DTW recalls the alliance between Renault and American Motors Corporation that proved highly damaging to the French automaker and had fatal consequences.
American Motors Corporation (AMC) was long the plucky underdog of the US automotive industry, always struggling to compete on equal terms with the ‘Big Three’ of General Motors, Ford and Chrysler. AMC had itself been formed from the 1954 merger of Nash Kelvinator Corporation and the Hudson Car Company(1). This was a merger driven out of weakness rather than strength, as neither partner had the financial or technical resources to continue independently.
With a market share of just 4%, AMC was still a fraction of the size of the Big Three, but there was a larger plan in play, devised jointly by George Mason, President of Nash-Kelvinator, and James Nance, President of the Packard Motor Car Company. Packard would acquire the rival Studebaker Corporation, then AMC and what became the Studebaker-Packard Corporation would merge to form a single large company to compete on more equal terms.
Unfortunately, Mason’s untimely death in October 1954 at the age of 63 brought an end to the larger plan. Mason’s successor, George Romney, wanted AMC to continue independently and concentrate on small cars, a market segment of less interest to the Big Three. The legacy marques were retired in 1958 in favour of Rambler and Metropolitan, the latter used only on a small car manufactured by Austin and imported from the UK from 1953 to 1961.
Romney left the company in 1962 to pursue a political career and his successor, Roy Abernethy, reintroduced larger models to try and improve its financial performance. The company enjoyed periods of profitability during the 1960’s and the Rambler brand was replaced by AMC in 1966. However, the increasing cost of developing new models to remain competitive was becoming unsustainable for AMC, given the company was still very much a minor player in terms of sales.
Abernethy’s successor, Roy Chapin, made a very astute acquisition of the Kaiser Jeep 4WD utility vehicle business in 1970. This gave AMC access to proven 4WD technology and a different market segment, where it was the leading player. In the same year AMC introduced the Hornet, a compact saloon that would become the bedrock of the company’s range. The Hornet was replaced by the Concord in 1977, but the latter utilised the platform and many of the mechanical components of its predecessor.
The Hornet platform would also provide the basis for the Gremlin subcompact and its 1979 successor, the Spirit. AMC employed its 4WD technology on the Eagle, another derivative of the Hornet, which established a niche for itself as a passenger car for arduous rural driving conditions. It was, in effect, the first crossover in the modern sense. One controversial addition to the AMC range was the 1975 Pacer, dubbed “the first small wide car” with unusual proportions, a rounded shape and large glass area. It was an object of mirth for many but has since acquired something of a cult following.
By the late 1970’s however, AMC’s range was looking increasingly threadbare and dated. The large Matador saloon and Pacer subcompact were discontinued in 1979 and 1980 respectively, so what remained was based on a single architecture that was over a decade old. AMC’s market share had dropped to just 2%
AMC needed a partner to inject capital and help develop new models, and that partner would be Renault. Initially, the French company injected US$150 million new capital into AMC, primarily for access to the company’s dealer network. Renault’s presence in the US market was tiny, having never recovered from the debacle of the Dauphine, the last Renault to sell in serious numbers there. The fragile Dauphine proved to be totally unsuited to US conditions, either breaking down or rusting away at an alarming rate.
Unable to persuade its banks to extend further credit, AMC shareholders voted in favour of a Renault takeover in December 1980. A plan was formed for AMC to manufacture and sell Americanised versions of Renault models. The first such models were the Alliance and Encore, based on the Renault 9 and 11 respectively. Consideration was given to selling the models under the AMC brand, but market research indicated a somewhat more positive perception of the French marque, so they would be sold as Renaults, albeit with discreet AMC logos on the publicity materials.
The Alliance was launched in June 1982 as an 1983 model, in two and four-door saloon forms. The most obvious visual change over the European 9 was the adoption of twin standardised(2) rectangular headlamp units instead of the 9’s model-specific single units. The twin headlamp design was also incorporated on European specification Renault 11 models. The Alliance was well received and sold over 140,000 units in its first year on the market. The Encore was launched in 1984 in three and five-door hatchback forms. The additional variants boosted sales to over 200,000 units in that year, helping to return AMC to profitability for the first time since 1979.
Trouble was brewing for Renault at home, however. Faltering European sales and the cost of its North American investments, including a new manufacturing plant in Canada, had pushed the parent company into losses. Georges Besse was appointed chief executive of Renault in January 1985 with a mandate to stem the company’s losses and improve efficiency. Besse instigated a plan to close plants and lay off 21,000 workers. This was bitterly opposed by the auto unions, as was his continued support for the AMC operation, which was characterised as the company ‘exporting’ French jobs to North America.
Shockingly, Besse was assassinated outside his Paris home on 17th November 1986. An anarchist group, Action Directe, later claimed responsibility for the killing, citing Besse’s Renault strategy as the motivation(3). At trial, four members of the group pleaded not guilty but were convicted, two for murder and two for conspiracy to murder.
Besse’s successor at Renault, Raymond Levy, allegedly under pressure from his fearful senior colleagues and French President François Mitterrand, undertook a review of the AMC operation. Sales of the Alliance and Encore were faltering because of a growing reputation for unreliability and poor dealer support. Low petrol prices were encouraging American motorists to trade up to larger cars, where AMC had no presence. Levy started the search for a buyer for Renault’s stake in AMC.
A federalised version of the Renault 21 called the Medallion was launched on 1st March 1987 as a delayed replacement for the AMC Concord, which had stopped production in 1983. The Medallion was not built by AMC but was a ‘captive’ import from France. Just over a week later, Chrysler Corporation agreed to buy Renault’s stake in AMC.
In September 1987, the model for which the new Canadian AMC plant had been built, the Premier, was launched. Based on the Renault 25, the Premier featured a new three-box body styled by Italdesign, which was smooth and contemporary with a drag coefficient of just 0.31, but possibly erring towards blandness. The Premier was an even longer delayed replacement for the AMC Matador, which had stopped production in 1979.
Because Renault no longer had any involvement, Chrysler chose to invent a new marque, Eagle, for the Premier, rather than try to resurrect AMC. The Alliance and Encore models had been discontinued by Chrysler in June 1987 because they were regarded as unwanted competition to Chrysler’s own small cars, and sales had fallen dramatically in any event.
The Medallion was rebranded Eagle in late 1988 for the 1989 model year but was discontinued after just twelve more months. The Premier, also sold as the Dodge Monaco, limped on until the end of 1991. Both Renault-derived models were dismissed by Chrysler Chairman Bob Lutz as “salesproof” in his 1998 memoir ‘Guts’. A total of 139,051 Premier and Monaco models were built over four years, far short of the projected annual sales of 150,000.
Renault retreated from the US again and has not returned since. AMC posted losses of US$767 million while under Renault ownership, while Renault itself posted losses of US$6 billion over the same period(4). Far worse than the financial losses, however, was the murder of Georges Besse, the most tragic consequence of Renault’s deadly American misadventure.
(1) Technically, Nash acquired Hudson.
(2) The 165 x 100mm unit was one of the standardised sizes mandated by Federal Motor Vehicle Safety Standard 108. The intention of this standard was to ensure that a replacement headlamp could immediately be found at any local gas station, should one fail or be damaged.
(3) Bernard Hanon, Renault’s former CEO whom François Mitterand had fired and replaced with Besse, remarked later in conversation with designer Robert Opron that Mitterand had “saved his life”. Apparently, Hanon’s name was on Action Directe’s hit-list but was removed and replaced with Besse’s after the former had been sacked. The conversation is quoted in Peter Pijlman’s book, Robert Opron: L’automobile et L’Art.
(4) Data from Automotive News Europe http://www.europe.autonews.com