Trucks, Jeeps

Chrysler Corporation: Buying Jeep in 1987

When Chrysler bought AMC in 1987, it looked bad for the smaller company. Chrysler confirmed some fears by demolishing a parts depot, but then kept Jeep strong, invested in AMC’s plants, and started to adopt AMC engineering practices and people.

The Jeep engineering group was converted into Jeep/Truck Engineering, reviving Dodge pickup efforts and eventually resulting in the hot state-of-the-art 1994 Dodge Ram. They did drop the ancient full-size Jeep pickups (J-10 and J-20, née Gladiator), but these had almost no sales by then.

Chrysler systematically replaced AMC’s outsourced parts with their own, and dropped the GM V6 engine with a far superior AMC straight-six.

Inside Chrysler: on the AMC purchase

Product planner Burton Bouwkamp wrote:

Hal Sperlich, then president of Chrysler Corporation, opposed the purchase of American Motors – he wanted to put the money [$1.1 billion — $2.3 billion in 2016 dollars] in new products.


After Chrysler purchased American Motors, Hal wanted to fold the engineering and styling organizations into Chrysler. Bob Lutz opposed that and was named President of the new American Motors division. Hal was so persistent in putting forth his recommendation that he was an irritant to Lee Iacocca, and Lee fired him. While Lee was at it, he got rid of Jack Withrow and Bob Sinclair, who were loyal to Hal.

castaingThe irony of this story is that Lutz was then appointed President of Chrysler (succeeding Hal) and folded American Motors Division Styling and Engineering into the Chrysler organizations. He then appointed Francois Castaing VP of Engineering.

Chrysler bought American Motors in 1987; I retired on March 1st of 1987. If I was at Chrysler when we acquired AMC, I would probably have been on Hal’s side and I probably would have been eliminated too.

In hindsight, buying AMC was a good decision, although if we had put $1.5 billion in new products under Hal’s direction, that might have worked too. In 1987 Chrysler was as it is today - it still doesn't have the resources to be fully competitive in the world automobile market.

Its alternatives are to be a niche player, like Volvo or Suburu, or to find a partner that can cover the car market while Chrysler covers the truck market. That’s why I was promoting an expanded relationship with Mitsubishi. At the same time, Lee Iacocca wanted to get rid of Mitsubishi— and he did!

Engineering process changes

Francois Castaing said in a 1990s interview:

[There was a] realization that our traditional engineering organization back in 1987-88 wasn’t going to be able to cope with the flow of new products we had to do. Chrysler had no choice but to re-do it quickly.

The traditional system would not have permitted us to either meet the timing or swallow and digest the flow of products coming one after the other ... the new minivan, Jeep Grand Cherokee, Viper, the new LH and so on. So first, out of necessity, we had to experiment with another way of doing it. The other way we found was based on the idea that a small, dedicated team where everybody understood the objective and the customer requirements would be more efficient than centralized, functional organizations. ... the Jeep/Truck group already was more or less organized like that. ... . So we decided to try it. And we expanded from there.

Burke Brown, leader of the LX project, wrote:

The American Motors purchase happened in 1987, [and they brought in Francois Castaing, who started using platform teams]. You have some material on it from Francois, about his passion for the platform concept, which was good at the time because it took a chunk of preselected people, a cross-section of folk, and we did nothing but worry about that LH. It was very focused...

AMC cars become Eagle

After Chrysler bought AMC, they renamed the AMC brand to “Eagle” for no immediately obvious reason, creating the Eagle Premier and — yes — the Eagle Eagle.

New cars

Bob Sheaves pointed out that AMC was largely responsible for Chrysler’s award-winning new cars, which came out through the 1990s. He wrote,

The PL (Neon) was started out of the AMTech replacement for the Renault Alliance, which had been created by AMC, based on a Renault design. When Chrysler bought AMC, the PL people, who came from the old L-body (Omni and Horizon) group in Highland Park, merged with those AMC guys, and the idea was changed from a “square” two box car to a much more modern three-box design that styling leader Tom Gale’s guys had penned.

counterattack; the Neon development team

The Neon was Lee Iacocca’s answer to the statement that American auto manufacturers could not build anything decent to compete against Japanese cars. It was to show just what Chrysler could do (what all of Chrysler could do, not that the fights between ex-AMC and ex-Chrysler guys had slowed down at the time). Lightweight, fuel sipping, powerful, comfortable in an American manner...

What happened to “old AMC”?


Jeep 4 liter engine


The AMC four cylinder pushed out 121 horsepower and 141 pound-feet of torque – far more than the Chrysler 2.5 liter engine that was to appear in 1989, with 100 horsepower and 132 pound-feet of torque. Both engines co-existed and the AMC motor eventually replaced the Dodge engine in the Dakota.

Component changes started in 1988 and continued through to the 1994 model year, the first of the all-Chrysler interiors and components. Chrysler did not change the Cherokee’s Borg-Warner four-speed automatic.


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