American Motors Corporation (AMC; commonly referred to as American Motors) was an American automobile manufacturing company formed by the merger of Nash-Kelvinator Corporation and Hudson Motor Car Company on May 1, 1954. At the time, it was the largest corporate merger in U.S. history.
American Motors' most similar competitors were those automakers that held similar annual sales levels, such as Studebaker, Packard, Kaiser Motors, and Willys-Overland. Their largest competitors were the Big Three—Ford, General Motors, and Chrysler.
American Motors' production line included small cars—the Rambler American, which began as the Nash Rambler in 1950, Hornet, Gremlin, and Pacer; intermediate and full-sized cars, including the Ambassador, Rambler Classic, Rebel, and Matador; muscle cars, including the Marlin, AMX, and Javelin; and early four-wheel drive variants of the Eagle and the Jeep Wagoneer, the first true crossovers in the U.S. market.
Regarded as "a small company deft enough to exploit special market segments left untended by the giants", American Motors was widely known for the design work of chief stylist Dick Teague, who "had to make do with a much tighter budget than his counterparts at Detroit's Big Three", but "had a knack for making the most of his employer's investment".
After periods of intermittent independent success, Renault acquired a significant interest in American Motors in 1979, and the company was ultimately acquired by Chrysler in 1987.
1954 formation
In January 1954, Nash-Kelvinator Corporation began the acquisition of the Hudson Motor Car Company (in what was called a merger). The new corporation would be called the American Motors Corporation. An earlier corporation with the same name, co-founded by Louis Chevrolet, had existed in Plainfield, New Jersey, from 1916 through 1922 before merging into the Bessemer–American Motors Corporation.
The Nash-Kelvinator/Hudson deal was a straight stock transfer (three shares of Hudson listed at , for two shares of American Motors and one share of Nash-Kelvinator listed at , for one share of American Motors) and finalized in the spring of 1954, forming the fourth-biggest auto company in the U.S. with assets of US$355 million and more than $100 million in working capital. The new company retained Hudson CEO A.E. Barit as a consultant and he took a seat on the board of directors. Nash's George W. Mason became president and CEO.
Mason, the architect of the merger, believed that the survival of the U.S.'s remaining independent automakers depended on their joining to form one multiple-brand company capable of challenging the Big Three as an equal. The "frantic 1953–54 Ford/GM price war" devastated the remaining "independent" automakers. The reasons for the merger between Nash and Hudson included helping cut costs and strengthen their sales organizations to meet the intense competition expected from autos' Big Three.
One quick result from the merger was the doubling up with Nash on purchasing and production, allowing Hudson to cut prices an average of $155 on the Wasp line, and up to $204 on the more expensive Hornet models. After the merger, AMC had its first profitable quarter during the second three months of 1955, earning $1,592,307, compared to a loss of $3,848,667 during the same period in the previous year. Mason also entered into informal discussions with James J. Nance of Packard to outline his strategic vision. Interim plans were made for American Motors to buy Packard Ultramatic automatic transmissions and Packard V8 engines for certain American Motors products.
In July 1954, Packard acquired Studebaker. The new Studebaker-Packard Corporation (S-P) made the new Packard V8 engine and Packard's Ultramatic automatic transmission available to American Motors for its 1955 Nash Ambassador and Hudson Hornet models. When Mason died in 1954, George W. Romney succeeded him. Ironically, Romney had once been offered Nance's job. In 1948, Romney received offers from Packard for the post of chief operating officer and from Nash for the number two position in the company. Although the Packard offer would have paid more, Romney decided to work under Mason because he thought Nash had a brighter future. Studebaker-Packard president James Nance refused to consider merging with American Motors unless he could take the top position (Mason and Nance were former competitors as heads of the Kelvinator and Hotpoint, respectively), and a week after Mason's death, Romney announced "there are no mergers under way either directly or indirectly." Romney agreed with Mason's commitment to buy S-P products. Mason and Nance had agreed that S-P would endeavor to purchase parts from American Motors in return, but S-P did not do so. As the Packard engines and transmissions were comparatively expensive, American Motors began development of its own V8. American Motors also spent US$40 million developing its Double Safe Single Unit monocoque, which debuted in the 1956 model year. In mid-1956, the Packard V8 and TwinUltramatic transmission were phased out and replaced by American Motors's new V8 and by GM Hydra-Matic and Borg-Warner transmissions.
Product development in the 1950s
Product consolidation
American Motors combined the Nash and Hudson product lines under a common manufacturing strategy in 1955, with the production of Nashes and Hudsons consolidated at the Nash plant in Kenosha. The Detroit Hudson plant was converted to military contract production and eventually sold. The separate Nash and Hudson dealer networks were retained. The Hudsons were redesigned to harmonize with Nash's body styles.
The fast-selling Nash Rambler model was sold as a Nash and a Hudson in 1955 and 1956. These badge-engineered Ramblers, and similarly the small Metropolitans, were identical except for the hubcaps, nameplates, and other minor trim.
The pre-existing full-size Nash product line was continued with the Nash Statesman restyled as the "new" Hudson Wasp and the Nash Ambassador restyled as the Hudson Hornet. Although the cars shared the same body shell, they were at least as different from one another as Chevrolet and Pontiac. Hudsons and Nashes each used their engines as they had previously: the Hudson Hornet continued to offer the I6 that had powered the (NASCAR) champion during the early 1950s; the Wasp now used the former engine of the Hudson Jet.
The Nash Ambassador and Statesman continued with overhead- valve and L-head sixes, respectively. Hudson and Nash cars had different front suspensions. Trunk lids were interchangeable, but other body panels, rear window glass, dash panels, and braking systems differed. The Hudson Hornet, Wasp, and their Nash counterparts had improved ride, visibility, and fuel economy because of their lighter unitized Nash body.
The larger Nash and Hudson range did not sell well, and AMC lost money each year. Dismayed with the results, Romney decided in 1956 that the company's future lay with the compact Rambler line. Romney halted production on the new large cars and focused entirely on the new Rambler Six and V8 introducing them in 1956, despite being scheduled for a 1957 release. Sales of the new Ramblers were poor, and sales of the Hudson and Nash models were almost non-existent, resulting in a $31.7 million operating loss for 1956. Sales improved in 1957, but the company saw a $11.8 million loss. In response, Romney launched a massive public relations campaign, traveling nationwide in 12 months. Romney spoke at union halls, dinners, churches, fairgrounds, and radio and TV stations. He was anywhere where he could get the word out about Rambler. Rambler sales took off in 1958, up 58.7%, and 425 new dealers were signed up. As a result, 1958 became AMC's first year of profitability since its formation, with $28 million in earnings. The Nash and Hudson brands were dropped, and Rambler became a marque in its own right and the mainstay of the company. The popular British-built Metropolitan subcompact continued as a standalone brand until it was discontinued in 1961. The prototype 1958 Nash Ambassador/Hudson Hornet, built on a stretched Rambler platform, was renamed at the last minute as "Ambassador by Rambler". To round out the model line, American Motors reintroduced the previous 1955, wheelbase Nash Rambler as the new Rambler American with only a few modifications. This gave Rambler a compact lineup that included the reintroduced American, the wheelbase Rambler Six and Rebel V8, as well as the wheelbase Ambassador.
The "dinosaur-fighter"
Sales of Ramblers soared in the late 1950s partly because of American Motors' focus on the compact car and its marketing efforts. These included sponsoring the hugely popular Walt Disney anthology television series and as an exhibitor at the Disneyland theme park in Anaheim, California. George Romney himself pitched the Rambler product in television commercials.
While the "Big Three" introduced ever-larger cars, American Motors followed a "dinosaur-fighter" strategy. George W. Romney's leadership focused the company on the compact car, a fuel-efficient vehicle 20 years before there was a real need for them. This gave Romney a high profile in the media. Two core strategic factors came into play: (1) the use of shared components in American Motors products and (2) a refusal to participate in the Big Three's restyling race. This cost-control policy helped Rambler develop a reputation for building solid economy cars. Company officials were confident in the changing market and in 1959 announced a $10 million (US$ today) expansion of its Kenosha complex (to increase annual straight-time capacity from 300,000 to 440,000 cars). A letter to shareholders in 1959 claimed that the introduction of new compact cars by American Motors' large domestic competitors (for the 1960 model year) "signals the end of big-car domination in the U.S." and that American Motors predicts small-car sales in the U.S. may reach three million units by 1963.
American Motors was also beginning to experiment with non-gasoline-powered automobiles. On April 1, 1959, American Motors and Sonotone Corporation announced a joint research effort to consider producing an electric car that was to be powered by a "self-charging" battery. Sonotone had the technology for making sintered plate nickel–cadmium batteries that can be recharged very rapidly and are lighter than a typical automobile lead–acid battery.
In 1959, American Motors hired designer Dick Teague, who had previously worked for General Motors, Packard, and Chrysler; after Edmund E. Anderson left the company in 1961, Teague was named principal designer and in 1964, vice president.
Changing focus in the 1960s
Innovation
To stay competitive, American Motors produced a wide range of products during the 1960s and added innovations long before the "Big Three" introduced them.
For example, the Rambler Classic was equipped with a standard tandem master cylinder in 1962 that provided stopping ability even if there was a failure in the brake system. Only Cadillac also included this safety feature six years before U.S. safety regulations required it on all cars.
Rambler also was an early pioneer in offering an automatic shift indicator sequence (P R N D2 D1 L, where if one selected "D2", the car started in second gear, while "1" began in first gear) on its "Flash-O-Matic" transmission which is similar to today's "PRNDSL" shift pattern, made mandatory for the 1968 model year cars, which required a neutral position between reverse and drive, while General Motors still offered a shift selector that had reverse immediately next to low gear (PNDSLR) well into the 1960s.