Why AMC Failed and Subaru Succeeded: a History of Two Quirky Car Brands

If you look at Subaru and the now-defunct AMC, surprisingly there are numerous points of comparison. Both were always small car brands in their respective home nations, both made quirky cars, both have a history of partnerships with other companies, and both succeeded by being ahead of the curve. However, one failed, AMC, and the other is one of the most profitable fastest growing car brands. How has Subaru managed to succeed where AMC previously failed? Some of it was luck, some of it was better advertising, and yes some of it had to do with the quality of their cars. Join me on this journey of discovery, so you too can learn how and why niche car companies are successful like Subaru or failures like AMC.

Just How Similar are Subaru and AMC?

While it may not be a book, history has a narrative, characters, and a plot. So does automotive history. To use a literary term, Subaru and AMC happen to fall into a similar archetype. That archetype is the small car company that’s always trying to get ahead by innovating and staying ahead of the curve. While this is an admirable strategy, it’s risky and costly, but it’s the only option for a small ambitious car company. The larger car companies can pump out the same vehicles with subtle improvements each year until some new idea or market demand comes along, often copying a fledgling company such as Subaru or AMC. The larger company has the disadvantage of being late to the party, but the small company took all the initial risk and has less money behind it to fully realize the idea’s potential. With the Pacer, for example, AMC took a big risk which initially paid off. However, other companies took notes on the design and used this to make better cars. Subaru did the same with their Outback. It was a huge success, but Volvo (also a relatively small company, but owned by Ford and now a Chinese company), and Audi, both cashed in with similar lifted wagons. Also, the whole crossover craze was in a way proceeded by the Subaru crossovers and AMC crossovers which existed decades before, but I will say most of today’s crossovers took more influence from the Pontiac Aztek (a car from a major player, but one which flopped miserably for the now defunct Pontiac brand).

Another similarity is that both struggled to make cars outside of the subcompact to midsized range. Subaru hopes to end this streak with a new three-row SUV called the Ascent, after the massive flop that was the Tribeca. They also both failed at selling super small cars. Subaru’s Justy had mild success before it was dropped from the US market, and while AMC had the Rambler and Gremlin, they didn’t properly challenge the even smaller Japanese car which entered the market during the oil crisis. That leads into another shortcoming of both companies, which is that they struggled with fuel economy, something important in the small car market. This was more due to AWD for Subaru, but both have been forced to use less efficient engines than their competition most of the time due to small budgets.

Modular Cars

To save money on production, both Subaru and AMC utilized modular car design. The idea is that you reuse platforms for different models, and reuse as many parts as possible across the entire range. It might seem like a cheapskate move, but in reality, it makes cars easier to maintain and to modify. However, this can lead to cars which become overly tired due to a tendency to use older parts. The basic AMC and Subaru engines went years without noticeable updates. Also, sometimes their cars did not receive the engine they deserved. The Pacer was supposed to have a rotary engine originally, but instead got stuck with tired AMC six cylinders which were not efficient or powerful. Subaru has seen the same issue, as their six-cylinder boxer is the largest engine they offer, and it has never cracked the 300 hp mark or 300 lbs./ft mark in stock form. As a result, Subarus are limited in towing capability.

Why Did Subaru Succeed? (And Why Did AMC Fail?)

So why, if both companies were so similar, did AMC fail, and Subaru succeed? As with anything in the industry, luck and timing played an important role. However, there is ample evidence that Subaru’s success was almost inevitable and not just due to being at the right place at the right time.

Quality/Reliability

Unlike AMC, Subaru has always had a knack for quality, except for a few exceptions. Subaru did have an issue with their 2.5-liter engines and the head gaskets. However, this was an isolated incident, and if you compare Subaru’s recalls and production flaws with larger competitors, the list happens to be way shorter than your average mainstream automaker, including fellow Japanese firms. One Legacy even fell into a lake and started back up with minimal work. At AMC, reliability became an increasingly relevant issue in the 70s. This became compounded by the shared parts across models and the rushed development of cars like the Pacer and Gremlin. Was AMC’s quality worse than the big three though? At the time, no it was not. The Chevy Vega leaked oil like a geyser and we all know about the Pinto disaster. So if it’s competitors were just as bad if not worse, why did AMC get such a bad wrap? Well, it’s hard for a smaller car company to control its perception in the media, and AMC had less sheep-like followers than the big three. It also had to compete with all the imports, including Subaru, which were more reliable, at least in the eyes of the public. Subaru, on the contrary, has won many awards for reliability and has built up its image through dedication to making reliable cars. Consumer Reports is one of their number 1 advocates.

Image and Advertising

Now that we’re on the topic of image, let’s talk about how Subaru has been able to build up a mass appeal. It’s not to say that AMC’s advertising was bad, but in recent years Subaru has been killing it in the advertising realm. Subaru has established itself as the car for different types of individuals instead of marketing to everyone all at once. It’s a car passed down in the family, a car for adventurers, a car for families of all ages, a car for young people, a car for people with pets, and a car for enthusiasts. Some of those things sound contradictory, but what Subaru does is make ads targeting each of these groups in individual advertisements. AMC’s Jeep had great marketing too, but AMC just did not get it sometimes. You want me to buy a Pacer because it’s wide and has more space? Cool, but you can’t just literally say that in the advert and expect people to be interested. They should have played more on the fact they were an underdog (everybody loves those) and shown how their vehicles had personality. People did love their AMCs, and many still own them, but that was never something AMC managed to capitalize on. If they survived into the internet age, they could have also seen a resurgence, as the internet makes it easier to figure out which cars are actually the best. The internet is arguably Subaru’s #1 advocate.

Racing Heritage

Another way to improve a company’s image is racing. Now, AMC did have success in Trans Am and a minor role in Nascar, but they never managed to gain an image from motorsports. In contrast, motorsports in many ways made Subaru who they are today. In the WRC, Subaru had a global stage to show of their cars, and a way to test their technology. While AMC had Mark Donohue, Subaru had star driver Colin McRae, Carlos Sainz, Richard Burns, Tommi Mäkinen, and Peter Solberg. Sadly, Subaru’s time in the WRC came to an end with a change in engine regulations. However, the USA rally team had already been busy gaining popularity. DC founder Ken Block and his Monster Energy Subaru made waves with solid stage rally performances and viral videos where Block started the Gymkhana series and made a sequel before moving to Ford (just like McRae). The guy who really held the stage rally torch, however, was Travis Pastrana, an excellent driver, and X-Games motocross gold medalist. After Travis, David Higgins from the Isle of Man took up the leading role from Travis and dominated Rally America for several years. Now, Travis is back, and Subaru has the best two driver team in US rally, and one that would rival all but the top WRC teams. AMC did enter Eagle SX/4s cars in US rallies, but they never achieved the level of success or built an image off of rally as Subaru.

Subaru's Better Partnerships

Part of AMC’s downfall was their failed partnership with Renault. They also failed to get a rotary engine for the Pacer when GM canceled the program. In contrast to AMC’s failed partnerships, Subaru’s have been much more healthy and fruitful. AMC even had a partnership with Levis for a specially upholstered Gremlin. Subaru’s most recent partnership has been with Toyota on the BRZ-GT86 twins. The partnership helped both parties and lead to a decent automobile. Previously, Subaru had dealings with other companies including GM, Isuzu, Suzuki, Daihatsu, and Nissan. Often, Subaru has rebadged other cars from Japanese companies in Japan in order to meet the demands of the market. This is cheaper than designing a new car that would only sell well in one market (Japan/Asia). Other times, Subaru allowed companies to rebadge some of its cars in return. In the partnership with Isuzu, Subaru even managed to secure a US factory in Indiana (Toyota would eventually take up Isuzu’s share). Subaru has also used partnerships to better its image, including the L.L. Bean edition Outback, the Puppy Bowl, and recently contributing towards charities including meals on wheels and the Hurricane Harvey relief fund (good marketing for them in the South). The closest AMC ever came to an advertisement partnership was the pink AMX playmate of the year car. Another thing AMC should have done is partner with a Japanese company just like GM, Chrysler, and Ford all did. Honda would have been a good partner, mostly because AMC was in desperate need of good engines, and that’s something Honda specializes in. Heck, they could have even partnered with Subaru.

AMC Buying Jeep

AMC buying Jeep was both the smartest and dumbest thing AMC ever did. The paradox? Jeep was the most profitable wing of AMC and kept AMC alive, but it also took attention away from building the AMC brand and the Eagle sub-brand. Subaru has always been one, solid brand, with one image to manage. With AMC things got messy with managing Jeep and AMC under one company. Having two brands under one roof does not always turn out so well unless you have one high volume, one luxury wing, and one for performance and etc. The organization was all messed up. Even Chrysler has struggled with this. AMC never expanded into the SUV or truck market due to the presence of Jeep. Sure, Subaru has never been big on trucks or serious SUVs, but it’s a market they can expand into when they are ready. Jeep took most of AMC’s resources, and eventually, the AMC brand just became a burden on the stronger Jeep wing. They would have done better if Jeep was better incorporated into the AMC brand, but Jeep even had separate people in management, marketing, and design. With the Jeep purchase, AMC attempted to be more like the big 3 with multiple brands under one roof, but that proved to be a miscalculation. It’s worth noting, after the 08 recession, many of the big three brands went under, as the companies strived to reduce overlap and increase the strength of their core brands. It’s hard enough making one brand work, but two or more at a time can become a hassle. With the Eagle cars, AMC even created a small sub-brand, instead of marketing it purely as an AMC.

Luck and Good People

AMC did have some good people, chiefly George Romney and designer Richard “D!ck” Teague. However, Subaru also has happened have great employees. Most important was the underrated efforts of Malcolm Bricklin in introducing Subaru to America. Without the jump start on the US market, Subaru might not even exist in its current capacity. Current Subaru of America President Thomas Doll has also orchestrated the recent upswing in sales for Subaru and has been with the company most of his career. Subaru is finally making the right cars at the right time, and are one of the automakers. Perhaps, if AMC had released a range of cars similar to the Eagle in the late 90s to the current day, it would have been a different story. If a car like the Pacer or Gremlin was released in the late 80s early 90s would it to have been a greater success? Much of what Honda and Toyota did had a similar design to earlier AMC cars.

Conclusions

Sure, AMC can blame some of its errors to things out of their control and Subaru’s success may be partially due to luck, but there were clear mistakes and miscalculations made by AMC. What Subaru proves is there is room in the market for a company like Subaru, but your cars have to stellar quality, and they need to be well built, even if that means partnering with another company to get the resources. You also have to build up a brand image through targeted advertisement, racing, and building good cars. AMC deserved to fail, even though they had the ideas to winners. I really wish AMC could have made it work though. It’s 2017 and Dodge/Chrysler is falling apart, and Ford and Chevy are keeping it a two horse race. Can Tesla fill the American underdog role AMC once held? Will Subaru continue to succeed? How will Subaru expand without losing their brand image? What’s the next big leap that Subaru takes to stay ahead of the game? We can’t answer those question right now, we can only speculate. The only thing we can do is watch as the ever unfolding story of automotive history rolls on, and boy has it been one heck of a story so far. #blogpost #carhistory #subaru #amc