American Motors was formed from the merger of
Nash Motors and
Hudson Motor Car Company, and the company hired Abernethy in 1954. During AMC's formative years, the company struggled with costs and sales. Abernethy became vice president of sales and concentrated on building AMC's sales and distribution network. He recognized that promotion and advertising are useless without a strong dealer organization, so his first task was to convert every Hudson and Nash dealer into an AMC dealer. He then kept many of these
dealers allied with AMC, thus helping to keep the corporation afloat, until AMC found its compact car niche under Romney's leadership. He was known to fly a year to make AMC synonymous with the
compact car. On February 12, 1962, the AMC
board of directors selected the 56-year-old Abernethy to replace Romney. This was the first time the company had separated the position of president from the chairperson of the board. Abernethy became responsible for day-to-day operations as president, while
Richard E. Cross, the automaker's legal counsel and new chairman, was now called AMC's chief executive officer. Both took command of a financially strong company (
working capital increased from a low of $46 million in 1957, to $103 million, and the firm eliminated all long-term debt), with sales increasing from $362 million (91,469 automobiles) in 1957, to more than $1 billion (422,273 total units) in 1960. One of the first tasks for the small automaker was to make its capital work harder in the face of competition with the automotive giants. Abernethy continued Romney's prohibition on automobile racing, which had been instituted by the
Automobile Manufacturers Association (AMA) in 1957. He made AMC observe both the letter and spirit of AMA's resolution, and was against a renewal of the auto industry's horsepower race by offering ever more powerful engines, as well as corporate sponsorship of activities that glamorize speed and performance. AMC's market performance reached record levels in 1964, placing the Rambler brand in third-place position in the domestic sales race. At the same time, AMC publicly disavowed any interest in automobile competition. Corporate advertising answered the question "Why don't we enter high-performance Rambler V-8s in racing?" with "Because the only race Rambler cares about is the human race." The "messianic fervor with which both former AMC president George Romney and his successor, Roy Abernethy, spread the message of fundamental motoring" helped solidify the image of the "Rambler driver" - a market segment that finds "any forms of performance repugnant." Nevertheless, in mid-1963 AMC announced a new V8 option in the
Rambler Classic models (which were previously available only with I6 engines, and the V8s reserved for the Ambassador line) as well as made a partial attempt to tap into the rapidly growing muscle and performance car image by introducing the sporty
Rambler Marlin midway in the 1965 model year. The mid-sized fastback model made the public "aware of changes in Rambler's styling - the reaction is favorable." However, Abernethy is now known for reversing Romney's plans for AMC that involved maximum parts compatibility for all lines of AMC vehicles. Abernethy was a big man of — smoking ten corona
cigars a day Abernethy said repeatedly that AMC's "main problem was its image lag — the fact that too many people still thought of American Motors as the builder of plain Jane compacts." He also started to move the Ambassador upscale to compete with other manufacturers'
full-size cars. Moreover, larger models typically return bigger profits. Offering larger, and often more prestigious or "
halo cars", can also help make the firm's smaller models look more attractive to consumers. Thus, as part of this vision, Abernethy put into motion a total remake of AMC's
corporate identity and its
marketing mix that would divorce its larger car lines from its
Rambler brand and his perceived "negative"
compact car image. The first models with Abernethy's
corporate strategy "in the business world's toughest race — the grinding contest against the Big Three automobile makers" were the cars introduced for the 1965 model year. The 1965 models were a major makeover of the completely new
platform that had just been introduced in 1963. American Motors' new cars included the stretched and more luxurious
Ambassadors, as well as new convertibles for the large models. New styling, more powerful engines, as well as numerous comfort and sports-type options, were now emphasized. Abernethy even switched the automaker's advertising agency to promote "a better luxury and sports car image". However, Abernethy had his critics, who contended that AMC "had its great success when it was doing what the Big Three weren't doing". at a price below
Impala,
Fury,
Galaxie..." The strategy shift at first seemed to be working, because sales of the redesigned 1965 and 1966 Ambassadors improved, even as AMC's overall production decreased from the record level achieved in 1963. However, corporate earnings per share were a meager 27 cents per share, the lowest since AMC made its famous compact car comeback in 1958. == The results ==