On the evening of November 17th, 1986, Georges Besse collapsed in the gutter outside his home in Paris. He had been shot four times in the head and chest, his body covered in blood. His death, while unfortunate, was not the only one that night. It also marked the end of the American Motors Corporation.
The automotive industry landscape in the United States wasn't always almost entirely composed of Ford, General Motors, and Chrysler. There was also the American Motors Corporation, better known as AMC.
AMC was much like the other three, in that it grew by buying other, smaller American brands to amass itself into one big car manufacturing juggernaut. While GM has brands like Chevy and Cadillac and Pontiac and Oldsmobile, AMC had brands like Jeep, Rambler, and Nash. It also sold cars under the AMC name, cars that people were pretty proud of. Like the muscular Javelin:
Photo credit: Brian Snelson
And the oddball Gremlin:
Photo credit: Mike L
But by the mid-1970s, the company was encountering financial trouble. It was the perfect storm when you're trying to run a business – a combination of poor timing, a weak economy, and bad management. Its main factory in Kenosha, Wisconsin, was the oldest in the country, and it was rife with horrible inefficiencies. Assembly points were strewn all over the city, with components and assembled cars having to make a trek pretty much across the Badger State before they could even be readied for delivery.
Cars like the enormous AMC Ambassador were introduced right as the oil crisis was reaching its peak, which isn't exactly what you'd call the "right moment."
The compact little Pacer, while better on fuel than the Ambassador, still had a thirsty straight-six engine that couldn't hope to compete on economy with the new offerings the Japanese were starting to bring over. And it was incredibly expensive to manufacture, which is the opposite of what any company wants for anything.
Basically, AMC was screwed.
The company was hemorrhaging cash. In 1976 and 1977, the company lost the equivalent of nearly $300,000,000 in 2014 dollars. Sales continued to shrink, and despite eking out the smallest of profits in 1978 thanks to Jeep sales, market share had dwindled to less than 2%. If sales of Jeep took a tumble, that would be very dangerous for the company.
Which is exactly what happened, in 1979, when the economy began to trip up a bit. Jeep sales began to decline, and AMC had another crisis on its hands. By 1980, nobody would lend the company money anymore.
Which is a very bad thing, in business.
AMC began to look for a foreign buyer, much like its competitor, Chrysler, would do 20 years later. In December of 1980, it found its savior in the form of Renault, which was owned by the French government at the time.
Yep, what you're thinking is exactly right. A company named American Motors was essentially owned by the French. But, c'est la vie. Might as well play some music, for the rest of your reading:
Renault, to its credit, immediately set about fixing what was wrong at AMC, which was a lot. They streamlined production and manufacturing, which generated some of AMC's highest costs. They brought in new people at the top, to sweep away the archaic management habits of the old company. And they acknowledged their presence by bringing in front-wheel drive Alliance, which was basically a Renault made in Wisconsin.