Renault, France's government-owned automaker, yesterday announced it will buy a substantial part of American Motors Corp. and jointly produce an entirely new line of cars in the United States by 1982.
The announcement by the French automaker came as the Carter administration was considering an appeal for massive federal aid by the Chrysler Corp., which, wants the government to help underwrite its losses until it, too, can get its new cars for the 1980's into production.
Renault said it would provide AMC with approximately $150 million in new capital to seal a partnership the two firms have had since last winter to market each other's cars.
The deal, signed yesterday in New York, was considerably broader than most industry observers had expected, and could be the first step toward a first-of-its-kind takeover of a major U.S. automaker by a foreign concern.
Renault is buying 1.5 million shares of AMC common stock for $15 million, representing a 5 percent interest in the company. Renault will also lend AMC $135 million over the next several months. Under terms of the loan it could be converted into stock representing another 17.5 percent interest in the domestic automaker.
Last January, when the firms first announced an agreement to market each other's cars, Renault-France president Bernard Hanon said his company had no plans either to invest directly in AMC or to make any special financial allaowances for the car maker.
To represent Renault's new interest in the domestic automaker, the French firm will place two representatives on the AMC board and will form joint financing units with AMC.
The new line of cars will be front-wheel drive compacts in several body styles to be produced at AMC's Kenosha, Wis., plant. The first cars produced will be for the 1983 model year.
They will be "aimed at the heart of the American market," according to an AMC spokesman, who said they would be competitive with the new line of General Motors Corp. X-cars and similar models proposed by Ford and Chrysler for the 1981 model year.
The AMC spokesman said the cars will meet the tough 1985 fuel-efficiency and emission-control standards set by the U.S. government. Although he was vague about projected sales for the new cars, he said, "You don't make a decision to spend this kind of money to tool a new line of vehicles, unless you are at least thinking of 100,000 cars."
Engines and transaxles for the new cars will come from Renault, but other major components like body stampings and production tools, will come from the United States, the two companies said.
The unprecedented deal makes Renault the second foreign manufacturer to produce cars in the United States. Volkswagen began building its subcompact Rabbit at a Pennsylvania plant last year.
Although AMC has become profitable in recent years, it has done so only because of the popularity of its Jeep models. The company earned $73.3 million in the nine-month period ending June 30, and last month declared the first dividend for its stockholders in five years.
AMC's automobile sales for the first nine months of this year were 112,662 fewer than the number of cars Volkswagen produced in Pennsylvania for the same period.
AMC Group Vice President Bill Sick said his company needed the arrengement with the world's sixth largest automaker because "we did not have the resources to develop our own lines for the 1980s starting from scratch."
He said the Kenosha plant has the capacity to produce 500,000 cars a year. He said new employes would be hired for that facility, and added that it would probably not be necessary to drop production of any existing AMC models built there.
Industry sources say, however, that the slow-selling Pacer models may soon be phased out.
Sick denied that Renault had waited for AMC to turn around financially before signing the deal, but acknowledged that the financial improvement of the American firm clearly resulted in the arrangement being finalized "a couple of months ahead of schedule."
For Renault, consummation of the deal means a long awaited foothold in the lucrative American auto market, something that has eluded the French firm since the ill fated experience here of its Dauphin model in the early 1960s.
The informal marketing agreement between the two companies signed last January has already resulted in sales of 14,950 Renault cars -- mostly subcompact "Le Car" models -- here during the first nine months of 1979.
Renault will now have access to an estimated 2,300 outlets in the United States and Canada.
With sales of $12.7 billion around the world, in 1978, Renault was the ninth largest industrial enterprise outside the United States.