Roy Abernethy - The Results

The Results

The evidence suggests that Abernethy was correct in making the Ambassadors more upscale with sales of the new models, that combined luxurious packaging and reasonable size, jumped from 18,647 in 1964 to over 64,000 in 1965 and then in 1966 they went even higher, to more than 71,000. However, there were serious problems. The company’s manufacturing facilities were ill equipped to take on the job of multiple chassis models. The costs of developing the new cars and engines meant managers now had problems in securing working capital to keep the company going. American Motor's automobile sales dropped twenty percent in the first half of 1966, and the firm reported a fiscal six-month loss of $4.2 million on sales of $479 million. The situation was so bad that Robert B. Evans invested more than US$2 million because AMC's stock was selling for only 60 percent of the company's net worth, thus becoming its largest stockholder and was named its chairman.

Abernethy was spending so much money that it was difficult for the company to turn a profit and rumors started to have a snowball effect on the company. With the financial health of the company in question - as well as the future of the company - even an extra long engine warranty appeared to be not enough to instill confidence among consumers. It was the strongest backing among all the automakers up to that time and promised to cover the entire vehicle for 2-years or 25,000 miles (40,000 km), as well as the engine and power train for 5-years or 50,000 miles (80,000 km). The last quarter sales for AMC (which included the newly introduced 1967 models) were disappointing. AMC recorded a balance sheet loss of $12,648,000 for the year. The 1965 and 1966 Ambassadors represented a crossroad in AMC's history, one at which some historians would say it took the wrong turn.

The company changed leaders from the likes of Romney, who defined the compact car segment, to that of Abernethy, "a likeable super salesman who unfortunately landed at the top as the market began to quickly change." He discounted the obvious industry trend toward youthful performance models. Even with the Big Three entering AMC's market niche, Abernethy insisted that the compact car revolution was not over and was prediting the automaker would sell 550,000 units in 1964 the total market increased from 2.6 to 3 million compact-sized cars. However, Abernethy presumed that customers needed more choices among those available from the Big Three with their new models in the compact car market. American Motors did not have the deep resources and market power. The Kaiser-Frazer Corporation also tried unsuccessfully to challenge the Big Three market leaders in their existing product segments.

In 1965, the Kaiser family decided to sell the Jeep operations and charged Stephen Girard to find a buyer. He was friends with Roy D. Chapin, Jr. and lobbied AMC's president to buy the light utility vehicle business.A tentative deal with Girard, fell apart when Henry Kaiser demanded a steeper price and Abernethy refused.

In the five years of Abernethy's tenure as president, the company had gone from a profitable operation to a losing one. Abernethy was forced to "drop out of management team" from the company by taking an "early retirement" on January 9, 1967.

After the departure of Abernethy, AMC's management decided to enter motorsports as a method to gain exposure, publicity, and a develop a "performance" image. The automaker joined its domestic Big Three's “Race on Sunday, Sell on Monday” philosophy. A new position, Performance Activities Director, with Carl Chamakian, was established to get AMC automobiles in racing that would attract a younger customer base during the height of the muscle car era.