AMC Liaison

A French connection--maybe

Can putting together two weaknesses make a strength? Profit-pinched American Motors Corp. has been openly looking for a foreign carmaker with which to form some kind of partnership. Last week AMC revealed the company that it is focusing on--not, as rumored, Peugeot, but the French government-owned Renault--and the terms of a "proposed affiliation" that left a great deal for AMC stockholders to desire.

The pact is very tentative: basically, a commitment to try to work out a formal deal. If concluded, that deal would combine the two companies' selling efforts in the U.S. (American Motors cars would appear in Renault showrooms and vice versa) and provide for sales of AMC Jeeps by Renault dealers overseas. Most important, Renault cars might be built in AMC plants. There are even some hints that the two companies might get together on designing a new car.

Such cooperation would clearly benefit both companies, but only to a limited extent. AMC Jeeps have been selling well in the U.S., but overseas they could face fierce Japanese competition. Making Renault's small, 32-m.p.g. Le Car would help AMC get the m.p.g. average of its total fleet high enough to meet tough federal standards. But Renaults have not sold well in America; they seem unlikely to draw much traffic to AMC dealer showrooms. Above all, Renault would put no money into cash-short AMC. If this is the best deal American Motors can come up with, it is still in trouble.

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