New Driver for The Laggard

While publicly professing their usual optimism, Detroit automakers for the past few weeks have been holding their breath. Their $6 billion investment in retooling for new models that have been sharply reduced in size and weight (TIME, Aug. 1) represented a gamble: Would the public like the smaller "big" cars? Last week the carmakers could relax a bit and repeat previous predictions of near record sales during the 1978 model-year with more conviction. New-car sales for the first 20 days of October--during which time most of the new models were in the showrooms--jumped 16% above a year earlier. That figure does not give a definitive reading of public response--early sales are distorted by heavy buying for company fleets--but it was about as good an opening as Detroit could have desired.

For everyone, that is, except American Motors--as usual. Alone among the four U.S. automakers, it suffered a sales decline, of a sharp 28.6%. That cut its long-sliding share of the U.S. market (excluding imports) from an already poor 2.9% last year to a nearly invisible 1.9% during the October period (its high was 6.4% in 1963). It was an inauspicious week for a new driver to take over. Nonetheless, Chairman Roy D. Chapin Jr., the man most closely associated with AMC's long struggle for survival, handed over the chief executive's job to President Gerald C. Meyers. Chapin, 62, from now on will concentrate on maintaining close ties to bankers, including those who every January are asked to renew AMC's $72.5 million line of credit. Meyers, who was named one of TIME'S 200 young American leaders in 1974, becomes at 48 the youngest head of a U.S. car company.

The bad sales figures quickly revived perennial Detroit speculation that AMC cannot be a car company much longer. Though American Motors expects to report a profit of $5 million for the fiscal year that ended Sept. 30, v. a loss of $46.3 million in fiscal 1976, cars had nothing to do with it; profits on sales of Jeeps, postal vehicles and buses carried the ball for the company in the face of car-sales losses.

To hear Meyers talk, however, if AMC does stop making cars the move would have to be forced over his dead body. It has long been AMC's claim that it needs to stay with cars to spread its total vehicle production costs and give its dealers more to offer the public. Ironically, in 1970, Meyers opposed AMC's acquisition of the Jeep business, which has turned out to be a large part of the company's salvation; instead, he wanted to concentrate on cars. Today he admits that "Jeep is a gold mine." Although AMC may no longer be able to exploit a niche in the auto market that the Big Three are unable or unwilling to fill, Meyers argues that AMC can still produce a distinctive auto with its small-car expertise. Meyers, a 6 ft. 2 in. engineer noted for his insistence on developing new products, asserts: "We've got to give the people something new and something good."

Easier said than done: AMC has less capital than its competitors with which to develop new models and reduce the size of its cars in order to meet future stringent fuel-economy standards. But it did scrape up the money to bring out a new '78 model, the Concord. It is a luxury compact that, with options, sells for as much as $5,200--roughly comparable to the price of the fast-selling subcompacts, Honda's Accord and Volkswagen's Rabbit. Meyers believes AMC must now focus its sales push on the Concord to the maximum. He told TIME Correspondent Ed Reingold a bit hyperbolically: "Concord is a runaway success; we will make 100,000. In the past we got drunk on success and started chasing something else. We're not going to make that mistake with Concord."

Concord sales, unlike those of AMC's other models like the Gremlin and Matador, have in fact started fast. But unfortunately for the company, Concord is not all that different; it faces stiff competition from the Ford Fairmont, Chrysler's Dodge Aspen and General Motors' Chevy Nova. And Meyers' optimism reminds skeptical Detroiters of the company's early exuberance about the glassy Pacer, whose sales in 1975, the year of introduction, really did hit 100,000--and then almost stopped. Whether Concord can keep up its initial success will go far to determine if Meyers remains the head of an auto company, or becomes the chief of the first U.S. carmaker to get out of the business since Studebaker. -

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