Chrysler's AMC buyout fits long history for both firms
Detroit — The Chrysler Corporation's successful takeover of rival automaker American Motors Corporation is the latest in a string of mergers and acquisitions that have come to shape the No. 3 United States auto manufacturer. In the last year alone, Chrysler has expanded ties with a number of carmakers - and it hints that other links could be forthcoming. But none are likely to have as big an effect on its product and dealer lineup as the AMC merger.
While most historians date the origins of Chrysler back to 1901, when the Dodge brothers went into the automobile parts business, the company can actually trace the first roots on the family tree back to 1877 and the Columbia Bicycle company.
Over the years, Chrysler has acquired such automakers as the Maxwell Motor Company, Saxon Motors, and the Chalmers Motor Company. The Dodge brothers themselves saw their operation swallowed up by Walter P. Chrysler in 1928.
That was the last big linkup for Chrysler for more than half a century. But in the past year, sparked by multibillion-dollar profits and the need to make strategic worldwide alliances, the automaker has announced plans to buy a majority share in Maserati, the Italian luxury sports carmaker, and another Italian auto manufacturer, Lamborghini, best known for its $150,000, 200-mile-an-hour Countach.
Chrysler also has ties to a Japanese carmaker, Mitsubishi Motors, with which it is building a new assembly plant in Bloomington-Normal, Ill. But the AMC acquisition is clearly the largest - and most important in nearly 60 years.
``The US auto market is a battleground,'' Chrysler chairman Lee Iacocca proclaimed Wednesday, shortly after completing the buyout. ``We've just extended our perimeter.''
American Motors has its own history of acquisitions and linkups. The company was formed in 1954 with the merger of the Hudson Motor Car Company and Nash-Kelvinator.
In 1970, AMC acquired its popular and profitable line of sports utility vehicles, the Jeep, which traces its roots back to the Willys-Overland Company, and a half-dozen other nameplates of yesteryear, including the Kaiser-Frazer, Pope-Toledo, and the Duesenburg (which prompted the phrase ``It's a Doozie!'').
It is the Jeep division that most observers see as the jewel in Chrysler's AMC acquisition. It is clearly the most successful and profitable portion of that carmaker's operations, fueling the expanding ``crossover market,'' in which a growing number of baby-boomers are trading in their station wagons and sedans for pickup trucks, minivans, and sports utility vehicles.
Since 1980, Chrysler has invested roughly $1.5 billion to expand its light truck operations, Mr. Iacocca notes. Chrysler sold about one truck for every five cars in 1980. Today that is about one truck for every two cars. And with Jeep, he says, Chrysler will control about 20 percent of the domestic market, its largest share ever.
Over the next six months or so, Chrysler will have to determine how to merge its latest acquisition into its own operations. Well-placed sources say plans have not been completed, but they give a glimpse at what may happen.
The first step, announced Wednesday, is the rechristening of American Motors as the Eagle/Jeep division. ``The real news is that Chrysler hopes to bring the P-car (the subcompact Sundance and Shadow models) and the minivans to Eagle dealers ... in the 1989 model year,'' says a source who is closely familiar with Chrysler current product plans.
That should enhance the relatively modest offerings now available from former AMC dealers. In return, Chrysler hopes to get some AMC products, notably Jeeps, for its own dealers.
``The target is that ... the Wrangler, the Cherokee, and the Wagoneer Jeeps should show up in the 1989 model year in Chrysler and Plymouth dealers,'' the source says, adding that several of those models will be updated in 1990 with the introduction of an entirely new Jeep platform, currently dubbed the ZJ.
The ZJ will also mark a major step in the consolidation of Chrysler and AMC's assembly operations. Chrysler executives favor plans to build the new Jeep at their soon-to-be-refurbished Jefferson Avenue assembly plant in Detroit.