Editing American Motors Corporation (section)

== Business legacy ==
[[File:AMC-post-1.jpg|thumb|170px|An American Motors surviving dealership sign, photographed in Nevada in 2007]]

American Motors was forced to constantly innovate for 33 years until Chrysler absorbed it in 1987. The lessons learned from this experience were integrated into the company that bought American Motors. The organization, strategies, and several key executives allowed Chrysler to gain an edge over the competition. Even today, the lessons gained from the American Motors experience continue to benefit other firms in the industry. There are many legacies of American Motors's [[Strategic management|business strategies]].

American Motors could formulate strategies that industry critics often evaluated as "strokes of brilliance".<ref name=Higgins>{{cite news|first=James V. |last=Higgins |title=Roy Chapin Jr. mastered how to survive in auto industry |newspaper=The Detroit News |date=August 12, 2001}}</ref> According to [[Roy D. Chapin Jr.]], American Motors realized they were up against the giants of the industry, so to compete successfully they had to be able to move quickly and with ingenuity.<ref name=Higgins/> An essential strategy practiced by American Motors was to rely on [[Outsourcing|outside vendors]] to supply components in which they had [[Sustainable competitive advantage|differential advantages]]. This approach was finally accepted within the U.S. [[auto industry]], but only after each of the Big Three experienced the failure of attempting to be self-sufficient.

The smallest U.S. automaker did not have "the massive R&D budgets of [[General Motors]], [[Ford Motor Company|Ford]], and foreign competitors ... thus American Motors placed R&D emphasis on bolstering the product life cycle of its prime products (particularly Jeeps)."<ref>{{cite book |url=https://books.google.com/books?id=MpAoAQAAMAAJ&q=AMC |title=R&D Decision Area |first1=John A. |last1=Pearce |first2=Richard B. |last2=Robinson |edition=Fourth |publisher=Irwin |year=1991 |page=315 |isbn=978-0-256-08324-8 |access-date=March 10, 2012}}</ref> In 1985, American Motors originated [[product lifecycle management]] (PLM) as a strategic business approach according to Sidney Hill Jr., executive editor for ''Manufacturing Business Technology'',<ref>{{cite web|first=Kenneth |last=Wong |url= http://www.deskeng.com/virtual_desktop/?p=536 |title=What PLM Can Learn from Social Media |date=July 29, 2009 |access-date=March 10, 2012 |archive-url= https://web.archive.org/web/20160513020247/http://www.deskeng.com/virtual_desktop/?p=536 |archive-date=May 13, 2016 }}</ref> in an effort to better compete against its much larger rivals by ramping up its product development process.<ref>{{cite web|first=Sidney |last=Hill Jr. |title=How To Be A Trendsetter: Dassault and IBM PLM Customers Swap Tales From The PLM Front |date=May 2003 |url= http://www.coe.org/coldfusion/newsnet/may03/technology.cfm |archive-url= https://web.archive.org/web/20090213042744/http://www.coe.org/coldfusion/newsnet/may03/technology.cfm |archive-date=February 13, 2009 |access-date=March 10, 2012 |publisher=COE newsnet}}</ref>

Another example of American Motors' agility was the ability of management to squeeze money out of reluctant bankers, even in the face of bankruptcy. These [[Core competency|core abilities]] helped save the company from collapse and, after each obstacle, gave it the wherewithal to keep it operating. Ironically, American Motors was never stronger than just before its demise.<ref name=Higgins/>

American Motors' managers anticipated important trends in the automotive industry.<ref>{{cite book|first=Mike |last=Lawrence |title=A to Z of Sports Cars, 1945–1990|publisher=MotorBooks/MBI|year=1996|page=1952 |url= https://books.google.com/books?id=glKW-Kh-lmcC&pg=PA1952|isbn=978-1-870979-81-8|access-date=March 10, 2012}}</ref> It preached fuel efficiency in the 1950s, long before most auto buyers demanded it. Led by American Motors' Rambler and several European cars, the small car innovation reduced the Big Three's market share from 93% in 1957 to 82% in 1959.<ref>{{cite book|first=James M. |last=Rubenstein |author-link=James M. Rubenstein|title=Making and selling cars: innovation and change in the U.S. automotive industry |year=2001 |publisher=Johns Hopkins University Press |isbn=978-0-8018-6714-9 |pages=221–222 |url= https://books.google.com/books?id=2SpJDgcgoMQC&pg=PA222 |access-date=March 10, 2012}}</ref> The company inherited foreign manufacturing and sales partnerships from Nash and continued developing business relations, decades before most of the international consolidations among automobile makers took place. American Motors was the first U.S. automaker to establish an ownership agreement with a foreign automaker, Renault.

Although small in size, American Motors was able to introduce numerous industry innovations. Starting in 1957, American Motors was the only U.S. manufacturer to fully immerse all automobile bodies in [[Primer (paint)|primer paint]] for protection against rust, until competitors adopted the practice in 1964.<ref>{{cite book|first=William J. |last=Abernathy |title=The productivity dilemma: roadblock to innovation in the automobile industry|year=1978|publisher=Johns Hopkins University Press |isbn=978-0-8018-2081-6 |pages=207–208}}</ref> Even one of American Motors's most expensive new product investments (the Pacer) established many features that were later adopted by the auto industry worldwide.<ref>{{cite book|first1=Craig M. |last1=Cagan |first2=Jonathan |last2=Vogel |title=Creating Breakthrough Products: Innovation from Product Planning to Program Approval |year=2002 |publisher=Financial Times Press |isbn=978-0-13-969694-7 |url= https://books.google.com/books?id=hlSRf61_nnkC&pg=PA11 |access-date=March 10, 2012 |page=11}}</ref> These included aerodynamic body design, space-efficient interiors, aircraft-style doors, and a large greenhouse for visibility. American Motors was also effective in other areas, such as marketing, by introducing low-rate financing. American Motors' four-wheel-drive vehicles established the foundation for the modern SUV market segments, and "classic" Jeep models remain the benchmark in this field. Roy D. Chapin drew on his experiences as a hunter and fisherman and marketed the Jeep brand successfully to people with like interests. The brand developed a cult appeal that continues.<ref name=Fracassa>{{cite news|first=Hawke |last=Fracassa |title=Roy D. Chapin Jr., ex-AMC chairman gambled to save Jeep |newspaper=The Detroit News |date=August 7, 2001}}</ref>

The purchase of American Motors was instrumental in reviving Chrysler. According to [[Bob Lutz (businessman)|Robert Lutz]], former president of Chrysler, the American Motors acquisition was a big and risky undertaking.{{sfn|Lutz|1999|p={{page needed|date=November 2020}}}} The purchase was part of Chrysler's strategic "retreat-cum-diversification" plan that he states did not have the proper focus. Initially, the goal was to obtain the world-renowned Jeep brand. However, Lutz discovered that the decision to buy American Motors turned out to be a gold mine for Chrysler.{{sfn|Lutz|1999|p=16}} At that time, Chrysler's management was attempting to find a model to improve structure and operations, ''"something that would help get our minds unstuck and thinking beyond the old paradigms that we were so familiar with''".{{sfn|Lutz|1999|p=31}} In this transformation, ''"Chrysler's acquisition of AMC was one of the all-time great moments in corporate serendipity''" according to Lutz ''" that most definitely played a key role in demonstrating how to accomplish change''".{{sfn|Lutz|1999|p=31}}

According to Lutz (1993), while American Motors had its share of problems, it was far from being a bunch of "brain-dead losers". He describes the "troops" at American Motors as more like the [[Battle of Wake Island|Wake Island Marines]] in battle, "with almost no resources, and fighting a vastly superior enemy, they were able to roll out an impressive succession of new products".{{sfn|Lutz|1999|p=33}} After first reacting with anger to the purchase, Chrysler managers soon anticipated the benefits. To further solidify the organizational competencies held by American Motors, Lee Iacocca agreed to retain former American Motors units, such as engineering, completely intact. In addition, American Motors' lead engineer, [[François Castaing]], was made head of all engineering at Chrysler. In an unthinkable strategic move, Castaing completely dismantled the entrenched Chrysler groups. In their place, American Motors's "[[Automobile platform|platform team]]" was implemented. These were close-knit cross-functional groups responsible for the whole vehicle, contrasted with Chrysler's highly functional structure. In this capacity, Castaing's strategy was to eliminate the corporate administrative overhead bureaucracy. This move shifted corporate culture and agitated veteran executives who believed that Chrysler's reputation as "the engineering company" was being destroyed. Yet, according to the popular press, by the 1980s, Chrysler's reputation was shot, and in Lutz's view, only dramatic action would change that.{{sfn|Lutz|1999|p=33}} In summary, Chrysler's purchase of American Motors laid the critical foundation to help re-establish a strategy for its revival in the 1990s.

Top managers at Chrysler after the AMC buyout appeared to have made errors similar to those by American Motors. For example, Chrysler invested heavily in new untested models while not keeping up its profitable high-volume lines.

The American Motors influence also continued at [[General Motors]]. GM recruited a new executive team to turn itself from near bankruptcy in the early 2000s. Among the new strategists at GM was Lutz, who understood the importance of passion in product design. Lutz's new thinking at GM incorporated the systems and structures that originated from American Motors's lean and focused operations.<ref>{{cite magazine|first=Alex |last=Taylor III |title=Finally GM is looking good |magazine=Fortune |volume=145 |issue=7 |date=April 1, 2002 |pages=69–74 |url= https://money.cnn.com/magazines/fortune/fortune_archive/2002/04/01/320620/index.htm |access-date=March 10, 2012}}</ref>

Renault implemented the lessons it learned from its investment in American Motors. The French firm took a parallel approach as it did with its initial ownership of American Motors and applied it to resurrect the money-losing [[Nissan]] automaker in Japan.<ref>{{cite book |url= https://books.google.com/books?id=RZ-RuS9VNSgC&pg=PR5 |title=Shift: Inside Nissan's Historic Revival |year=2007 |first=Carlos |last=Ghosn |author-link=Carlos Ghosn |publisher=Crown Publishing Group |isbn=978-0-307-42381-8}}</ref>

In 2009, in a deal brokered by the [[Presidency of Barack Obama|Obama administration]], [[Italy|Italian]] automaker [[Fiat S.p.A.|Fiat]] initiated a [[White knight (business)|white knight]] takeover of Chrysler to save the struggling automaker from liquidation. The deal was immediately compared to the American Motors-Renault deal; some commentators noted the irony in that Chrysler now faced the same fate that American Motors faced 30 years earlier, while others expressed skepticism of whether the Italian firm could save Chrysler, given how the Renault deal failed. However, there were crucial differences between the two:
* Fiat CEO [[Sergio Marchionne]] became CEO of Chrysler as part of the deal and immediately began globally integrating Fiat and Chrysler's assets and product lines.
* The Fiat-Chrysler merger did not face the political opposition the American Motors-Renault deal did since a family group led Fiat with significant equity, and the U.S. government supported the merger.
* While American Motors proved to be a continuous money-loser for Renault, Chrysler returned to profitability fairly quickly and became an essential source of revenue and profits for Fiat, which has been struggling to maintain volume and profitability amid the [[European debt crisis]].

The two firms would later fully merge to create [[Fiat Chrysler Automobiles]] in 2014, and would further merge with the French firm [[PSA Group]], owners of the [[Citroën]] and [[Peugeot]] brands, to form [[Stellantis]] in 2021.<ref>{{cite news |work=Reuters |location=London, UK |title=Fiat says merger into Dutch-registered FCA effective October 12 |date=October 7, 2014 |url=https://www.reuters.com/article/us-fiat-spa-chrysler-idUSKCN0HW0CZ20141007 |access-date=July 5, 2021 |archive-date=November 25, 2021 |archive-url=https://web.archive.org/web/20211125195858/https://www.reuters.com/article/us-fiat-spa-chrysler-idUSKCN0HW0CZ20141007 |url-status=live }}</ref>