain with four major automakers in place for the duration of the Millennium. Emboldened with Jeep on its side, AMC seemed to have the path towards accomplishing this vision.

Through the OPEC oil crisis and the fallout that put Chrysler on the brink of bankruptcy, AMC had its own failures to work though. Product development at Jeep was virtually stagnant, as AMC took a "if it ain't broke, don't fix it" approach to the iconic sports utility brand. Some products AMC produced were outright failures. The Gremlin was simply a Hornet with a chopped rear end. Plenty of consumers did not view the Gremlin as a competitor to the Ford Pinto, Chevrolet Vega and any imported compact car in the market. The Pacer was simply the wrong vehicle at the wrong time.

Prior to Le Regie's overture at AMC's Southfield headquarters, the two companies had cooperated before in the 1960s. AMC needed an outlet to sell its cars in Europe and Renault agreed to build Rambler Classics and Americans from Completely Knocked-Down kits in France. Renault's North American operation simply imported cars from France to a fickle market. The 5 – known as the LeCar stateside – was seen as a quirky, but semi-fragile alternative to Volkswagen and the Japanese in terms of fuel efficiency and fun to drive aspects. Renault managed to sell enough LeCars and 15/17 coupes to keep afloat in the USA.

This time around, Renault and AMC sought to create a another joint venture involving the manufacture of each other's products for a global market. In 1978, the two companies agreed to such a venture that would benefit both companies – starting an agreement to distribute each of their products in their appropriate markets. Renaults made their way into AMC showrooms in the North America, while Jeeps were being sold at Renault dealers in Europe.

There were plenty of obstacles challenging the foundations of this joint venture. The pressure was on in Southfield to increase fuel efficiency and update the engineering on Jeep products. As the Japanese brands gained serious ground on the marketplace, AMC's and Renault's cars were being passed up for the likes of Honda, Toyota and Datsun. Financial worries were building at AMC to the point where the banks refused to loan more money to the company. This left AMC at risk of shutting down if they cannot make it on its own.

AMC eventually asked Renault for a $90 Million loan to keep things afloat. Instead of lending the money, Renault agreed in January of 1982 to acquire 49% of AMC. AMC simply became part of Le Regie…sort of.

Weeks after the acquisition agreement, Renault sent over a veteran executive, Jose Dedeurwaerder, to Southfield. As President of AMC, Dedeurwaerder reviewed the way the old company did business and made sweeping changes. In no time, Renault's AMC was a leaner operation through streamlined management and manufacturing processes. On the assembly line floors of Kenosha and Toledo, a new technique in building vehicles were introduced – something Renault had instituted worldwide. By the start of the 1983 model year, AMC's own lineup was pared down to the four-wheel drive Eagle wagon – a vehicle originally designed in 1970 as the Hornet Sportwagon.

Meanwhile, Renault supplanted AMC showrooms with their own vehicles. The LeCar effectively replaced the Spirit hatchback. For 1981, the Renault 18 was introduced to replace the Concord sedan and wagon. The 18 was a hit in Europe and Renault hoped for the same success stateside – except it went up against the Honda Accord. Prior to the acquisition agreement, Renault added the Fuego coupe for 1982 – another hit back on the old continent.

Though all of the French-sourced cars were practically visual improvements at AMC dealerships, Renaults weren't exactly problem-free. Despite instituting quality control at Kenosha and Toledo, some may argue that it was all a mask for the quality problems Renault's imported cars embodied. This is why consumers would turn away and head towards the nearest Volkswagen, Toyota, Nissan/Datsun or Honda dealer after a test drive in an 18i or Fuego.

The most important offspring of the acquisition was a couple of upcoming new products that were key parts of the original joint venture agreement back in 1978. Renault originally agreed to have the LeCar built at Kenosha. Instead, the French had a better idea. The compact car market continued to grow with the Volkswagen Rabbit, Toyota Corolla, Honda Civic, Ford Escort, and Nissan Sentra claiming sales from larger, less efficient products. Renault already had a car to compete in this segment – the 9. In Europe, the 9 was hugely touted as France's answer to the Volkswagen and the Ford. The sedan had a very clean and efficient design. Renault and AMC decided that building the 9 at Kenosha instead of the LeCar made more sense for growth in the USA market.

The job went to AMC's Richard Teague to shape the 9 for North America production. He took the simple lines and elements of the 9 and Americanize them. The result was the Alliance – a 9 that wore both the Renault diamond and AMC's logo on it. It looked like the 9, but with elements placating USA regulations and supposed consumer tastes.

The Alliance drew a lot of attention upon its introduction in the fall of 1982. Renault supplied the engines – a 1.4-liter and 1.7-liter. AMC made sure they would have the requisite equipment levels American consumers expect from their cars. As a result of these efforts, Motor Trend awarded their Car of The Year Award for 1983 to the Alliance.

The Alliance was not foolproof. There were some initial quality issues with the Kenosha-built cars. Complaints mounted on the lack of power from the 1.4-liter engine, though the 1.7-liter version wasn't much of a motivator, either. The Alliance attracted enough buyers to keep AMC afloat, but the car was simply outclassed by the likes of the Rabbit, Civic and Sentra.

Following the Alliance, Teague went to work on the hatchback brother to the 9 – the 11. Another strong seller in Europe, the 11 took the Fuego's glass hatch design and melded it onto the 9's basic design. Teague did not touch that part of the 11, but employed the same concepts from the Alliance onto the 11. The Encore debuted for 1984 as a companion to the Alliance on the Kenosha line.

The work of Renault-AMC did not stop with passenger cars. While developing the Renault 9 and 11 for North American consumption, they went to work on a brand new Jeep. In 1982, AMC kicked around the idea of a smaller Jeep SUV based on a brand new platform. The plan for the new product was to retain as much of the Jeep's reputation in strength, durability and four-wheel drive ability and fuse it into a more fuel efficient vehicle with advanced engineering for its segment. It sought to advance Jeep towards the end of the Millennium with such a product.

In the fall of 1983, Renault and AMC introduced the new Jeep Cherokee and Wagoneer. Under the guidance of product developer Francois Castaing, it would become part of the change in American motoring. The smaller Jeep made it easier for Americans to enjoy off-roading, while being civilized enough to take the kids to school or tow a small boat to the lake. As General Motors built a two-door SUV off the S-Truck platform and Ford introduced the Bronco II off the Ranger's chassis, Jeep's Cherokee added a four-door wagon version at the onset. The Cherokee/Wagoneer were the first of the "smaller" SUVs to be built from the ground up – something unheard of at the time from a North American automaker.

Globally, the new Cherokee was seen as comfortable and capable SUV against the likes of the Toyota Land Cruiser, Nissan Patrol, Mitsubishi Montero/Pajero/Shogun and the Range Rover. The Cherokee may not have been driven in the jungles of Asia or the grasslands of Africa, it could do well along the mountainsides of North America and the green lanes of the UK. It simply returned Jeep back into the global arena.

Because of the Cherokee, AMC's stock was ripe for a complete takeover. Renault would not be the one to do it – they were not in the position to acquire anything beyond a majority stake in AMC. However, a resurgent Chrysler was in a shopping mood, led by lee Iacocca's vision of a global powerhouse for the K-Car company. In 1987, Chrysler agreed to buy out Renault's stake in AMC and merge it into the Pentastar family.

The timing was quite interesting for such a move. Renault retooled AMC's Brampton, Ontario plant for production of a North American-designed version of the 25 executive sedan – the Premier. The year before, Renault imported the popular 21 family sedan as the Medallion, with Americanized adaptations to it. It was also ready to nix production of the Eagle 4WD wagon by the time AMC became part of Chrysler. Eagle became the brand for any car sold under AMC or Renault's banner.

The asset Chrysler wanted the most was Jeep. Both Renault and AMC made their money off of the new Cherokee and it became their best selling product at their showrooms. Chrysler knew it had a winner in the Cherokee and the Wrangler as it continued cultivating the brand around these two vehicles.

However, Chrysler also acquired an asset that would help them gain momentum again in the 1990s – AMC's Renault-influenced management processes. When it was time for Chrysler to renew its product line, they threw the K-Car DNA out the window. Instead, Chrysler integrated Renault and AMC's management into the pipeline to create a leaner operation inside its Highland Park headquarters. Castaing changed the way Chrysler developed products by concentrating on an integrated platform-based approach than a traditional separate design and engineering development plan. The result was the follow-up to the Premier – the cab-forward sedans off of the LH platform.

Through its link with Renault, AMC was provided a chance to remain a viable part of North America's automotive industry. In turn, Renault tried to increase their presence in this marketplace. Sometimes, these alliances work, but others do not.

When it was announced 30 years ago that Renault took 49% of AMC, I immediately thought that it would just be Renault and Jeep. In essence it became as such, except there was a market to keep the Eagle 4WD wagon on the lots. I was quite entertained by the newer Renaults – the 18i and Fuego. There's a bit of quirkiness that attracts me to the Renaults of the era – from their ignition keys to some of the shapes inside and out.

Deep down inside – perhaps it's because of my quarter French (OK, Alsatian) heritage – I hoped that the Fuego would work out for our market. I was blinded by its looks without understanding what was lurking underneath them. One could dismiss the level of quality as being relative to the times. It's one thing to design something different to the tastes of another market, but one must be able to match the wants of design and quality to win over those customers.

However, I had no idea how important a part Jeep would play in the ensuing years of the Renault-AMC relationship. I should have seen this coming through the windshield of my dad's 1981 Jeep Grand Wagoneer. I remember when he bought it through one the biggest Jeep retailers of the time, Brian Chuchua's Jeep in Fullerton, California. I had a chance to drive this old school large SUV in the summer of 1982 as a way to get to an Oakland A's game during my post-high school graduation trip to the Bay Area. I always envisioned Jeep's products as a true recreational vehicle – one you take up into the mountains on a weekend of fun. Nothing prepared me for how civilized the Grand Wagoneer was. It did not dawn on me that it was the direction Jeep had in mind once they introduced the smaller Cherokee and Wagoneer a year or so later.

Renault stepped in at the right time to save AMC from oblivion. The venture had not have yielded great results for Renault through its own product line, but by taking Jeep to the next level. What transpired afterward was ripe for AMC's final acquisition by Chrysler. We may have forgotten about the Renault Alliance and the Eagle 4WD wagon, but without Le Regie's 49% investment in AMC 40 years ago – there would be no Jeep for us to enjoy today.

Funny how history sometimes repeats itself…

All photos by Randy Stern

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