[Funky bass line music starts] NARRATOR: As Gerald Meyers discussed future car ideas in June of 1971, none felt right.

The new Vice President of Product Development for American Motors Corporation wanted something its competitors didn't have.

GERALD MEYERS: It was my opinion that we needed to continue to be different.

At that time, our bigger cars had tailed off and fuel prices were rising.

And I went to Dick Teague and I asked him if he could develop with the engineers, a vehicle that was attractive, small, and fuel-efficient.

NARRATOR: In response, VP of styling Richard Teague doodled a futuristic pod with giant windows.

NARRATOR: Meyers liked it.

A spacious but economical commuter car would be perfect for the country's increasingly crowded highways.

And, no rival offered anything like it.

FRANK PASCOE: American Motors had to think out of the box, in order to survive.

We did some wild and crazy things there.

[Engine vrooms] ANNOUNCER: Funding for The Last Independent Automaker was provided in part by... [Driving rhythmic music] WOMAN: We are Detroit.

And when we move, you move.

ANNOUNCER: Funding was also provided by...

The Alfred P. Sloan Foundation... MotorCities National Heritage Area... And also... For a complete list of funders, visit APTonline.org [1970s music plays] NARRATOR: Vice President of Styling, Richard Teague.

excitedly oversaw AMC's new commuter car project, codenamed "Amigo."

Like the Ramblers of the '50s, the goal was to provide big car comfort, without the extra bulk.

JOSH GREENPLATE: The first thing they did was basically put four chairs out on the floor of a styling studio and had people sit in them, and they basically developed the car around that.

It was one of the first times an American company really considered ergonomics and the people in the car in developing it.

NARRATOR: Engineers planned something equally radical under the hood: a Wankel rotary engine that was small, quiet, and light.

DAVE PERRINE: In a piston engine, everything happens in the same cylinder over and over.

The way a Wankel works, intake happens in one section, combustion happens in another section, and then exhaust happens in the other section.

Each action has its own separate compartment in the engine as it turns.

NARRATOR: Conceived by Felix Wankel in the 1930s, it had seen limited use in cars.

But now, a rotary craze swept the industry, as General Motors made plans to build its own.

Soon, AMC was negotiating to buy GM rotaries for the Amigo.

PATRICK FOSTER: Many people thought that Wankel Rotary was going to be the engine of the future.

So, the idea of a very compact engine like the Wankel to go into a very modern car, was ideal.

It was tremendously smooth, and that was going to be a big advantage.

And of course, everybody else selling a small car at the time, they'd have a cramped interior, they'd have a lumpy four cylinder engine.

And the Amigo was going to just outshine them all.

PERRINE: We didn't have a lot of experience with rotary engines.

And we installed two rotary engines in two different Gremlins for some performance evaluations and they turned out to be pretty peppy.

That little engine was very impressive.

[Engine noise] NARRATOR: But at the moment, American Motors was actually struggling to build enough regular engines, as both its economy cars, and four-wheel-drive Jeeps, were seeing record sales.

[Upbeat country music starts] PATRICK: Jeep went from being a work vehicle to a true recreational vehicle.

If you look in the 60s, most of the pictures are of guys plowing driveways or they're going out to rescue people whose cars won't start.

Pickup trucks are always with construction companies.

Then you get into the 70s, they're driving along the beach with the wind blowing through their hair and instead of being in work clothes they've got a beautiful girl with them and they're just having a tremendous amount of fun.

NARRATOR: Despite the current oil crisis, the large Wagoneer and new Cherokee were highly profitable.

But the best seller was the CJ or "Civilian Jeep," modeled after the World War II icon.

DAVID TRACY: In many ways, that World War II Jeep represents freedom.

It's a bit cliché, but it's one of the most beloved vehicles of all time.

If you can use that in your marketing it doesn't get better than that.

[Cars zooming] NARRATOR: Meanwhile, the car market was evolving, as sporty "muscle cars" gave way to "personal luxury coupes."

[upbeat easy rock music] RICHARD BENNETT: They had to have the style.

The long hood, the vinyl tops, wheel covers, velour seats.

That was the car to see and be seen in and so if the automaker come out with a stylish personal luxury coupe, boom they had an instant hit on their hands.

NARRATOR: For 1974, AMC replaced its basic Matador coupe with an ostentatious new model.

But Teague and his team eschewed the stuffy styling of competitors for a sleeker shape.

MAN: There is an undeniable smugness stamped into the fenders of AMC's new Matador.

A refreshing exception to the headlong rush of Detroit's automakers into the opera-windowed world of gimmickry.

Matador is this year's style leader.

PERRINE: I saw the first prototype I thought it was the most aerodynamic looking piece of sheet metal I'd ever seen in my life.

NARRATOR: That shape came at a price, though; as the new coupe no longer shared body panels with the sedan and wagon, making it more expensive to manufacture.

But, with strong initial sales, a few NASCAR wins, and a role in the latest James Bond movie, it was off to a good start.

NARRATOR: Like the Matador Coupe, the Amigo also, would not share body panels with any existing product.

NARRATOR: So far, the design tested well with focus groups.

TOM HALE: The size of the interior, the comfort of the interior, the downsizing of the overall dimensions of the car.

All of those things were in favor of people rather than style so much.

And yet, it still had that really distinct look that no other car had.

BOB MONACELLI: It was a very unique car.

One door was wider than the other, so you can get in the back seat a little easier and it had a lot of glass.

You had no blind spots whatsoever.

NARRATOR: While five feet shorter than a Cadillac Fleetwood, the Amigo would be almost as wide and have way bigger windows.

The whole design exemplified what Chairman and CEO Roy Chapin Jr. called, AMC's "philosophy of difference."

HALE: We didn't have the extent of committees that the big companies have and so many of the committees play it safe.

You know, you don't want to be too radical.

You get booted out of the room.

You know?

NARRATOR: Unfortunately, American Motors had left a critical piece outside its control.

[Ominous funk music] NARRATOR: By 1973, GM realized that the Wankel engine's high operating temperatures caused reliability issues and made the exhaust too dirty for pollution regulations.

But, when re-engineered for cooler, cleaner, operation, it burned too much fuel.

The engine could either be efficient or clean, but not both.

With the country in the midst of an oil crisis, this was a catastrophe.

FOSTER: Mazda, which had rotary cars on the market, had been doing pretty well with them.

Their sales went right down the toilet, all of a sudden they had to cut prices, and they had to offer special deals on them.

NARRATOR: That December, GM dropped a bombshell: the Wankel engine would not be ready for the Amigo's 1975 debut or maybe, ever.

AMC now scrambled to redesign the car.

MEYERS: At the last moment, we had to jam a six cylinder engine into a rotary engine space, and it wasn't a good thing because it didn't fit very well, and secondly, because it was too heavy.

FOSTER: When you go from a rotary engine that weighs maybe 250 pounds to a cast iron inline six that weighs maybe 500 pounds, you've got to beef up the chassis a little bit.

You've got to put heavier springs on it, you've got to put bigger shock absorbers on it, and then you've got to put a heavier transmission behind it because it has a lot more torque.

And then you've got a heavy car.

[Engines revving] NARRATOR: In the fall of '74, the "Amigo" was revealed to the press as the 1975 AMC Pacer.

Development costs had ballooned to 60 million dollars, meaning the new car had better be a success.

Roy Chapin remained optimistic, although he admitted the design was "controversial."

Popular Mechanics magazine mused, "This is the first time that a car manufacturer has said in advance of bringing out a new product that some people may not like it.

That takes guts.

That's different.

That's Pacer."

GUY: Ok hit it!

♪♪ ♪ Wide!

Small was never this wide.

♪ ♪ Wide!

Small was never this wide, wide, wide, wide!

♪ ANNOUNCER: Introducing the AMC Pacer!

The first wide small car.

MAN: Ah!

look out!

WOMAN: It's too wide!

ANNOUNCER: The widest small car made.

WOMAN: Jump!

ANNOUNCER: The AMC Pacer, the first wide small car.

GUY: I didn't know it was that wide!

NARRATOR: The Pacer went on sale in February and was immediately a hit.

[Upbeat disco music] JEFF KENNEDY: It was a big deal, that car was so ahead of its time, and so different from everything else on the market, and the showroom traffic was incredible.

I remember one time I drove a new Pacer over to the post office, came out, there's a big crowd around like, "What is this?

What is this?"

MALE VOICE: "Pacer is the freshest, most creative, most people-oriented auto to be born in the U.S. in 15 years."

"The Pacer is lovable.

The small car for the person who doesn't like small cars may at last be in our midst."

GREENPLATE: You drive a Pacer and they ride great.

They're quiet.

You have obviously great visibility.

They feel more like a big car, but they drive small because they do have such a small footprint.

NARRATOR: Dealers were flooded with customers.

By year's end, the factory would build over 145,000 Pacers, making it AMC's most successful new product, ever.

NARRATOR: Despite the Pacer's success, the industry as a whole was suffering from a stagnant economy, and increasingly strict pollution and safety laws.

[Downbeat music] PERRINE: We had a lot of round-the-clock testing going on, three shifts, seven days a week.

If you failed to get an EPA certificate of compliance, then you could build the vehicle, but you could not sell it.

Yeah, it was a lot of pressure.

We found a bee, a dead bee in the air cleaner of one of our vehicles, and so that was enough to void the test.

And thank goodness because the second time we ran it, we got the numbers we wanted and got our certificate and they could sell the vehicles.

[Traffic noise] NARRATOR: That year, Congress passed yet another regulation.

Starting in 1978, all automakers would have to meet Corporate Average Fuel Economy standards.

But with two agencies now regulating safety, emissions, and gas mileage, their goals often conflicted.

[Car crash noise] JOHN DAVIS: Safety regulation, being terrific for the public health, adds weight to the cars and thus, runs against trying to make the cars more fuel efficient, which often means lighter.

[Engine starts] NARRATOR: New air pumps and catalytic converters cleaned up exhaust, but dragged down gas mileage.

Better technology, aerodynamics, and materials raised mileage, but cost more money.

PERRINE: But here's the thing about fuel economy, if you look at an option list on a new car and it says for another $1,500 you can get two more miles per gallon, would you buy it?

No!

You expect it.

Consumers expect fuel economy.

They don't want to pay for it.

DAVIS: Cars today are incredibly safe and really incredibly clean, and I don't think we would have gotten there without a relentless push from both the government and the consumer advocates, many of which I criticized at the time as being overreaching.

NARRATOR: As the industry buckled down, American Motors faced the added challenge of meeting the same standards as its larger rivals.

FOSTER: If you're GM and you're selling 5 million cars a year, you can amortize it pretty easily.

If you're AMC selling 350,000 cars a year, it's a lot more expensive.

It's exponentially more expensive.

MEYERS: It was demoralizing, but we had to do something.

We couldn't just say we don't like it and go out of business.

[Factory noise, whirring and buzzing] NARRATOR: To help build the Pacer, AMC outfitted its Kenosha, Wisconsin plants with a new technology: robot welders.

Although faster and more consistent than humans, the new machines weren't perfect.

ROMAN WOJEIECHOWICZ: On a hot humid day all of the sudden these robots like, had a mind of their own.

They'd be smashing the cars, they weren't going here, they'd be turning here or there and everything.

Well come to find out the humidity was affecting the computer.

And they built a room that was air conditioned just to put the computer in there so the humidity didn't affect it.

[Driving bass-driven rock music] NARRATOR: However, record demand for the new Pacer meant the robots weren't the only ones making mistakes.

FOSTER: Auto assembly plants, even when they're running their normal pace, it's hard, fast-moving work and what happens when you speed that up is now all of a sudden the door panels are not going on quite straight, the screws are not all the way screwed down.

Alright the guy put the front seat in and he put three of the bolts on it but not the fourth.

This other guy got the radio into the instrument panel but he didn't hook it up because the assembly line was moving too fast.

So you just have a lot of quality problems.

It always came back to hurt them in the end.

[Tools clanking] DAVE FURLIN: We had word that the mayor had ordered a car and he ordered a Pacer.

So the car was coming down the line, and it had a "no brake" sticker on it.

So I'm driving the car off and I see smoke coming from underneath the hood.

There was a fuel leak and the car caught on fire.

And all these big shots are walking around and the car's on fire.

A couple of guys come running out with fire extinguishers and we put the fire out, you know.

It had all this dust and powder all over the car, and we had to clean the car all up, put a new wire harness in it, and fix the brakes!

Yeah, that was not a good day.

[laughs] But that's the kind of stuff that you run into working in a factory like that, you know.

NARRATOR: Despite the issues, the Pacer had a banner year.

MAN 2: Mrs. Fitzhaulkin?

It's on the way!

ANNOUNCER 2: Fortunately for the Sandwich King, he had a new AMC Pacer.

The Pacer is wider than any other small car, so he had enough room to work on his giant creations.

And since the Pacer is wider, it gives an incredibly stable ride at a time when he couldn't afford to make any mistakes.

[Classical music] The AMC Pacer, no other small car can make this sandwich.

VINCE GERACI: Dennis Montone who was a manufacturing guy, he'd come into my office and I said, "We just released the Pacer, how's it doing?"

He says, "Listen we cannot make enough of them.

They're going off the dealer floors like there's no tomorrow."

I said, "Man that's terrific."

[Ominous funk music] NARRATOR: But as 1976 began, Pacer sales were cooling off.

GERACI: Six months, seven months, comes back into the office, give me the update on the Pacer, what's- what's happened?

"Ummm, all those who wanted one got one, and I don't know what happened, but that market has just gone south."

I says, "noooo, no Dennis, no!"

NARRATOR: Owners liked the Pacer's room and handling, but complained about its poor quality and low gas mileage.

KENNEDY: The problem with the Pacer is, it was so overbuilt and so heavy that fuel mileage wasn't where it was, for other cars in that category, and that hurt the car.

NARRATOR: Marketed as a "small car," customers expected mileage in the high 20s, but rarely got it.

MICHAEL PORTER: In reality, the Pacer was a midsize car, at least in terms of its interior dimensions.

By emphasizing the smallness, I fear that we were bringing people in that were expecting a very fuel-efficient vehicle and it really was not competitive with other small cars, but it beat the heck out of them in terms of overall comfort.

NARRATOR: And as management feared, its unique looks began turning off mainstream customers.

FOSTER: A good sized percentage of the buying public decided, you know, we've seen Pacers now for two years, we're over the styling.

It doesn't shock us or surprise us anymore.

GERACI: What do I tell ya?

Everyone who wanted one, got one.

SHOW ANNOUNCER: It is now our pleasure to present your 1977 AMC Jeep Review.

NARRATOR: Each year, AMC invited dealers to a rousing show of its upcoming products.

But after two years in the red, the best it could muster were minor updates.

♪ We did it!

♪ ♪ It's loaded with sex!

♪ ♪ Now all I need is the AMX!!

♪ NARRATOR: To boost the faltering sales of its aging lineup, AMC gave the Hornet a sporty AMX model, and the Matador Coupe got some "opera-windowed gimmickry," to make its sleek shape more formal.

But the big news was a new Pacer station wagon, and-after seven years on the market-a mildly refreshed Gremlin.

Like its competitors already had, the Gremlin finally offered a 4 cylinder engine and a four speed transmission for better gas mileage.

♪ The Gremlin is back and looking great!

♪ ♪ You'll notice it's taken off some weight ♪ ♪ It's shorter now ♪ ♪ It's lost some weight ♪ ♪ Will give you great savings mile-for-mile!

♪ NARRATOR: The song didn't mention that AMC had spent a fortune to build the new motor, and the design actually came from Volkswagen.

As AMC didn't have its own four cylinder, meaning that the Gremlin, first designed to compete with VW, was now powered by it.

[Audience claps] NARRATOR: Across the board, AMC's aging lineup struggled against fierce new competition from America, Germany, and especially, Japan.

ROMAN: We hated the Japanese cars coming in here.

It took our jobs away.

I hate to admit it, but they were better built cars and they were cheaper in price.

And that really hurt the auto industry.

[Sound of snow plow and trucks passing] NARRATOR: Despite the updates, sales collapsed.

Now instead of fighting for better pay and benefits, the United Auto Workers Union fought to save jobs.

CAROL ZARUCK: When you have a layoff, everybody gets bumped, and they go by seniority.

So someone that was real proficient painting a car, 'cause they've done it for years, all the sudden finds himself out on the street, and somebody that used to put tires on the car is now a painter.

You know?

If they could keep people where they were, they were better off.

NARRATOR: Thousands were let go, desperate to find whatever work they could.

ANTHONY DAVIS: You go out and hustle.

You know, taking on part time jobs, you're not sure where your next paycheck's gonna come from.

It makes it difficult on relationships, you know uh... Yeah, I almost lost my home.

And then I had one year where I had to tell my son, it was Christmas time, I told him it wasn't going to be much.

It's kind of tough when you got to tell your kid, Christmas is going to be rough this year, so you're not able to... ...get him the presents, you know like I said.

NARRATOR: That winter, as sales continued to slide, Roy Chapin got a $20,000 raise.

[Upbeat showbiz music] [People chattering] NARRATOR: For a week in 1977, AMC's styling department was transformed into a movie set for "The Betsy," a lurid melodrama of a backstabbing family running a failing car company.

SUSAN TASSI: It was very exciting for us!

We had to kind of be quiet and keep out of the way, but just to see a movie star was a unique experience in your workplace.

ROBERT: I was at the drawing board, and I had to draw the name "Betsy."

I think I have eight seconds on the film.

I've only seen it once, and I didn't see the whole film.

It's not a very good movie.

[Chuckles] NARRATOR: Ironically, a real-life drama had developed at American Motors over who would lead the company after CEO Roy Chapin Jr. and President Bill Luneburg retired.

Rumors swirled around Executive Vice President Gerald Meyers, and Vice Chairman William McNealy.

Meyers had a wealth of product and manufacturing experience, but McNealy was a creative and clever marketing executive.

FOSTER: Both men were very self-confident.

They both knew that they were brilliant, and they both felt that they should be at the top.

And they couldn't stand each other.

NARRATOR: As the infighting dragged on, AMC's one bright spot was the rapidly growing Jeep division.

MEYERS: I was not pleased that car sales were falling, but we were less concerned about car sales when we had Jeep going as well as it was, because Jeep is a very profitable vehicle.

We were making twice or three times as much on a Jeep as we were in a car.

NARRATOR: When Luneburg retired in May, Meyers was promoted to president, implying McNealy was destined for Chairman and CEO.

But the board of directors pulled a surprise: there would be a shootout, instead.

On November 18th, 1977, McNealy went first.

[Reading] NARRATOR: He boldly declared that American Motors should kill its cars and focus on Jeeps.

Meyers' plan was less drastic: Reduce car production, increase Jeep production, and like the rest of Detroit, partner with a foreign automaker to design new, high-tech cars.

In the end, the board made Meyers CEO.

Chapin would stay another year as Chairman, then retire.

Feeling betrayed, McNealy resigned.

FOSTER: It was a tremendous shame when Bill McNealy left.

Probably his idea was the best, but it was just too painful.

NARRATOR: Immediately, Meyers began cutting costs, including the slow selling Matador.

NARRATOR: The only "new" product for '78 was the AMC Concord, essentially a Hornet, cleverly disguised with luxury features.

BENNETT: Those little things went a long way to make what was normally a humble car into something, that resonated with a nice subset of buyers that were practical but still wanted something a little extra.

[Retro-futuristic 1980s music] NARRATOR: Back in the spring, American Motors launched a traveling exhibit called "Concept 80," full of futuristic new product ideas.

FOSTER: I went to the Concept 80 show and I met Roy Chapin Jr. there and Dick Teague and several other people.

It was nicely arranged but the whole purpose of it was to get the press back on their side and to say "this is what we're capable of, so have some faith in us we're going to come through."

WOMAN ANNOUNCER: Vehicles from the 1980's from American Motors Corporation.

NARRATOR: Unfortunately, AMC had spent so much money in the last few years, it could no longer afford to build a brand-new car from scratch.

Instead, it would need help from an outside partner, and Gerry Meyers would find one, in France.

ANNOUNCER: The Complete Book of AMC Cars features a fully-illustrated history of American Motors vehicles, and is available online at MPT.org/Shop.

Or call the phone number on the screen.

To learn more about the cars and the people of American Motors, connect with The Last Independent Automaker online.

ANNOUNCER: Funding for The Last Independent Automaker was provided in part by... [Driving rhythmic music] WOMAN: We are Detroit.

And when we move, you move.

ANNOUNCER: Funding was also provided by...

The Alfred P. Sloan Foundation... MotorCities National Heritage Area... And also... For a complete list of funders, visit APTonline.org