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== Financial developments, Renault partnership == === Late 1970s === [[File:1978 AMC Concord DL 4-door sedan beige.jpg|thumb|right|1978 AMC Concord]] [[File:1979 AMC Spirit liftback light blue NC-r.jpg|thumb|right|AMC Spirit liftback]] [[File:Jeep Grand Wagoneer white NC f.jpg|thumb|right|Jeep Grand Wagoneer]] In February 1977, ''Time'' magazine reported that although American Motors had lost $73.8 million in the previous two fiscal years, U.S. banks had agreed to a year's extension for a $72.5 million credit that had expired in January, that stockholders had received no dividends since 1974, and that Pacer sales did not match expectations. However, Time noted record Jeep sales and a backlog of orders for AM General's buses.<ref>{{cite magazine |url= http://www.time.com/time/magazine/article/0,9171,914814-2,00.html |archive-url= https://web.archive.org/web/20100828111708/http://www.time.com/time/magazine/article/0,9171,914814-2,00.html |archive-date= August 28, 2010 |url-access=subscription |title=American Motors Hangs In There|magazine=Time|date=February 14, 1977|access-date=August 31, 2012}}</ref> In July 1977, it was announced that the [[General Services Administration]] of the Federal U.S. government had awarded AMC a three-year contract worth $15 million to lease 5,838 cars. Since the beginning of the fiscal year on October 1, 1976, the GSA had purchased 8,700 cars from AMC for $30 million.<ref>{{cite web|title=Hotline News: Top News in Fleet and Leasing Large Lease Contract Goes to AMC |date=July 1, 1977 |url= https://www.automotive-fleet.com/147091/hotline-news-top-news-in-fleet-and-leasing-2 |work=Automotive Fleet |access-date=November 15, 2023}}</ref> On October 21, 1977, Roy Chapin Jr. retired, and Gerald C. Meyers became chairman and CEO.<ref name=ward/> On March 31, 1978, American Motors and Renault announced a sweeping agreement for jointly manufacturing and distributing cars and trucks that would benefit both.<ref>{{cite news|first=Reginald|last=Stuart|title=Joint Manufacture Planned In Accord By A.M.C., Renault; Distribution Also Covered |url= https://www.nytimes.com/1978/04/01/archives/joint-manufacture-planned-in-accord-by-amc-renault-distribution.html |url-access=subscription |access-date=August 9, 2010 |newspaper=The New York Times |date=April 1, 1978 |page=27 |archive-date=June 11, 2019 |archive-url= https://web.archive.org/web/20190611045005/https://www.nytimes.com/1978/04/01/archives/joint-manufacture-planned-in-accord-by-amc-renault-distribution.html |url-status=live}}</ref> A month later, American Motors announced that it would halt the production of standard urban [[transit bus]]es after about 4,300 were sold by its AM General subsidiary over a period of three years.<ref>{{cite news|title=A.M.C. to Halt Building Standard Transit Buses |url= https://www.nytimes.com/1978/06/01/archives/amc-to-halt-building-standard-transit-buses-4300-vehicles-sold-over.html |url-access=subscription |access-date=August 9, 2010 |newspaper=The New York Times |date=June 1, 1978 |page=D4 |archive-date=February 15, 2022 |archive-url= https://web.archive.org/web/20220215053425/https://www.nytimes.com/1978/06/01/archives/amc-to-halt-building-standard-transit-buses-4300-vehicles-sold-over.html |url-status=live}}</ref> In May 1978, the U.S. Environmental Protection Agency ordered the recall of all American Motors's 1976 cars (except those conforming to California emissions regulations) – some 270,000 vehicles— plus 40,000 1975 and 1976 Jeeps and mini trucks, for correction of a fault in the pollution control system. Total cost was estimated at up to $3 million, or more than AMC had earned the previous quarter.<ref>{{cite magazine |url= http://www.time.com/time/magazine/article/0,9171,919677,00.html |archive-url= https://web.archive.org/web/20080307194638/http://www.time.com/time/magazine/article/0,9171,919677,00.html |archive-date=March 7, 2008 |url-access=subscription |title=AMC's Almost Total Recall |magazine=Time |date=May 22, 1978|access-date=July 29, 2010}}</ref> American Motors lost an estimated $65 million on its conventional (non-Jeep) cars for the fiscal year that ended September 30, 1978, but strong Jeep sales helped the company to an overall $36.7 million profit on sales of $2.6 billion. However, American Motors faced costly engineering work to bring their Jeeps into compliance with a federal directive for all 4-wheel-drive vehicles to average {{convert|15|mpgus|L/100 km mpgimp|abbr=on}} by 1981.<ref>{{cite magazine |url= http://www.time.com/time/magazine/article/0,9171,916539,00.html|archive-url= https://web.archive.org/web/20101014110944/http://www.time.com/time/magazine/article/0,9171,916539,00.html|archive-date= October 14, 2010|url-access=subscription|title=Money Machine|magazine=Time|date=December 18, 1978|access-date=July 29, 2010}}</ref> In December 1978 the government of [[Iran]], embroiled in the [[Iranian revolution]], cut off oil exports to the world. This caused a devastating effect on all American automobile makers and American consumers. Gasoline prices jumped 52 percent between September and December 1979. Each of the [[Big Three (automobile manufacturers)|Big Three]] (Ford, General Motors, Chrysler) lost money throughout 1979 leading to Chrysler becoming insolvent and considering bankruptcy by September. Ford survived only because of its European operations, eventually losing $7 billion in domestic sales from 1979 to 1982. [[1979 oil crisis|During the crisis]], and with its domestic market share at 1.83%, American Motors struck a deal with Renault, the nationally owned French automaker in October 1979. AMC would receive a $150 million cash injection, $50 million in credits, and also the rights to start building the [[Renault 5]] in 1982<ref name=accent>{{cite magazine |url= http://www.time.com/time/magazine/article/0,9171,947525,00.html|archive-url= https://web.archive.org/web/20091026235427/http://www.time.com/time/magazine/article/0,9171,947525,00.html |archive-date= October 26, 2009 |url-access=subscription |title=French Accent |magazine=Time |date=October 22, 1979 |access-date=July 29, 2010}}</ref> (a deal for Renault products to be sold through the American Motors-Jeep dealer network had already been made in 1979).<ref>{{cite web |url= http://www.amxfiles.com/amc/part5.html|title=Endgame: Renault and Jeep |publisher=AMX-files |access-date=August 31, 2012 |archive-url= https://web.archive.org/web/20090525103845/http://www.amxfiles.com/amc/part5.html |archive-date=May 25, 2009}}</ref> In return, Renault acquired a 22.5% interest in American Motors.<ref name=accent/> This was not the first time the two companies had worked together. Lacking a prestige model line in the early 1960s, Renault assembled [[Complete knock down|CKD]] kits and marketed Rambler cars in France.<ref>{{cite web |url= http://blog.doctissimo.fr/phedor/cimetiere-oubliees-rambler-2264660.html |title=Le Cimetiere Des Autos Oubloees: Renault Rambler (1962–67) |publisher=The graveyard of forgotten cars |language=fr |date=April 4, 2007 |access-date=August 31, 2012 |archive-url= https://web.archive.org/web/20150222211612/http://blog.doctissimo.fr/phedor/cimetiere-oubliees-rambler-2264660.html |archive-date=February 22, 2015}}</ref> In 1979, American Motors announced a record $83.9 million profit on sales of $3.1 billion (US${{formatnum:{{Inflation|US|3100000000|1979}}}} in {{Inflation-year|US}} dollars{{inflation-fn|US}}) for the fiscal year ending in September—this despite an economic downturn, soaring energy prices, rising American unemployment, automobile plants shutting down, and an American market trend towards imported cars.<ref>{{cite magazine |url= http://www.time.com/time/magazine/article/0,9171,948805,00.html|archive-url= https://web.archive.org/web/20101015203415/http://www.time.com/time/magazine/article/0,9171,948805,00.html |archive-date= October 15, 2010 |url-access=subscription |title=AMC's Charge |magazine=Time |date=November 19, 1979 |access-date=July 29, 2010}}</ref> ===1980s=== A drop in Jeep sales caused by the declining economy and soaring energy prices began to constrict American Motors' cash flow. At the same time, pressure increased on the company's non-Jeep product lines. The face-lifts and rebranding of American Motors' once-innovative and successful cars were not enough in a competitive landscape that had changed dramatically. No longer was the threat limited to the [[Big Three (automobile manufacturers)|Big Three]] automakers ([[General Motors]], [[Ford Motor Company|Ford]], and [[Chrysler]]). In response to the [[1979 oil crisis]], the Big Three had resorted to importing foreign motor vehicles, mainly Japanese models. Japanese models were mass-marketed and had lower manufacturing costs.<ref name="University of Michigan Press">{{Cite book |url=https://www.jstor.org/stable/10.3998/mpub.18647 |title=The Japanese Automotive Industry: Model and Challenge for the Future? |date=1981 |publisher=University of Michigan Press |isbn=978-0-939512-08-9 |doi=10.3998/mpub.18647|jstor=10.3998/mpub.18647 |editor-last1=Cole |editor-first1=Robert }}</ref> By the end of 1980 Japanese manufacturers surpassed Detroit's production totals, becoming first in the world. Indeed, the share of Japanese cars in U.S. auto purchases rose from 9 percent in 1976 to 21 percent in 1980.<ref name="University of Michigan Press"/> The Japanese manufacturers ([[Honda]], [[Toyota]], and [[Nissan]]) used streamlined production methods such as outsourcing and [[Just In Time (business)|Just In Time]] (JIT) supply-chain management. They had new, highly efficient assembly plants in the United States. And now they targeted the heart of American Motors' passenger product line: small cars. While Americans turned to the new imports in increasing numbers, American Motors continued its struggle at the inefficient and aging downtown [[Kenosha, Wisconsin]], facilities—the oldest continuously operating automobile plant in the world, where components and unfinished bodies still had to be transported across the city. In early 1980, the banks refused American Motors further credit. Lacking both capital and resources for the new, truly modern products it needed to offer, the company turned to Renault for a $90 million loan (US${{formatnum:{{Inflation|US|90000000|1980}}}} in {{Inflation-year|US}} dollars{{inflation-fn|US}}).<ref>{{cite magazine |url= http://www.time.com/time/magazine/article/0,9171,924408-8,00.html|archive-url= https://web.archive.org/web/20071130033908/http://www.time.com/time/magazine/article/0,9171,924408-8,00.html|archive-date= November 30, 2007|url-access=subscription|title=Detroit's Uphill Battle |magazine=Time|date=September 8, 1980|access-date=July 29, 2010|first1=Alexander |last1=Taylor III |first2=Christopher |last2=Redman |first3=Barrett |last3=Seaman}}</ref> By September that year, American Motors's U.S. market share had fallen to 1.7%, and in November sales dropped 19.1%. American Motors warned stockholders that the company could be bankrupted if they did not approve a plan for Renault to acquire as much as 59% of the company.<ref>{{cite magazine |first1=Alexander |last1=Taylor |first2=Christopher |last2=Redman |url= http://www.time.com/time/magazine/article/0,9171,922223-2,00.html |archive-url= https://web.archive.org/web/20121105153045/http://www.time.com/time/magazine/article/0,9171,922223-2,00.html |archive-date=November 5, 2012 |url-access=subscription |title=Detroit's Road Is Still Rocky |magazine=Time|date=December 15, 1980 |access-date=July 29, 2010}}</ref> On December 16, 1980, American Motors shareholders "overwhelmingly approved making the French Government-owned Renault" their company's principal owner.<ref name="Peterson D1">{{cite news |first=Iver |last=Peterson |title=A.M.C. Raises Renault's Stake; A.M.C.-Renault Plan Set |url= https://www.nytimes.com/1980/12/17/archives/amc-raises-renaults-stake-amcrenault-plan-set.html |url-access=subscription |access-date=August 9, 2010 |newspaper=The New York Times |date=December 17, 1980 |page=D1 |archive-date=August 11, 2020 |archive-url= https://web.archive.org/web/20200811021323/https://www.nytimes.com/1980/12/17/archives/amc-raises-renaults-stake-amcrenault-plan-set.html |url-status=live }}</ref> Jean-Marc Lepeu, former corporate treasurer at Renault, became vice president for finance at American Motors. In September 1981, [[Jose Dedeurwaerder]], a Renault veteran of 23 years, mainly in manufacturing, became American Motors' executive vice president for manufacturing.<ref>{{cite news |title=AT (Franco-)American Motors, Paris Takes the Wheel |first=James |last=Risen |date=February 7, 1982 |newspaper=The New York Times |url= https://www.nytimes.com/1982/02/07/business/at-franco-american-motors-paris-takes-the-wheel.html |access-date=November 4, 2019 |archive-date=February 15, 2022 |archive-url= https://web.archive.org/web/20220215001659/https://www.nytimes.com/1982/02/07/business/at-franco-american-motors-paris-takes-the-wheel.html?searchResultPosition=68 |url-status=live }}</ref> In January 1982, the company's president [[W. Paul Tippett Jr.]] replaced Gerald C. Meyers as chairman and CEO, and Dedeurwaerder moved up to be president.<ref>{{cite magazine |url= http://content.time.com/time/magazine/article/0,9171,921599,00.html|url-access=subscription|first=John S. |last=Demott |title=On the Comeback Trail |magazine=Time |date=March 12, 1984 |access-date=August 20, 2019}}</ref> By this time Renault owned 46% of American Motors. Dedeurwaerder brought a broad perspective at this critical time: he is credited with streamlining many of American Motors' arcane management techniques. He also instituted important improvements in plant layouts, as well as in cost and quality control.<ref>{{cite book|editor-last=Derdak |editor-first=Thomas |title=International Directory of Company History, Volume 1 |publisher=St. James Press |year=1988 |page=[https://archive.org/details/internationaldir0001unse/page/136 136] |isbn=978-0-912289-10-6 |url= https://archive.org/details/internationaldir0001unse/page/136}}</ref> Having increased its stake in the company several times to keep it solvent, Renault eventually owned 49% in 1983. Some view this development as ending American Motors' run as a truly American car company. New ownership and management heralded a new product venture for American Motors: a line of modern [[front-wheel drive]] cars, designed by Renault, to be produced at Kenosha.
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