American Motors Corp. is putting much of its immediate future into the bed of a small, two-wheel-drive pickup truck that the auto maker introduced here today.
The vehicle is the Jeep Comanche, AMC's only "all-new" product for the 1986-model year and, some analysts say, the company's main hope for regaining profitability in the next two years as it struggles to broaden its product line.
AMC lost $100.3 million in the first six months of 1985, after posting a modest profit of $15.5 million a year earlier. Analysts contend, and AMC's top officials agree, that the company's poor financial performance stems mainly from its limited lineup of cars and trucks.
AMC essentially has only one car line, the subcompact Alliance/Encore, which is running in the most competitive segment of the U.S. new-car market. Retail sales of the Alliance/Encore models fell 37.9 percent in the first seven months of this year, to 74,574 from 120,019 units sold during the same period in 1984.
The Alliance/Encore line fell victim to twin forces: declining demand for small cars in a fuel-fat economy and a rising tide of imports. There also have been some charges that the AMC cars had quality problems, as indicated by low ratings in the latest "Consumer Satisfaction Index" published by a California-based market analysis agency, J. D. Power & Associates.
But the Power survey has been criticized as inaccurate by auto industry analysts and officials, and other consumer surveys have rated the AMC cars on par with those of competitors.
What is certain is that the bright spot at AMC has been the company's sales of traditional four-wheel-drive Jeep vehicles. The company sold 92,495 Jeeps in the first seven months of 1985, a 5.4 percent increase over 87,780 Jeeps sold in the comparable 1984 period.
"They're dying in automobiles, but they're having capacity problems in Jeeps," said David Healy, an analyst with New York-based Drexel Burnham Lambert. AMC is hoping to use the new two-wheel drive Comanche to capitalize on its only strength so far, Healy said.
But Healy and other analysts ex had doubts that the Comanche will be enough to boost AMC's earnings between now and 1987, when the company plans to start producing an upscale, mid-sized car at a new plant in Bramalea, Ontario.
"I don't want to be accused of kicking a company that's on the ropes, but it seems like the whole world is coming after that market" at which the Comanche is aimed, said one analyst who requested anonymity. Japanese auto makers now occupy about 55 percent of the U.S. compact truck market, in which rebate plans and other sales incentive programs abound, the analyst said.
But Joseph E. Cappy, AMC's executive vice president for operations, remains undaunted. AMC currently has only enough products to compete in 16 percent of the nation's light-truck market, Cappy said. He said the Comanche will give his company the ability to compete in 50 percent of the market that constitutes light trucks: pickup trucks, vans and similar multi-use vehicles.
"Sure, it's a very competitive segment," Cappy said. "But it's a segment where we have the proven ability to do well."
Some 4.2 million light trucks will be sold in the United States this year, and a likely number will be sold in this country in 1986, Cappy said.
Compact pickup trucks, about 77 percent of which are front-wheel-drive, make up nearly half of the light trucks sold in the United States, Cappy and other AMC officials said.
"The Jeep Comanche has so many product features over our competition that we expect it will be literally an overnight success," Cappy said. AMC officials said the same thing in 1983 when they brought out the first of the Alliance cars. For a full year, at least, they were right; the Alliance was one of the hottest subcompacts on the market in those early days.
Cappy said the company has "freshened" the Alliance/Encore line for 1986 by redoing the dashboard and making some other cosmetic and performance changes. But mostly, the company is going to freshen its advertising approach, he said.
"We might have made a mistake putting 42 percent of our advertising money" into campaigns that supported dealer programs to sell the Alliance/Encore, Cappy said. Next year, dealers will be asked to carry more of their own ads while AMC concentrates on corporate image-building programs, Cappy said.