The Renault group’s high profile chairman had been assassinated in fall 1986 by French extremists, and the company’s new chair, Raymond Lévy, was experiencing pressure from all sides.
And the Premier was largely responsible for said pressure, with its lengthy development and expensive new assembly plant in Ontario. AMC on its own lost $91.3 million in 1986, which worsened Renault’s already tenuous financial situation. Lévy’s predecessor had embarked on austerity measures across the Renault portfolio starting in 1985. Factories closed, and many jobs were lost in France while money poured into North America. Lévy continued these initiatives through 1987, and by then the company had stabilized financially to an extent.
However, Renault was still losing money domestically. Across the ocean, AMC was seen as a money pit by Renault executives, and its operations were losing money too. Lévy was not a huge AMC fan like his predecessor, so in considering the financial situation, the unfriendly political climate at home, and the recent assassination, he decided to sell off AMC and North American operations.
Selling AMC seemed the best way forward, as the entire situation was not a great look in France. The action would cut off a big liability to Renault’s finances, please the brass at Renault, and ease tensions with French workers. At the time Renault owned 46.1 percent of AMC’s stock. A handy buyer was found in Chrysler, who already had an agreement with AMC to produce the M-body Diplomat and Fifth Avenue at Kenosha. The existing relationship made negotiations between Chrysler and AMC-Renault easier, and the rumor mill of a Chrysler purchase of AMC had started up in 1985.
The sale agreement was set up on March 9th, 1987. Chrysler agreed to buy Renault’s stake in AMC, plus all other outstanding shares. The deal totaled $1.5 billion ($3.4 billion adj.). Unlike other mergers where lip service is generally paid to “keeping the company whole,” Chrysler was upfront about its reason for the AMC purchase. Lee Iacocca told the LA Times a day after the announcement, “For Chrysler, the attractions are Jeep, the best-known automotive name in the world…” and went on to cite the Brampton Assembly plant, and the AMC dealership network to expand Chrysler’s existing network. Of prime attractiveness to Iacocca was the (ZJ) Grand Cherokee, then well under development at AMC. Shrewd forward thinking there.
The sale didn’t close until the first week of August 1987, when the final piece of the puzzle fell into place: AMC shareholders approved (overwhelmingly) the Chrysler buyout. The fourth-largest US automaker became a subsidiary of Chrysler, and The Big Three remained. As soon as the sale closed, AMC was immediately rebranded as the Jeep-Eagle division. Chrysler separated the valuable Jeep name from a new Eagle brand that would sell a mishmash of products – including the Premier. The AMC brand was just damaged goods.
The Eagle decision was a last-minute one. That much was evident in the promotional materials distributed to dealers, which showed the Premier with Renault badges. A poster on the wall says “1988 Premier” but not Eagle. The internet assures no Premiers ever left dealer lots with Renault badges intact, but even the MotorWeek review featured a Renault-badged car.
Hastily cobbled, the Eagle brand launched in 1988 with the Premier as its flagship. But with new parentage came new product ideas (and overlap), and a new focus. More on that next time.