IN 1986, Renault's situation was near disaster. The company lost about $6 billion during 1981-86.
'In 1986, Renault was in a state of survival,' recalled Gerard Gastaut, at that time AMC's vice president for business planning and corporate affairs. He is now in charge of Renault's international strategy at the product planning division.
'The challenge was clear: to bring Renault back to life, whatever the means might be,' Gastaut said. 'So it was decided to focus on Europe, quality and competitiveness. All the rest was sold, closed or left dormant.'
The US subsidiary posted net losses of $767 million 1980-86. 'It was impossible to turn AMC around,' a company insider said.
Ironically, AMC earned nearly $54 million in the first half of 1987. But it was too little, too late.
'We realized we probably didn't have the resources or the staying power to keep it up,' said AMC President Joseph Cappy. 'So when Chrysler stepped in, it was a real blessing.'
Still, AMC accounted for less than 10 percent of Renault's total loss in 1986. Could Renault have closed AMC's loss-making car division but kept the Jeep jewel?
'It would have been too expensive to liquidate AMC, especially because it would have been necessary to book a provision for the pension funds,' said Gastaut.