Monday 9th January 1967
Roy D Chapin Jr was named Chairman of American Motors to succeed the retiring Robert B Evans. AMC President Roy Abernethy also retired and was succeeded by William V Luneberg.
Chapin joined American Motors in 1954 when the corporation was formed with the merger of Nash and Hudson. Later, he served as an assistant treasurer and a director at AMC. By 1964, he held the post of executive vice president in charge of international operations of AMC. Robert B. Evans, chairman of AMC, recognized the talents of Chapin and promoted him from an executive vice president to take his place as chairman of the board.
The “dynamic and intelligent” Chapin was appointed to fill the CEO position at AMC following the departure of Roy Abernethy in 1967, along with William Luneburg as president. Chapin realized he was taking over at a crucial time; The Wall Street Journal described it as “a dying company.” At the time, Chapin said, “We’re going to have to show ingenuity.” He reflected later that the most difficult period was “… when our president, Bill Luneburg, and I took over. We were out of money and we had to do something to overcome the immediate problems. We had no time to think about long-range problems. Obviously, we managed to solve immediate considerations…”
At the time Chapin took control of the company, AMC’s share of U.S. auto sales slipped, from 6.4% in 1960 to a mere 3.2 percent. On top of the loss of US$12.6 million in fiscal 1966, Chapin and new President William V. Luneburg had more bad news for the annual meeting of shareholders by reporting a 10% sales drop from a year earlier (to $257 million) and the company lost another $8,459,917 (US$63,809,466 in 2017 dollars) in the first quarter of its 1967 fiscal year. The company skipped paying a dividend for the sixth straight quarter and to control the inventory of unsold cars AMC closed its factories for ten working days, the second such shutdown in two months. For the entire year AMC “lost an astounding $75.8 million.” During an era when relationships were vital to securing corporate financing, Chapin “was a well-known industrialist who inspired great confidence among the leading financiers of his day” to help keep the automaker going.
In just a few weeks in his new post at AMC, Chapin decided to focus on the smallest and at that time the least popular AMC model — the compact Rambler American. His objective was to double Rambler sales to 140,000 cars in 1967 and recapture at least 10% of the compact market that AMC once dominated. He saw a gap between U.S. cars and the inexpensive imports (primarily the Volkswagen Beetle) and positioned the Rambler right into the center of this gap with a new, low price tag to make its total value superior to the imports, as well as superior in both price and range of choice” to U.S. compacts. Chapin cut the suggested retail price of the basic two-door Rambler American sedan to $1,839 (US$13,497 in 2017 dollars), which was $278 less than its closest U.S. competitor, the $2,117 Plymouth Valiant. This move made the considerably larger and more powerful American only $200 more than the rudimentary Volkswagen. By forgoing the annual styling changeovers that were expected among the domestic firms, AMC could save retooling costs and keep the car’s price so low. Helping AMC was the strategic decisions by the competing automakers not to match the price drop.
Within a month of taking their positions, Chapin and Luneburg reversed the automaker’s upholding ban on racing that was instituted by the Automobile Manufacturers Association (AMA) in 1957. American Motors began race car sponsorship and focused on developing new muscle cars models for consumers looking for performance.
In addition to slashing prices and sponsoring Ramblers in racing to help build a performance image, Chapin was optimistic because the company had cut costs by $27 million a year, hired new executives, and had significant products in the pipeline, including new youth-oriented models. Chapin appeared in print advertisements where he was interviewed by John Bond, publisher of Road & Track and Car Life about product and corporate strategy to assure the success of AMC. Chapin continued making changes for the 1968 model year, and took the bold step to make air conditioning standard on all the AMC Ambassador models at a time when this comfort feature was still an option on the expensive Cadillac and Lincoln brand luxury vehicles. After the disastrous 1967 results, the company’s retail sales increased 13% during fiscal-year 1968.
Other changes during included new marketing campaigns with Guy Hadsall Jr. reporting directly to Chapin. These included dropping the road shows for introduction of new models in favor of closed circuit TV, as well as “dynamic meetings” by holding the first automobile sales events in the sky using chartered flights to “mystery” destinations. The automaker’s new advertising agency Wells, Rich, and Greene that was headed by Mary Wells Lawrence was also “innovative and daring in its approach.” Print and TV advertisements broke with the traditional convention of not attacking the competition, with AMC cars appearing side by side with competing makes. The launch of the two-seat AMC AMX sports car was through a marketing agreement with Playboy Enterprises.
The 1970 AMC Hornet was launched under Chapin’s leadership as a value compact to compete against the “import tide.” Chapin worked with Ivan Vassall Sr., who in 1969 established the first black-owned auto dealership in Philadelphia.
Chapin was a promoter of innovation at AMC. In 1967, he announced a joint venture with Gulton Industries for development of an electric automobile. A three-passenger commuter, the Amitron was an experimental design shown to the public
While at the head of AMC, Chapin spearheaded the acquisition of Jeep from the Kaiser Motors Division of Kaiser Industries in 1970. According to Chapin: “Perhaps the easiest decision I ever made was the purchase of Jeep from Kaiser in 1970. I tried to buy it when Geo rge Romney (later Michigan governor) and Roy Abernethy were running AMC. Romney and Edgar Kaiser couldn’t get along. I was running the international operations under Abernethy and I was following Jeep around. When they put up a plant, I followed with a Rambler plant because it worked like a charm. Where Jeep was, there were roads and gasoline. Abernethy didn’t go for the idea and the first thing I did when I became chairman and got a little money was to buy Jeep. We got it for a song, about $75 million…”American Motors’ engineers and designers quickly overhauled Jeep and expanded its lineup, creating a valuable asset that attracted Renault, Chrysler, and ultimately DaimlerBenz AG.
Chapin was also interested in the Wankel engine and stated “that the rotary engine will play an important role as a powerplant for cars and trucks of the future.” An agreement was signed with Curtiss-Wright in February 1973, for AMC to build Wankels for both passenger cars and Jeeps, as well as the right to sell any rotary engines it produces to other companies. American Motors designed the unique AMC Pacer around the engine, but the production cars used AMC’s conventional piston engines.
In 1977, on the 75th anniversary of the “birth” of two organizations, American Motors and Popular Mechanics, Chapin described AMC’s “corporate philosophy of difference, under which we strive to offer the American motoring public a wider choice” and stated that “the most significant change we can look to will be the development of alternate sources of power to replace our dependence on fossil fuels.”
Chapin was also instrumental in developing collaboration between American Motors and Renault. He was also in favor of Renault investing in AMC, but was distressed by the company’s sale to Chrysler.