A recent Hemmings column by Patrick Foster (2023) argues that American Motors’ biggest mistake was not buying Willys Motors — the maker of Jeep sport-utility vehicles — way back in the early-60s. Indeed, he went as far as to say that not doing so “in 1963 was probably a main factor in [AMC’s] eventual takeover by Chrysler.”
Foster (2023) states that purchasing Willys at that point would have given American Motors “a lock on the Latin American market and become a significant force in the global market.”
This is a similar — but more amped up — argument that he made in a biography of George Romney, who headed American Motors from 1954-62. Foster concluded that Romney’s unwillingness to purchase Willys “was a huge error of business judgment, in fact, the largest he ever made” (2017, p. 188).
With the luxury of hindsight, Foster’s criticism can make intuitive sense. After all, the dominant attitude in the auto industry is “get big or get out.” In addition, Jeep pioneered a segment of the American market that would ultimately challenge passenger cars in sales. Just as importantly, as the automotive industry became more globally integrated, Jeep emerged as one of the top 20-brands partly because of its iconic role during World War II (Global Brands, 2023).
That said, Foster’s column has a pop-history glibness that is scented with Detroit groupthink. Let’s take a closer look at his argument and consider an alternative take.
Foster: AMC lost chance to be ‘world-class automaker’
In his Romney biography, Foster (2017) mostly focused on what he saw as the advantages Willys would have brought to American Motors’ domestic operations. These included expanding its dealer network, securing a foothold in a growing SUV market, and gaining greater access to U.S. defense business.
In contrast, Foster’s (2023) latest column emphasizes the value of Willys’ overseas businesses. These included major stakes in what he described as the two largest automobile and truck manufacturers in South America: Industrias Kaiser Argentina and Willys-Overland Brazil. Foster noted that in 1963 the two produced 94,500 car and trucks — “more than Jeep produced in America. Suffice it to say, [the two automakers] were very profitable.”
Perhaps Foster has access to different figures than John Gunnell (1993), who reported that for the 1963 calendar year 110,457 Jeeps were produced in the U.S. Note that this was for a much narrower line of vehicles built in only one country. And if the two South American automakers were “very profitable,” how long would that have lasted given their aging designs and growing competition from much bigger automakers?
Also see ‘AMC’s Roy D. Chapin Jr. succumbed to the illusion of bigness’
Foster doesn’t address the potentially huge costs of defending these two tiny automakers against the likes of Volkswagen, Toyota, Fiat and Chrysler (Wikipedia, 2023a). If American Motors would have trouble staying competitive in the U.S., why would it have been any easier in South American countries? For one thing, how would AMC have responded to a rising tide of subcompacts when it could not afford to build one for the much larger U.S. market?
The above question hints at how AMC could have become even more financially overextended if it had bought Jeep prior to its parent company selling off Brazilian and Argentinian holdings. Of course, American Motors could have gotten rid of Willys’ holdings at a future point. But in the meantime that would have given the automaker a much larger portfolio of problems to solve. Given AMC’s mounting U.S. difficulties in the second half of the 1960s and 1970s, would management have had the bandwidth — and skills — to divert its attention to South America? Again, Foster doesn’t address this question.
Foster also didn’t mention another factor that could have influenced Romney’s refusal to buy Willys. He opposed “economic imperialism,” which drove him to develop foreign partnerships rather than own operations in other nations (Harrison, 1962). That was a highly unorthodox view for an executive of an industry where automakers tend to race each other to build the largest global empire. I am surprised that Foster doesn’t acknowledge that what he saw as Romney’s “huge error of business judgment” may have been at least partly grounded in his values. One can disagree with Romney’s strategy while still respecting his personal ethics.
AMC may not have been the best fit for Willys
As with his Romney biography, Foster’s latest column mentions ways AMC could have benefitted in the U.S. by purchasing Willys Motors in the early-60s. At the top of his list would appear to be integrating dealer networks.
Foster makes a more careful argument in his book, where “signing up the best Willys dealers to sell Ramblers, and Rambler dealers to sell Willys . . . would have added perhaps 700 Rambler dealers and over 1,000 Jeep outlets” (2017, p.187). In contrast, Foster’s column uses bigger numbers and seems more optimistic about the value of trying to sell passenger cars at Willys dealers. Would that have been all that helpful if Willys dealers tended to be more marginal, located in places more appropriate for selling trucks, or competed in the same geographic market with Rambler dealers?
Foster (2023) is on more solid ground in arguing that “Jeep’s U.S. sales likely would have doubled” by selling them through Rambler dealers. That’s essentially what ended up happening after AMC bought Jeep in 1970. Even so, here — as in Foster’s other writings — he doesn’t acknowledge the considerable challenges of integrating the production capacity of the two companies.
Also see ‘Could Studebaker have come out of the 1970s as successful as Jeep?’
All U.S.-produced Willys vehicles used separate body-on-frame construction whereas American Motors only built unit-body cars, which required a different assembly method. That would prove to be a problem because capacity imbalances between Jeeps and AMC passenger cars could not be solved by quickly and easily shifting production between plants.
This stood in contrast to Studebaker and International-Harvester, whose vehicles also used separate body-on-frame construction. Willys production was actually high enough that it could have counterbalanced the collapse of Studebaker’s passenger-car sales in the first half of the 1960s.
Romney may have integrated AMC and Willys best
I have been pretty critical about Foster’s take, so to be fair I should offer one rather large caveat. If AMC were going to buy Jeep, it could have made more sense to have done so in 1960 rather than a decade later because there may have been a better chance to fully integrate Willys into AMC’s operations. A key reason why is because Romney was much more focused on maximizing economies of scale than his successors. That could have powerfully influenced the design of what would become the Jeep Wagoneer, which was introduced in 1963.
For example, Romney might have chosen to make the new models smaller so they could share more components with the Jeep Universal (later called the CJ). He might have also pressed for a hybrid unit-body/body-on-frame construction that could have allowed it to be more easily produced in AMC’s passenger-car plants. Finally, Romney might have pressed for the redesigned 1963-64 Ramblers to be smaller to improve their viability in South American markets.
Also see ‘Five questions about Aaron Severson’s take on American Motors’
By the same token, Romney’s successors might have also been forced to pay more attention to designing passenger cars that were “international” in size, weight and features and less reliant on annual styling changes.
If all that happened, American Motors plausibly could have lasted longer as an independent automaker. I just don’t think it would have played out that way. Romney’s successors, Roy Abernethy and Roy Chapin Jr., paid too little attention economies of scale and were too infatuated with Detroit’s “bigger is better” design philosophy. This is why I didn’t include Romney’s refusal to buy Willys in my own assessment of his eight biggest mistakes (go here).
One more thing. Even if American Motors had perfectly executed a Willys purchase in 1960-63, the odds were still fairly high that the automaker could have eventually been swallowed by the likes of Chrysler. Indeed, having a larger footprint in South American might have made AMC a more attractive target.
NOTES:
Production figures and product specifications from Gunnell (1993, 2002).
RE:SOURCES
- Foster, Patrick R.; 2017. George Romney: An American Life. Waldorf Publishing, Grapevine, TX.
- 2023. “AMC’s Chance To Be A World Manufacturer Passed Them By In 1963.” Hemmings. Posted Aug. 9.
- Global Brands; 2023. “Car Brands [2023] — Top 20 in the World.” Accessed Aug. 10.
- Gunnell, John; 1993. Standard Catalog of American Light-Duty Trucks, 1896-1986. Second Ed. Krause Publications, Iola, WI.
- ——–; 2002. Standard Catalog of American Cars, 1946-1975. Revised Fourth Ed. Krause Publications, Iola, WI.
- Harrison, Selig S.; 1962. “Romney and the Republicans.” The New Republic. Posted March 4.
- Wikipedia; 2023a. “Automotive industry in Brazil.” Page last edited July 27.
- ——; 2023b. “IKA-Renault Torino.” Page last edited July 29.
PHOTOGRAPHY:
- 1967 IKA Torino image by Tomsbatz01, Wikipedia Creative Commons
One concern with the South American division was the political instability and possible nationalization of their operations, or requiring local suppliers that aren’t up to snuff. Selling off the south American holdings was a prudent move at the time. Yes Jeep’s sales doubled in the mentioned time. This is when Jeep came out with the revolutionary Wagoneer. Around this time AMC came out with the redesigned Classic/Ambassador followed next year by the new American. Both sides would get the synergy of combined dealerships, and maybe they could dump some of the dealer deadwood. I remember two dealerships in Chicago one AMC and one Jeep that were storefronts. This was in the 70s, when a typical new car dealer in older areas of the city would be say, the size of a Walgreen’s for the showroom/shop with about 15k square feet for the lot. Even the second tier imports were bigger.
What you kind of miss is that most South American countries had very closed economies at the time. E.g., Brazil completely relied on domestic manufacture of cars and trucks. It was basically a safe haven for former U.S. car & truck manufacturers, such as Kaiser & Willys, with almost zero competition and high profit margins.
There were only two ways for a large company to get into Brazilian market – either to start producing cars locally, with great expense (as GM did in late 1960s), or to purchase an already existing local manufacturer (as Ford did when it purchased Willys-Overland do Brasil and started producing Mavericks there).
There was no “rising tide of subcompacts” there – Fusca (VW Beetle) was still king in late 1970s and early 1980s, followed by a slightly more up-to-date VW Typ 3 based rear-engined car and other locally manufactured versions of relatively outdated European and U.S. models – such as Renault 12 (in Ford Corcel guise) or Fiat 147 (Fiat 127 derivative); Japanese imports were unheard of, as far as I know. AMC – instead of Ford – buying out Willys do Brasil & replacing its dated Aero Willys with something like Hornet – that doesn’t sound like a bad idea to me. Would’ve been a luxury car there.
But yeah – I agree with the “just making AMC a more attractive target” part. Willis or not – it still would have looked like a little fish in a pond full of sharks.
The South American countries may have been relatively closed, but that didn’t stop other larger automakers from getting a manufacturing foothold. For example, according to Wikipedia (2023a), as of 1953 VW started assembling the Type 1 in Brazil. “Beginning in 1958, the Type 1 (‘Fuscas’) had a 24-year run as the number one in sales in Brazil.”
By the late-70s Fiat, Ford and GM were also fielding subcompacts (Wikipedia 2023b). That strikes me as a meaningful amount of competition.
According to the World Bank (graph p. 61), passenger-car production soared in Brazil from 1960-79. I haven’t found an output breakdown by type of car, but I think it reasonable to assume that sales of subcompacts also grew substantially.
I did find Brazilian production figures for Chrysler’s compacts, and they sold modestly. That makes sense because these were considered large luxury cars in that country.
The bottom line is that it is hard to see how AMC was going to become what Foster calls a “world-class automaker” and gain a “lock on the Latin American market” by producing a small number of luxury cars in Brazil and Argentina. Willys had apparently recognized this as a problem and entered into a partnership with Renault, which initially included producing the Dauphine (Wikipedia, 2023c).
Another thing to keep in mind is that Willys did not wholly own these operations. For example, according to Time magazine, as of late-1962 Willys controlled 49 percent of its Brazilian operation. A New York Times article from almost two years later said the renamed Kaiser Jeep Corporation reportedly owned only 38 percent of Willys-Overland do Brasil. A number of sources mention operations being sold to Ford in 1967 because of financial difficulties, but I haven’t yet come across more specifics (e.g., Automobile.fandom; Wikipedia, 2023d).
Thus, the question lingers: Could AMC find a more cost-effective way to generate additional sales and profits than buying Willys’ foreign holdings? Apparently Romney and Abernethy thought so.
I would also question whether AMC’s styling direction with the Hornet would have worked nearly as well in South America as the more international look — and efficient design — of the 1964-69 American. A car roughly like the IKA Torino strikes me as having more potential.
AMC-Jeep in that scenario would have probably benefited from an earlier more equal alliance with Renault by way of the real-life 1965 Kaiser Jeep/Renault Model H Prototype as well as the Willys do Brazil’s Renault 12-based Project M that later became the Ford Corcel.
Fwiw the all-alloy Cleon-Alu engine was originally designed as a Straight-Six for Renault’s Frégate replacing Project 114 and looking at both Renault as well as Alpine’s developments (including by one Marc Mignotet) in growing the regular A-Type 4-cylinder from 1647cc to 1774cc and 1862cc up to 1950cc. It was also proven to fit into FWD cars.
Extrapolate the above into a Six displacing up to 3-litres and AMC-Jeep has a potentially more usable alternative all-alloy 4/6-cylinder engine to acquire a licence from in place of a Kaiser-Jeep licence for the Buick V6 as occurred in real-life.
I think Steve is likely more correct than Mr. Foster, whom I do not know but have read in Hemmings over the years. The accounts I have read about the Kaisers, father and son, trying to sell Willys-Overland in the fifties and sixties, are that the price the Kaisers were asking was too high. What Pat Foster has never reconciled is that George Romney never put A.M.C. at risk, except in 1956 when he bet the farm on the Rambler and shut down the full-size Nash and Hudson in 1957. The cost of the 1963 Classic and 1964 American had to be steep for the unit-body retooling. Only a foolish C.E.O. would add the burden of additional costs and expense in the time frame of 1962-1963-1964 to a small company. But Romney was elected governor of Michigan in 1962, so he was no longer in charge in 1963 and it was not his decision. …And one did not see the boards of directors of Studebaker or International-Harvester going after Willys-Overland, as I am very sure that the Kaisers tried to solicit offers from those manufacturers. While I would like to believe that there are parallel universes where there are factories churning out Studebakers, Packards, I-H trucks and tractors, Nashes, Hudsons and Ramblers, the economics of the world changed after 1945 and the ability to weather the failure of vehicles that failed in the marketplace narrowed. Jeep could not even save Cerberus’ Chrysler investment in 2009. With regard to Romney turning down the Kaisers prior to 1963, the words of Kenny Rogers “The Gambler” seem to apply: “You’ve got to know when to hold ’em; know when to fold ’em; know when to walk away…” I was mentored in my broadcasting career by a very successful businessman and entrepreneur whom several times walked away from big multi-million acquisition deals that he personally wanted, but that priced unreasonably high. The buyer is often the greater fool in the eyes of the seller in these matters: Willys-Overland was likely that kind of acquisition in the eyes of George Romney.
I had broad exposure to AMC cars as a child growing up in the seventies and owned a 70 Hornet for a brief time. I’m a fan of their cars and my criticism is based on affection for the brand. I think AMC management was reckless. It was folly to abandon the practical Rambler image. Each time they did it was disappointing at a minimum, disastrous on average. The unfortunate looking Marlin. The Pacer planned a GM wankell. The 74 Matador coupe which contradicted the overwhelming preference for personal luxury cars. The dead end Porche 4 cylinder.
AMC might have spent money more wisely on developing their in house 4 cylinder earlier, developing a conservative but more modern platform like Ford did with the Fox platform. They might have introduced McPherson struts, a 4 cylinder, and even a 5 speed stick option to the existing Gremlin and Hornet. That and more modern interiors. Combine this with the buyer protection plan and their focus on build quality and I think this would have been a better scenario for success.
Their cars would have been practical and stodgy but could have been pitched as a high quality alternative to the garbage the big three were putting out. Nobody bought a Volvo 240 or a Toyota Corona because it was handsome…. AMC should have aimed to be America’s true import competitor.
My 2 cents.
Further thoughts. Earlier ownership of Jeep would not have changed the disastrous decisions AMC made in the seventies. They still would have had comparatively few resources compared to the big three.
I also think AMC would inevitably had to partner 2ith or been swallowed another manufacturer. A strong AMC with a good brand image might have survived as a brand but owned by a larger company. There’s no reason to think an independent AMC would have survived when far larger manufacturers have had to band together.
With this article you again raise the question of whether Patrick Foster is a serious automotive historian or a dabbler in “pop-history glibness that is scented with Detroit groupthink.” I am reminded of an op-ed penned by Foster in Automotive News dated July 10, 2006 entitled “Remember the days of real MPG?” His viewpoints were so slanted that I felt compelled to submit a response to Automotive News that was never published. At the time, I had not heard of Foster before.
Here is my submission, with two paragraphs deleted, because the first recounts a personal anecdote and the second lacks sufficient context without access to Foster’s complete essay:
Patrick R. Foster ought to be embarrassed for calling himself an automotive “historian” (Remember the days of real MPG? Automotive News 7/10/06). His commentary had more spin than a White House press briefing on Iraq.
He touts the 1941 Nash Ambassador 600’s range of 600 miles per tankful as superior to the Ford Escape Hybrid’s advertised range of 500 miles. But he omits mention of the 600’s miles per gallon. If you strap on a large enough fuel tank, any range is attainable (like the Rutan airplane that circled the globe without refueling).
The next two cars he cites as paragons of fuel efficiency were automotive parodies, much smaller than today’s Mini Cooper and Honda Fit, including the King Midget, which Foster admits was a “teensy 2-passenger runabout.” Its last engine upgrade in 1966 increased its horsepower to 12! (My lawn tractor has 18 hp.) The Crosley was a very small 2- or 4-seater (depending on body style) with a stamped steel engine producing all of 26.5 hp in 1947. The Nash Metropolitan was more mainstream, but still a 2-seater, with a wheelbase of only 85 inches. (The current Mazda Miata has a wheelbase of 92 inches.)
He then states that the EPA city/highway mpg ratings were 30/40 for his 1978 Mazda GLC and 38/52 for his 1984 Renault Alliance. However, he forgot that EPA applied a “correction factor” starting with the 1985 model year, with no change in the test method, which simply lopped 10% off the test result’s city mpg and 22% off the highway mpg. Translation? 27/31 mpg for the GLS and 34/41 mpg for the Alliance. Not surprisingly, the best 1985 ratings among several Alliance models according to fueleconomy.gov are 34/40 mpg.
He also stated that he “regularly saw” 44-47 mpg for his Alliance “with a load of people and luggage driving at 70 mph with the air conditioning running.” I don’t believe it. I never got better than about 35 mpg in my 1979 VW Rabbit with a 1.5-liter gas 4-cylinder, 4-speed manual, NO a/c, 2 adults and 2 small children, and going an indicated 60 mph (true 57 mph).
Foster writes, “Today, aside from a few expensive hybrids, few companies are marketing a truly economical car.” How does he characterize mainstream cars with gasoline engines and automatic transmissions that offer outstanding mileage, such as the very popular Toyota Corolla (30/38) and Honda Civic (30/40)? Not efficient enough? Go for a manual transmission, a VW diesel, or an “expensive” Toyota Prius or Civic Hybrid.