"Ironic, isn't it?" asked an early '80s Renault ad. "Just when America really needs small, extremely gas-efficient front-wheel-drive cars, most Americans have never even heard of the world's all-time leader in small, extremely gas-efficient front-wheel-drive cars."
You might forgive Renault for being cynical. Sure, it didn't invent front-wheel drive. That honor went to its crosstown counterpart, Citroën, whose 1934 Traction Avant was named for the new layout. But Renault did much to popularize the concept in the mass market, and to advance its packaging and efficiency advantages. The Renault 16 of 1965 had been the world's first front-drive hatchback.
Yet Renault had little to show for its quarter century of selling cars in the United States.
Renault was the first foreign automaker to officially establish a presence in the American market. Six years later, in 1959, a full twenty percent of its production crossed the Atlantic.
Renault's advertising was self-deprecating, like that of Volkswagen's Beetle. Its cars at the time were rear-engined, driving their rear wheels, like the Beetle. They looked more modern, which was no surprise given that they had been designed in the '50s. The VW owed its lines to the '30s. Unfortunately, whereas the Beetle took off as a symbol of counterculture in the '60s, Renault was, after a promising start, left by the wayside.
Renault's cars did not enjoy the build quality or charisma of the German interloper. The French watched, bemused, as a car whose roots could be traced back to the Third Reich captured the hearts of hippies the length and breadth of the West Coast.
Volkswagen even made the transition to front-wheel drive just as the 1973 gas crisis hit, and its Rabbit proved a hot seller in those early, uncertain days.
Renault had its own front-drive hatchback. The Renault 5 was in 1976 billed to Americans as "the incredible little car a million Europeans drive." Renault sales were up eighteen percent on the strength of the R5, and doubled in 1977 when it was engagingly renamed "Le Car." Still, Renault remained a quirky and faintly risky purchase.
Renault wanted more. Its two hundred and fifty outlets (of eighteen thousand Renault dealerships worldwide) were inadequate, and the small network had a reputation for being poorly stocked.
But Renault was about to hit the Big Time.
American Motors, the fourth company in Detroit's "Big Three," was foundering. Formed in 1954 as a merger of Hudson and Nash, it had seen success in the early '60s with its Rambler line of compacts - the kinds of cars that General Motors, Ford, and Chrysler had not shown much interest in building. Indeed, AMC should have been well-positioned to meet the challenges of the '70s, as gas prices soared after 1973.
However, a management change in the mid '60s had seen AMC chase its far wealthier domestic competition. It was a dangerous game for a company whose pockets were not nearly as deep, and whose image and designs boasted a "philosophy of difference." AMC had a reputation for characterful, if challenging, designs whose appeal were decidedly more boutique than the mass market could bear. Two of its most recent examples, the Gremlin and Pacer compact cars, had burned brightly, then fizzled out quickly, as boutique products so often do. More seriously, both were rear-drive, with older engine technology which could not meet the mounting Japanese challenge. AMC owned Jeep, but the sport-utility boom was fifteen years away.
As gas prices soared, AMC needed a fuel-efficient, modern compact car - and that meant front-wheel drive.
Surprisingly, AMC's first stop on its Summer 1977 tour to find a European partner was not Renault, but its Peugeot counterpart. Peugeot's cars in the U.S. were rear-drive, with one or two exceptions. The company, which had recently bought front-drive pioneer Citroën, was mounting a charge to change this.
Meanwhile, every single Renault that you could buy pulled itself along.
Bernard Hanon, general manager of Renault, believed that the most efficient way to make inroads into the American market would be to negotiate the distribution of the French company's products through the sales network of a U.S. manufacturer.
A Renault executive named François Doubin heard that AMC was looking for a partner, and discreetly arrived at the company's headquarters in February of 1978. He met with several AMC executives who explained precisely what kind of cars they were looking for, how much they were willing to pay, and how fast they needed the models. Doubin flew back to Paris to relay his conversation to Renault's top brass — and returned to Detroit forty-eight hours later with a list of what the Paris-based automaker was willing to provide.
Impressed by Doubin's swift action, AMC abandoned talks with Peugeot.
As Renault entered into negotiations with AMC, Chrysler pulled out of the European market on July 10th, 1978, and sold its Spanish, British (Coventry, Scotland), and French plants to Renault rival PSA/ Peugeot-Citroën. The sale price? One dollar!
This further fed Renault's appetite.
In a $250 million deal announced on January 10th, 1979, AMC agreed with Renault to sell both the R5 (Le Car) and R18 (midsize sedan) in the United States, exclusively, through AMC's dealer network, multiplying the number of dealers selling Renault cars in America by more than four, to twelve hundred. Meanwhile, Renault received a five-percent stake in AMC and distribution rights to its Jeep products in France and elsewhere in the world.
AMC had given its dealers new product to sell. But the LeCar and 18i made it little more than an importer - particularly when it became clear that AMC's own models would be left to ride out their product cycles without replacement.
Meanwhile, to Renault's surprise, Americans roundly rejected the new 18i sedan. It had front-wheel drive, fuel injection, the comfiest seats you'll ever have found in a car, and a beautiful, big-car ride. But this most popular Renault in Europe, introduced there in 1976, had made barely a dent in the American market following its launch in 1980. Renault had tried to iron out the most glaring aspects of its French character, but American magazines called it "chauvinistically French"; "a slice of the French psyche on wheels." The 18i had failed to meet Renault's expectations - four times over. It seemed clear to Renault that AMC could and should provide more guidance with regard to the tastes and desires of its home turf.
If the deal was to be successful, each partner would have to offer the other more than either had originally envisioned. Renault boosted its stake in AMC to 22.8 percent.
Renault had been developing a new five-passenger compact sedan. Codenamed Project B42, the four-door car would become the Renault 9, Europe's "Car of the Year" for 1982. Despite the award, the R9 had also been roundly criticized in Europe for giving too much of its Frenchness away in the name of globalization. Robert Opron's sturdy, three-box design was so straight-laced as to seem mundane, setting the stage for Renault's rather ambivalent corporate face that decade.
AMC's engineering staff, on the other hand, was extremely interested. A comfortable French car that wasn't too French seemed just the ticket - and that it had a trunk was a bonus, as Americans preferred sedans to hatchbacks. Moreover, despite its squared-off appearance, the R9 was wind-tunnel perfect for its day, with a 0.35 coefficient of drag. The R9 would be the ideal starting point for AMC's desperately needed front-drive compact.
Through 1982, Renault raised its stake in AMC to $350 million. Its equity in the company now stood at 46.4 percent. The return on its investment in AMC had yet to materialize, as AMC's losses in the past two years had amounted to more than $300 million. But Renault was optimistic that things would work.
Renault had built nearly twenty million front-wheel-drive cars in its twenty years of experience with the layout. Its U.S. sales were up, a two-hundred percent improvement over the days without AMC. Now, Renault and AMC prepared for the American launch of the R9. The car would be dubbed "Alliance," and would be built at AMC's plant in Kenosha, Wisconsin.
Partnering with AMC had, in its view, put the French company closer than ever to success in the U.S. market. "AMC has given us a greater sensitivity to the American market, to the needs of this market, and it's helped us, in the case of the Alliance, to fine-tune the car to the American perception," Pierre Gazanan, the executive vice president and general manager of Renault USA, told Motor Trend.
Alliance was the first front-wheel-drive car that AMC had ever built. Its production line in Kenosha, Wisconsin, had been thoroughly reengineered, to the tune of $200 million, to be more heavily robotized than anything the company had attempted before. The construction of the front-cradle assembly that located the suspension, and mounted the transverse engine/ transaxle package and steering rack, was fully automated. Robots were employed to perform all major structural welds.
"This automation, along with production tolerances reduced to fractions of a millimeter, might just make the Alliance the finest-quality car built in this hemisphere, maybe even the world," gushed Jim Hall for Motor Trend.
Meanwhile, seventeen hundred workers were called back to Kenosha. At an internal presentation of the car in 1982, some AMC dealers openly wept. They'd been through hell over the past five years, and now they finally had a modern product to sell. Potential buyers were enticed with French champagne and Wisconsin cheese.
For the first two years, the Alliance was on fire. It had an all-aluminum engine, five-speed gearbox, electronic fuel injection, rack-and-pinion steering, and fully independent suspension (with innovative twin coaxial torsion bars). It promised fifty-two miles per gallon on the highway. The front "monotrace," or single-rail, seats were a particular delight: comfy, and mounted in pedestal fashion on a single, wide central frame that gave a rocking adjustment motion while allowing rear passengers to slide their feet underneath. Car and Driver named the car to its "10Best" list, calling it "a blending of compact dimensions, surprising creature comfort, excellent fuel economy, good looks, and very pleasing over-the-road behavior that ought to have the various Japanese importers talking to themselves."
Marketing pitched Alliance as a way to get "European technology that's affordable." In the first quarter of 1983, Alliance made up ninety-one percent of AMC's car sales, and singlehandedly doubled the company's market share, to two-and-a-half percent. A Popular Mechanics "Owner's Report," published in June of 1983, indicated that nine of ten Alliance owners surveyed said they'd buy the car again. More than a hundred thousand Alliances were sold in 1983 and 1984.
Even the Fuego, a coupe version of the 18i, was doing moderately well - and certainly better than Renault would have managed on its own. Although Renault's success in Formula 1 was uninteresting to most Americans, the turbo technology which drew from Renault's racing efforts gave Fuego excellent performance while saving fuel - and people took notice.
Things began to go pear-shaped in 1984.
Over in Europe, the new Renault Espace minivan was a revolution. Had it arrived in America (as AMC announced that it would), it could have posed a real challenge to Chrysler's hot-selling Dodge Caravan and Plymouth Voyager. But the Espace was fiberglass-bodied and a rather more expensive product - and Renault could not build enough as it was.
Instead, 1984 brought America a hatchback version of the Renault Alliance sedan. The Encore was, said Renault, "a panoramic hatchback that opens to fit your lifestyle... created with a distinctive European look, and European outlook." Like the Alliance, Encore took home awards from both Car and Driver and Motor Trend. However, even as ads encouraged people to "let go of preconceptions about automotive styling and design," Encore's bubble-glass rear end reignited old fears of French design.
Then, in a cruel twist of fate, gas prices began to fall. People wanted large cars again, and AMC/ Renault had nothing to offer. They'd bet the farm on the Alliance.
There was also the issue of refinement. While the 1.4-liter engine in the Alliance and Encore had been updated with the latest technologies, it was also, in its essence, an older design with its roots in 1962. The "Cléon" was an overhead-valve or "pushrod" engine, not inclined to rev like a Honda, and generally absent of the sort of delicate fizzle that a growing number of import intenders appreciated. A larger, 1.7-liter engine, of the freer-spirited overhead-cam variety, debuted for 1985 - but by that point, few noticed. To the cursory observer, the Alliance, a car which had promised affordable technology, seemed staid.
It mattered not that 1.7-liter Alliances and Encores were faster than their competition, that they handled at least as well as the best in the class or, indeed, that (snatchy brakes aside) there was a lot that was right with the way these cars went down the road; these subcompacts were aging and subcompacts were growing tiresome. Alliance/ Encore sales faded to just sixty-five thousand cars in 1986.
Renault also launched a convertible version of the Alliance - the lowest-priced convertible in America. Like the new sporting Alliance coupe, dubbed GTA, it was at best a niche car, plying an image that was no longer sought.
French engineers helped AMC modernize the Jeep Cherokee, while AMC itself saw some success with its cleverly updated Eagle line of four-wheel-drive wagons.
Cherokee and Eagle both presaged the SUV boom that would soon follow. So, too, did Chrysler's Lee Iacocca.
Having saved Chrysler from bankruptcy in the early '80s, Iacocca was flush with cash, buying Lamborghini and partnering with Maserati. While neither of those investments would quite work out, he'd had his eye on Jeep for some time. That would prove most prescient.
Iacocca's first move was to ask AMC to build fifty thousand copies of Chrysler's "M-Body" Fifth Avenue at Kenosha. The old rear-drive car had experienced an unexpected uptick in popularity.
AMC was only too happy to get the work. Its domestic passenger-car sales fell forty-one percent in 1986, a year in which it had achieved the dubious honor of being the first to use "zero-percent financing" incentives. The Jeep Cherokee continued to set sales records, but for the moment it could not sustain the company. The Alliance, though improved, would not sell.
By the end of 1986, AMC was in dire straits. "The wolves are at AMC's doorstep," wrote Arthur St. Antoine for Car and Driver.
"The balance-sheet pens at American Motors have been filled with nothing but red ink for years, and now the struggling automaker is mounting what could be a last-ditch effort to save itself from financial ruin."
Freelance writer Ken Gross surmised, "When a company loses money as AMC has done, customers pick up a whiff of death, and then shy away even further."
The answer, AMC executives promised, lay in three larger cars: the compact Renault Medallion four-door sedan and wagon (lightly Americanized versions of the Renault 21), the Premier midsize sedan (an Americanized Renault 25), and the Renault Alpine sports car.
Over in France, Renault was in trouble. Its unions were accusing it of propping up AMC while it laid off French workers. When its CEO was assassinated by militant union activists, the writing was on the wall.
While the Alpine was due to start prowling American streets before the onset of Summer 1987, it never materialized. On March 9th, 1987, Chrysler announced that it would buy a controlling interest in AMC.
Given the effort Renault had put into conquering America, the deal seemed surprising. It was particularly enigmatic given that the new Renault Premier would be built in a brand new, $700 million plant in Bramalea, Ontario. One analyst commented that it was as though, after nine months, Renault wasn't sure whether it really wanted to be pregnant.
The market had simply turned on Renault's econocars. With the gas crisis over and the Ford Explorer SUV on the horizon, Americans were clamoring for the bigger engines of old yet again. Even so, the premature unloading of AMC meant that Renault would never see the benefits of the Jeep division. Moreover, the news overshadowed the launch of both Medallion and Premier, and Chrysler Vice Chairman Bob Lutz would later term the cars "unsellable."
Medallion would last but two years; Premier, four, although the Premier would have a significant impact on the design of midsize and large Chryslers for the ‘90s. Its rear disc-brake design would also live on in Dodge's Viper supercar.
Indeed, the same could be said of AMC's engineers. They were led by François Castaing, formerly from Renault's F1 team, and he would quickly rise to lead Chrysler engineering as well. The 1993 Jeep Grand Cherokee, a rousing success through the '90s, had been designed under Castaing during the Renault days at AMC.
Chrysler got the blame for closing Alliance's Kenosha home, America's oldest operating car plant, in 1988. "Lee Iacocca lied to us," read a banner over a local tavern. "It was just too inefficient," explained Chrysler spokesperson Baron Bates.
The Renault-AMC partnership was among the first of its kind in the U.S. auto industry, following a similar deal between Chrysler and Mitsubishi, and in advance of Ford's arrangement with Mazda, and General Motors' tie-ups with Isuzu, Suzuki, and Toyota.
In 2009, Car and Driver apologized for naming the Alliance and Encore to its 1983 and 1984 "10Best" lists. "That car... well, it was the early '80s and after a bottle of Lafite-Rothschild at lunch, my feelings for the French were at an all-time high," continued the magazine's mea culpa in 2015. Renault's abrupt departure had left hundreds of thousands of owners without a support network that understood the cars and could source parts quickly. Making matters worse was that Renaults of this era had difficulties with heating and cooling, and with the three-speed automatic transmission with which some were equipped. The aluminum engines did not take well to failing thermostats and many died an early death.
Every few years, Renault reiterates that it is content to let its Nissan partner duke it out in the American market and that it has no plans to return itself. That said, sometimes an executive or two will let out a pang of regret over the sale of AMC.