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AMC chairman foresees US small car resurgence

"Every car on the road today is economically obsolescent." American Motors Corporation chairman and chief executive officer Gerald C. Myers explains that he thinks most motorists have decided that they either cannot afford or do not wish to afford driving a car built for cheap gas.

"In spite of their physical ability to keep on running, these cars have lost their appeal almost overnight," he says. "There's a recoiling from them. And some people don't like the social implication of even being thought of as driving one of them."

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This new American penchant for the more economical small car, he says, is "irreversible." It also offers the auto industry what Mr. Myers sees as a "fantastic" marketing opportunity.

Instead of the usual annual 10 percent of the car-driving population trading in the old for a new model, a potential 20 percent could appear in any given year -- "Wow, what a market!"

"We've got to get through this difficult period, but there is a silver lining ," Mr. Myers says. "And those that survive, I say, are in for one whale of a good time."

He admits that for the time being it is the Japanese who have been capitalizing most on the American consumer's new thirst for small cars. As he sees it, they simply happened to be in the right place at the right time with the right goods.

"One year ago there were 500,000 Japanese cars sitting in ports around this country that couldn't get sold. The Japanese had built an industry around little cars and put in a lot of capacity. Suddenly things turned in that direction. They found a ready and willing market because we're free traders."

But Mr. Myers predicts that in as little as three years time the Japanese could be "on the outside looking in."

"There will be such capacity in this country that this special situation will no longer exist. They will find that there is no longer such a big market willing to grab off any little car, no matter what the design or who built it. . . . There will always be a market for imported cars but it will ease down and level out."

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The issue of auto industry survival goes well beyond national boundaries, he says.

"Internationalization of the industry is going to proceed at a very rapid pace. There are 30 independent auto companies in the world today. We see that number diminishing to 12 by the year 2000. If you're not a $15 to $20 billion car company, forget it. You better get yourself in a good position and you'd better be represented in the markets of the world that can accept volume."

The conviction that many automobile companies will be forced out of business in the next several years prompted American Motors to search out and seal up its Renault connection one year ago. The tie with the French auto firm involves an agreement to distribute and sell one another's products. And led to an agreement to build Renault-designed products in American Motors's Kenosha, Wis., plant beginning in 1982.

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