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Chrysler Corporation: How Buying Jeep in 1987 Changed Everything

When Chrysler bought AMC in 1987, it looked bad for the smaller company. After confirming some owners' (and employees') fears by demolishing a parts depot, Chrysler started to adopt AMC engineering practices and people, and, in the end, some joked that AMC had taken over Chrysler rather than the other way around.

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Jeep engineers were re-organized into Jeep/Truck Engineering, reviving Dodge pickups and bringing about the hot-selling, state-of-the-art 1994 Dodge Ram. Admittedly, Chrysler dropped the full-size Jeep pickups (J-10 and J-20, née Gladiator), but these ancient relics had almost no sales, and were not under particularly active development.

Chrysler systematically replaced AMC's outsourced parts with their own, replacing the GM V6 engine with a far superior AMC straight-six, and dropping the troublesome Renix electronic ignition systems.

Inside Chrysler: on the AMC purchase

Product planner Burton Bouwkamp wrote in 2007:

Hal Sperlich, then president of Chrysler Corporation, opposed the purchase of American Motors - he wanted to put the money [$1.1 billion - $2.4 billion in 2017 dollars] into new products, instead.

Then, after Chrysler purchased American Motors, Hal [Sperlich] wanted to fold the engineering and styling organizations into Chrysler. Bob Lutz opposed that, and was named president of the new American Motors division.

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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 (former Valiant leader) Bob Sinclair, who were loyal to Hal.

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The irony of this story is that Lutz was then appointed President of Chrysler - and folded American Motors Division Styling and Engineering into the Chrysler organizations. He then appointed AMC's Francois Castaing vice president of engineering.

Chrysler bought American Motors in 1987; I retired on March 1, 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:

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The traditional [Chrysler] 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 that the platform concept "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 and the new Chrysler cars

Bob Sheaves linked AMC to Chrysler's steady stream of award-winning new cars in the 1990s:

The PL (Neon) was started out of the AMC replacement for the Renault Alliance, which had been created by AMC, based on a Renault design. When Chrysler bought AMC, the people 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.
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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"?

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. The Eagle brand was supposed to win over people who would normally buy imports; but with an odd, eclectic mix of Renault, former-AMC, Mitsubishi, and Chrysler cars, it only lasted to calendar-year 1997.

The AMC four cylinder, which easily outpowered its same-displacement Chrysler equivalent, continued on, eventually replacing the Chrysler engine in the Dodge Dakota. The AMC straight six continued for many years, but only in Jeeps; it never made it to Chrysler cars or trucks. Jeep continued along its own path, essentially untouched until after Daimler took over Chrysler.

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; but Jeep would start to benefit from the ingenuity of the New Venture Gear team.

For more, see our trucks/Jeeps page and Jeep WranglerJeep CherokeeJeep WagoneerComanche Pickup4.0 engine


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