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Trade Journal: Chrysler Plans to Dismantle and Absorb AMC

March 17, 1987

DETROIT (AP) _ American Motors Corp. will be fully absorbed into Chrysler Corp. by late 1987 if Chrysler’s proposed buyout plans proceed on schedule, an industry trade journal reported.

Under the proposal, AMC would remain an independent subsidiary, but not for long, Chrysler Vice Chairman Bennett E. Bidwell was quoted as saying in Monday’s edition of Automotive News.

″The free-standing subsidiary concept will only be transitory,″ Bidwell said. ″If the deal is consummated, it would be our intent to bring it within the purview of Chrysler Motors expeditiously.″

Chrysler has agreed to buy French government-owned Renault’s 46.1 percent interest in AMC and all other outstanding AMC shares, as well as assuming AMC’s debt and at least part of its liabilities.

The deal requires approval by the French, Canadian and U.S. governments; AMC and Chrysler directors, and AMC’s shareholders. Chrysler and Renault say they plan to work out the details of the agreement within the next 30 days.

The absorption would be completed by year’s end, Automotive News said.

Chrysler spokeswoman Karen Stewart told The Associated Press the statement attributed to Bidwell was accurate. But she declined to say when AMC might be integrated into Chrysler’s operations.

″Trying to attach any time frame at this point is really premature,″ Stewart said Monday.

Meanwhile, Ford Motor Co. spokesman Chuck Snearly said executives of the No. 2 automaker last year considered buying AMC but decided the move would not be a good business decision.

″I don’t want to say we didn’t seriously consider it because they looked at it and gave it their attention, but it never went beyond an informal study stage, so in that sense it wasn’t serious,″ Snearly said.

Chrysler, the third-largest U.S. automaker, would retain that ranking with absorption of No. 4 AMC, which mainly produces Jeep trucks and sport-utility vehicles along with Renault Alliance and Encore subcompact cars.

Chrysler ″would have no plans at this time to unilaterally expand the Jeep franchise,″ as industry analysts have speculated, Bidwell said.

Some Jeep products, however, might be discontinued because of competition with Chrysler’s line, especially Jeep’s full-size pickups. Jeep’s Wagoneer and Cherokee, however, have no equivalent at Chrysler and were a main factor in the buyout offer.

Chrysler has no sport-utility vehicle of its own and had planned to develop and launch one by 1991. The AMC purchase would eliminate Chrysler’s costs and waiting time for such a vehicle.

Bidwell also said that while Chrysler has agreed to continue AMC’s U.S. distribution of the new Renault Medallion sedan for five years, it hasn’t agreed to sell a specific number of the French imports.

Chrysler has agreed to sell at least 300,000 Renault Premier mid-size models in 1988-92 or pay a penalty to Renault, Chrysler Vice Chairman Robert S. Miller Jr. said. Premier would be sold through the AMC dealer network, he said.

Premier, built at AMC’s new plant in Bramalea, Ontario, is scheduled for introduction this fall. Chrysler hasn’t decided under which brand name it will sell Premier, Miller said.

Chrysler also has made no promises about the slow-selling Alliance, built at AMC’s plant in Kenosha, Wis.

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