Editing American Motors Corporation (section)

== 1985 and the final buyout ==

=== Marketplace and management changes ===
Significant changes occurred in 1985 as the market moved away from American Motors' small models. With fuel relatively cheap again, buyers turned to larger, more powerful automobiles, and American Motors was unprepared for this development. Even the venerable Jeep CJ-5 was dropped after a ''[[60 Minutes]]'' TV news magazine staged exposé of rollover tendencies under extreme conditions. American Motors also confronted an angry workforce. Labor was taking revenge, and reports circulated about the sabotage of vehicles on the assembly lines because of the failure to receive promised wage increases{{citation needed|date=April 2019}}. There were rumors that the aging Kenosha plant was to be shut down. At the same time, Chrysler was having trouble meeting the demand for its M-body rear-drive models ([[Dodge Diplomat]], [[Plymouth Gran Fury]], and [[Chrysler Fifth Avenue]]). Because they were assembled using the old "gate and buck system" and the tooling could be easily moved, Chrysler could supply the components and control the quality while AMC assembled the car. Therefore, [[Lee Iacocca]] and [[Joseph E. Cappy]] agreed to use some of AMC's idle plant capacity in Kenosha.<ref name=sharf>{{cite magazine |url= http://wardsautoworld.com/ar/auto_lee_iacocca_knew/index.html |first=Stephan |last=Sharf |title=Lee Iacocca as I knew him; he was certainly the right man at the right time. |magazine=Ward's AutoWorld |date=May 1, 1996 |archive-url= https://web.archive.org/web/20110728081658/http://wardsautoworld.com/ar/auto_lee_iacocca_knew/index.html |archive-date=July 28, 2011 |access-date=August 23, 2024}}</ref>

In January 1985, Renault's chairman in France, [[Bernard Hanon]], was dismissed by the government in a shake-up triggered by huge losses as a result of his goal to revolutionize Renault's product strategy in the 1970s and 1980s.<ref>{{cite web|url= https://www.autonews.com/article/19980928/ANA/809280720/hanon-was-renault-s-american |title=Hanon was Renault's 'American' |date=September 28, 1998 |work=Automotive News |access-date=August 23, 2024}}</ref> He was instrumental in 1981 for the company to invest in AMC and also made Renault a full-line automaker, but this ballooned the firm's debt.<ref>{{cite news|url= https://www.latimes.com/archives/la-xpm-1985-06-23-fi-12257-story.html |title=Sputtering Renault Faces a Major Overhaul to Get It Running Again |first=Stanley |last=Meisler |date=June 23, 1985 |newspaper=The Los Angeles Times  |access-date=August 23, 2024}}</ref> Renault relinquished its number one sales position in Europe, which it held from 1980 until 1983. The company had been losing money since 1981 and had fallen to sixth place behind Ford, Fiat, Volkswagen, Peugeot, and General Motors.<ref>{{cite news|url= https://www.nytimes.com/1985/02/03/business/france-s-ailing-auto-industry.html |title=France's Ailing Auto Industry |first=Paul |last=Lewis |date=February 3, 1985 |newspaper=The New York Times |access-date=August 23, 2024}}</ref> Strikes plagued Renault at the end of 1984, and the French government introduced price controls that severely cut the profit margins on cars sold in France, Renault's most important market. Hanon was replaced by [[Georges Besse]], ex-president of [[Arkema|Produits Chimiques Ugine Kuhlmann]] in France.

In April 1985, AMC Chairman W. Paul Tippett resigned to become president of a textile company. Jose J. Dedeurwaerder, president since 1982 and chief executive officer since September 1984, announced at the Paris Auto Show in October 1985, that AMC would begin imports of the innovative seven-seat, front-wheel-drive Espace minivan in the spring of 1986.<ref name="PM-French-Iron">{{cite magazine|url= https://books.google.com/books?id=YOQDAAAAMBAJ&dq=More+French+iron+for+American+Motors&pg=PA28 |first=Daniel Charles |last=Ross |title=Detroit Listening Post - More French iron for American Motors |page=29 |magazine=Popular Mechanics |date=March 1985 |volume=162 |issue=3 |via=Google Books |access-date=August 23, 2024}}</ref> This was part of expanding the range of Renault models that include plans for marketing the [[Renault Alpine GTA/A610#Federalized version|Renault Alpine GTA/A510]] sports car through select AMC dealers.<ref name="PM-French-Iron"/> In December 1985, Dedeurwaerder became chairman of AMC's executive committee while continuing as the company's president and CEO. Joe Cappy was moved up from executive vice president to chief operating officer, and Tippet's position was filled by an ex-Renault vice president, Pierre Semerena.<ref>{{cite news |title=A.M. names new chairman |date=December 14, 1985 |url= https://www.nytimes.com/1985/12/14/business/am-names-new-chairman.html |newspaper=The New York Times |access-date=August 13, 2023}}</ref>

Semerena made his managerial reputation as a no-nonsense cost cutter. The new management responded with tactical moves by selling the lawn care [[Wheel Horse]] Products Division and signing an agreement to build Jeeps in the People's Republic of China. [[The Pentagon]] had problems with [[AM General]], a significant [[defense contractor]], being managed by a partially French-government-owned firm. The U.S. government would not allow a foreign government to own a substantial portion of an important defense supplier.<ref>{{cite book |first1=Byron |last1=Olsen |first2=Barney |last2=Olsen |first3=Joseph |last3=Cabadas |title=The American Auto Factory |page=127 |year=2002 |publisher=MotorBooks International |isbn=978-0-7603-1059-5}}</ref> As a result, the profitable AM General Division was sold to [[Ling-Temco-Vought|LTV Corporation]].<ref>{{cite news |title=AM General sale to LTV agreed on |date=July 26, 1983 |url= https://www.nytimes.com/1983/07/26/business/am-general-sale-to-ltv-agreed-on.html |newspaper=The New York Times |access-date=August 23, 2024}}</ref>

Another milestone within AMC's management was the departure of Dick Teague.<ref>{{cite web|url= https://richardlangworth.com/dick-teague |title=Facing Disaster with a Smile: The Dick Teague I Knew |date= March 5, 2024 |first=Richard M. |last=Langworth |website=richardlangworth.com |access-date=August 23, 2024}}</ref> He was American Motors' design vice president for 23 years - an industry record.<ref name="Heseltine"/> he was one of the most consistently resourceful automotive designers and responsible for many Jeep and AMC designs, including the Javelin, AMX, Hornet, Gremlin, Pacer, Matador coupe, and the Cherokee XJ.<ref name="Heseltine">{{cite web|url= https://www.motor1.com/news/235984/richard-teague-american-automobile-design/ |title=Richard Teague: American Automobile Design's Unsung Hero |first=Richard |last=Heseltine |date=March 13, 2018 |website=motor1.com |access-date=August 23, 2024}}</ref>

=== Problems at Renault and assassination ===
In France, Renault continued to experience financial trouble. The investment in American Motors (including the construction of a new Canadian assembly plant in [[Brampton]], Ontario) forced cuts at home, resulting in the closure of several French plants and mass [[layoff]]s. Renault was down to just three alternatives regarding its American holdings: (1) it could declare American Motors officially bankrupt, thereby losing its investment; (2) it could come up with more money, but Renault management perceived American Motors as a bottomless pit; or (3) American Motors could be put up for sale, and the French company could get back part of its investment. At the same time, Renault's new chairman, [[Georges Besse]], continued to champion the French firm's future in the North American market, pointing to the company's completion of the newest and most advanced automotive assembly plant in North America, then known as [[Brampton Assembly|Bramalea Assembly]], as well as the recent introduction of the thoroughly modern, fuel-injected 4.0&nbsp;L and 2.5&nbsp;L engines. In addition, Jeep vehicles were riding an unprecedented surge in demand. It seemed to Besse and others that American Motors was on course for profitability.

However, on November 17, 1986, Besse, who had a high-profile among French capitalists, was assassinated by a member of a French clandestine far-left extremist group, [[Action Directe]].<ref>{{cite encyclopedia |url= https://www.britannica.com/topic/Direct-Action |encyclopedia=Encyclopædia Britannica|title=Direct Action |publisher=Encyclopædia Britannica Online |date=February 20, 2008 |access-date=September 14, 2020}}</ref> AMC's plans to reinvigorate sales with higher-priced Renaults continued for a little longer, with the plan being a three-pronged lineup beginning with the mid-sized [[Eagle Medallion|Medallion]], the larger [[Eagle Premier|Premier]] above it, and the sporty [[Renault Alpine GTA/A610|Renault Alpine]] providing a halo car.<ref name=Wards87>{{cite book | ref = WYB87 |title=Ward's Automotive Yearbook 1987 |publisher=Ward's Communications |location=Detroit, MI |editor-last=Stark |editor-first=Harry A. |volume=49 |date=1987 |page=178 |isbn=((0-910589-00-7))}}</ref><!-- This invalid ISBN is indeed printed (twice) in the book. It seems that they obtained a valid ISBN for Ward's Automotive Yearbook 1983, 0-910589-00-3, and then just incremented that in the following years, resulting in invalid ISBNs. You can see the printed ISBNs here:
1983: https://books.google.de/books?redir_esc=y&id=Gdy1AAAAIAAJ&focus=searchwithinvolume&q=ISBN
1984: https://books.google.de/books?redir_esc=y&id=IOO1AAAAIAAJ&focus=searchwithinvolume&q=ISBN
1985: https://books.google.de/books?redir_esc=y&id=t4lTAAAAMAAJ&focus=searchwithinvolume&q=ISBN
1986: https://books.google.de/books?redir_esc=y&id=p8q1AAAAIAAJ&focus=searchwithinvolume&q=ISBN
1987: https://books.google.de/books?redir_esc=y&id=TXlaAAAAYAAJ&focus=searchwithinvolume&q=ISBN
--> The Medallion and the Premier both went on sale, but Alpine never made its planned mid-1987 rollout.

=== Chrysler purchases American Motors stock ===
Under pressure from Renault executives following Besse's death, Renault's new president, Raymond Levy, set out to repair employee relations and [[Divestment|divest]] the company of its investment in American Motors. Renault owned 46.1% of American Motors' outstanding shares of stock. In 1986, American Motors posted a $91.3 million loss.<ref name=holusha>{{cite news |first=John |last=Holusha |title=Chrysler is Buying American Motors; Cost is $1.5&nbsp;billion |url= https://www.nytimes.com/1987/03/10/business/chrysler-is-buying-american-motors-cost-is-1.5-billion.html |url-access=subscription |access-date=August 7, 2010 |newspaper=The New York Times |date=March 10, 1987 |archive-date=August 15, 2018 |archive-url= https://web.archive.org/web/20180815165532/https://www.nytimes.com/1987/03/10/business/chrysler-is-buying-american-motors-cost-is-1.5-billion.html |url-status=live }}</ref>

The earlier agreement between Chrysler and American Motors in 1985, under which American Motors would produce [[Chrysler M platform|M-body chassis]] rear-drive large cars for five years from mid-1986 through 1990, fed the rumor that Chrysler was about to buy AMC. According to the head of manufacturing for Chrysler, Stephan Sharf, the existing relationship with AMC producing a car for a competitor facilitated the negotiations.<ref name=sharf/>

[[File:1st Jeep Grand Cherokee .jpg|thumb|The [[Jeep Grand Cherokee]] was the driving force behind Chrysler's buyout of American Motors; Lee Iacocca wanted the design. Chrysler completed development and released it to the public in late 1992 and continues to use the nameplate.]]

On March 9, 1987, Chrysler agreed to buy Renault's share in American Motors, plus all the remaining shares, for about $1.5&nbsp;billion (${{formatnum:{{Inflation|US|1500000000|1987}}}} in {{Inflation-year|US}} dollars{{inflation-fn|US}}).<ref name=holusha/><ref name=cannpl>{{cite news |url= https://news.google.com/newspapers?id=A0BPAAAAIBAJ&pg=6239%2C2741774 |work=Toledo Blade |location=(Ohio) |agency=Associated Press |title=Chrysler announces plans to purchase AM as subsidiary |date=March 9, 1987 |page=1 |access-date=September 21, 2020 |archive-date=February 15, 2022 |archive-url= https://web.archive.org/web/20220215100052/https://news.google.com/newspapers?id=A0BPAAAAIBAJ&pg=6239%2C2741774 |url-status=live }}</ref><ref name=bbupdl>{{cite news |url= https://news.google.com/newspapers?id=g05TAAAAIBAJ&pg=4227%2C6179679 |work=The Bulletin |location=Bend, Oregon |agency=UPI |title=Chrysler sets AMC deal |date=March 9, 1987 |page=A1 |access-date=September 21, 2020 |archive-date=October 11, 2021 |archive-url=https://web.archive.org/web/20211011055926/https://news.google.com/newspapers?id=g05TAAAAIBAJ&pg=4227%2C6179679 |url-status=live }}</ref><ref name=rlvbo>{{cite news |url=https://news.google.com/newspapers?id=le5VAAAAIBAJ&pg=3256%2C2111076 |work=Eugene Register-Guard |location=Oregon |agency=Washington Post |title=Chrysler plans to buy out rival |date=March 10, 1987 |page=1A |access-date=September 21, 2020 |archive-date=February 15, 2022 |archive-url=https://web.archive.org/web/20220215000526/https://news.google.com/newspapers?id=le5VAAAAIBAJ&pg=3256%2C2111076 |url-status=live }}</ref><ref name=wmsnytes>{{cite news |url=https://news.google.com/newspapers?id=CeEyAAAAIBAJ&pg=3500%2C4320252 |work=Wilmington Morning Star |location=North Carolina |agency=(''New York Times'' News Service) |title=Chrysler agrees to buy out struggling American Motors |date=March 10, 1987 |page=1A |access-date=September 21, 2020 |archive-date=August 27, 2021 |archive-url=https://web.archive.org/web/20210827004835/https://news.google.com/newspapers?id=CeEyAAAAIBAJ&pg=3500%2C4320252 |url-status=live }}</ref><ref name=ctbaa>{{cite news |url=https://news.google.com/newspapers?id=cagpAAAAIBAJ&pg=7299%2C5148234 |work=Spokesman-Review |location=(Spokane, Washington) |agency=Associated Press |title=Chrysler to buy ailing AMC |date=March 10, 1987 |page=A1 |access-date=September 21, 2020 |archive-date=February 15, 2022 |archive-url=https://web.archive.org/web/20220215033933/https://news.google.com/newspapers?id=cagpAAAAIBAJ&pg=7299%2C5148234 |url-status=live }}</ref>
Chrysler made no secret that they were only interested in AMC for Jeep, AMC's new assembly plant in Canada, and AMC's network of 1,300 dealerships nationwide. Chrysler president Lee Iacocca was quoted in the March 10, 1987 [[LA Times]] as saying:

{{blockquote|For Chrysler, the attractions are Jeep, the best-known automotive brand name in the world; a new . . . assembly plant at Bramalea, Canada, and a third distribution system giving us access to a larger market.<ref>{{cite news |title=Chrysler Plans to Buy AMC for $757 Million: Reaches Accord on Purchasing Renault's 46.1% Interest; Wants Jeep, Assembly Plants, Dealers |first=James |last=Risen |date=March 10, 1987 |url=https://www.latimes.com/archives/la-xpm-1987-03-10-mn-5919-story.html |newspaper=Los Angeles Times |access-date=August 6, 2021 |archive-date=August 6, 2021 |archive-url=https://web.archive.org/web/20210806022157/https://www.latimes.com/archives/la-xpm-1987-03-10-mn-5919-story.html |url-status=live }}</ref>}}

With the sale complete, American Motors became the [[Jeep-Eagle]] division of Chrysler on August 25, 1988, and was fully merged as of March 29, 1990.<ref name=cofs.lara.state.mi.us />

<ref name=aappbuo>{{cite news |url=https://news.google.com/newspapers?id=4e5VAAAAIBAJ&pg=5673%2C1355597 |newspaper=Eugene Register-Guard |location=Oregon |agency=Associated Press |title=AMC approves Chrysler buyout |date=August 6, 1987 |page=2E |access-date=September 21, 2020 |archive-date=August 28, 2021 |archive-url=https://web.archive.org/web/20210828004403/https://news.google.com/newspapers?id=4e5VAAAAIBAJ&pg=5673%2C1355597 |url-status=live }}</ref><ref name=wmsctov>{{cite news |url=https://news.google.com/newspapers?id=vLkyAAAAIBAJ&pg=3703%2C2330843 |work=Wilmington Morning Star |location=North Carolina |agency=New York Times News Service |title=Chrysler completes $1.5 billion AMC takeover |date=August 6, 1987 |page=6B |access-date=September 21, 2020 |archive-date=June 13, 2021 |archive-url=https://web.archive.org/web/20210613183934/https://news.google.com/newspapers?id=vLkyAAAAIBAJ&pg=3703%2C2330843 |url-status=live }}</ref>

The sale came at a time when the automotive press was enthusiastic about the proposed 1988 lineup of Renault, Eagle, and Jeep vehicles and reported that the small automaker's financial outlook was improving. American Motors' quarterly results for all of 1987 were positive. Chrysler purchased American Motors when the company appeared to be in an excellent financial position with its new product line.<ref name=holusha/>

It was the Jeep brand that Chrysler CEO [[Lee Iacocca]] wanted – in particular, the ZJ [[Jeep Grand Cherokee|Grand Cherokee]], then under development by Jeep engineers, which ultimately proved highly profitable for Chrysler (the nameplate remains in production today). However, the buyout included other attractive deal sweeteners for Chrysler. Among them was the world-class, brand-new manufacturing plant in [[Bramalea, Ontario]], which offered Iacocca an unprecedented opportunity to increase his company's [[Capacity utilization|production capacity]] at a fire-sale price. American Motors had designed and built the plant in anticipation of building the [[Renault 25]]-based [[Eagle Premier]]. Additional profitable acquisitions were the American Motors dealer network (the addition of which strengthened Chrysler's retail distribution – many American Motors dealers switched to selling Chrysler products), and American Motors' underrated organization and management talent – which Chrysler quickly assimilated (numerous leading Chrysler engineers and executives were ex-American Motors).<ref>{{cite magazine |url= http://wardsautoworld.com/ar/auto_daimlerchrysler_ifs/index.html |title=DaimlerChrysler: The 'What Ifs?' |magazine=Ward's AutoWorld |date=June 1, 1998 |access-date=August 31, 2012 |archive-url= https://web.archive.org/web/20110728081757/http://wardsautoworld.com/ar/auto_daimlerchrysler_ifs/index.html |archive-date=July 28, 2011 }}</ref>

Renault left the U.S. market entirely as a brand in 1987. Thus, the Renault Medallion was sold through the new [[Jeep-Eagle]] division as an Eagle, not a Renault. The Jeep-Eagle division was formed from the American Motors Jeep Renault dealer network. The [[Jeep]] and [[Eagle (automobile)|Eagle]] vehicles were marketed primarily by former American Motors dealers. The American Motors badge was last used on the Eagle Sports Wagon through the 1988 model year, then eliminated, and the Eagle car brand was phased out by 1998.