Roy Abernethy
Encyclopedia
Roy Abernethy was an executive in the American automobile industry
, serving as CEO
of American Motors Corporation
(AMC) from February 1962 to January 1967. Prior to his tenure at AMC, Abernethy had been with Packard
Motors and Willys-Overland
. Abernethy replaced George W. Romney
who resigned from AMC to become Governor of Michigan
.
mechanic
at luxury automaker, Packard
, earning 18 cents
per hour
. He then moved up establishing success in auto sales reaching US$
1,000,000 in Packard vehicles in a single year from his dealership in Hartford, Connecticut
. Abernethy also held the post of vice president of sales at Willys
.
and Hudson Motor Car Company
and the company hired Abernethy in 1954. During AMC's formative years, the company struggled with costs and sales. Abernethy concentrated on building AMC’s sales and distribution network. Abernethy was the vice president of sales, and kept many of the dealers allied with AMC, thus helping to keep the corporation afloat, until AMC found its compact car niche under Romney's leadership. He was known to fly 50000 miles (80,467 km) miles a year to make AMC synonymous with the compact car
. Abernethy achieved sales successes for the company and by 1962, Rambler was number three in sales rank among all the brands of cars sold in the United States.
On February 12, 1962, the AMC board of directors
selected the 56-year old Abernethy to replace Romney. This was also the first time that the company separated the position of president from the chairperson of the board. Abernethy became responsible for day-to-day operations as president, while Richard E. Cross
, the automaker's legal counsel and new chairman was now called AMC's Chief Executive Officer.
Both took command of a financially strong company (working capital
increased from a low of $46 million in 1957, to $103 million, and the firm eliminated all long-term debt), with sales increasing from $362 million (91,469 automobiles) in 1957, to more than $1 billion (422,273 total units) in 1960. Abernethy was predicting a total of 450,000 Ramblers to be delivered for the 1962 year, despite increasing competition from the new domestic-made compact cars offered by the Big Three.
Roy Abernethy instituted the automaker's prohibition on automobile racing. He was against a renewal of the auto industry's horsepower race by offer ever more powerful engines, as well as corporate sponsorship of activities that glamorize speed and performance. As AMC's market performance reached record levels in 1964 placing the Rambler brand in third place position in the domestic sales race. At the same time AMC publicly disavowed any interest in automobile competition. Corporate advertising answered the question "Why don't we enter high-performance Rambler V-8s in racing?" with "Because the only race Rambler cares about is the human race."
However, Abernethy is now known for reversing Romney's plans for AMC that involved maximum parts compatibility for all lines of AMC vehicles. Abernethy was a big man of 237 pounds (108 kg) — smoking ten corona cigar
s a day, — and had big ideas for the company. He was convinced that with the right marketing AMC could take on the “Big Three” (General Motors
, Ford
and Chrysler
) model for model, if the company could shed its "economy car
" reputation.
Abernethy said repeatedly that AMC's "main problem was its image lag — the fact that too many people still thought of American Motors as the builder of plain jane compacts." He also started to move the Ambassador upscale to compete with other manufacturers' full-size car
s. Moreover, larger models typically return bigger profits. Offering larger, and often more prestigious or "halo cars
", can also help make the firm's smaller models look more attractive to consumers. Thus, as part of this vision, Abernethy put into a motion a total remake of AMC's corporate identity
and its marketing mix
that would divorce its larger car lines from its Rambler
brand and his perceived "negative" compact car
image.
The first models with Abernethy’s corporate strategy
"in the business world's toughest race — the grinding contest against the Big Three automobile makers" were the cars introduced for the 1965 model year. They were billed as the “Sensible Spectaculars”. The 1965 models were a major makeover of the completely new platform
that was just introduced in 1963. American Motors' new cars included the stretched and more luxurious Ambassadors
, as well as new convertibles for the large models. New styling, the more powerful engines, as well as numerous comfort and sports-type options were now emphasized. Abernethy even switched the automaker's advertising agency to promote "a better luxury and sports car image". However, Abernethy had his critics who contended that AMC "had its great success when it was doing what the Big Three weren't doing".
The strategy shift at first seemed to be working because sales of the redesigned 1965 and 1966 Ambassadors improved, even as AMC's overall production decreased from the record level achieved in 1963. However, corporate earnings per share were a meager 27 cents per share, the lowest since AMC made its famous compact car comeback in 1958. Moreover, a completely new design was also slated for the larger 1967 models. This strategy added $60 million in retooling costs, which was a major stretch for the company.
The objective was to position the 1967 AMC Rebel
and Ambassador designs on an equal basis with competitive models marketed by the Big Three. The new 1967 models also came with completely modern "GEN-2" AMC V8 engine
s. Furthermore, AMC introduced a revolutionary guarantee. The engine and drivetrain
were covered for five years or 50000 miles (80,467 km). The media was positive in covering the new models, with experts such as Tom McCahill
highly praising the new car's performance and ride comfort.
to keep the company going. American Motor's automobile sales dropped twenty percent in the first half of 1966, and the firm reported a fiscal six-month loss of $4.2 million on sales of $479 million. The situation was so bad that Robert B. Evans
invested more than US$
2 million because AMC's stock was selling for only 60 percent of the company's net worth
, thus becoming its largest stockholder and was named its chairman.
Abernethy was spending so much money that it was difficult for the company to turn a profit and rumors started to have a snowball effect on the company. With the financial health of the company in question - as well as the future of the company - even an extra long engine warranty appeared to be not enough to instill confidence among consumers. The last quarter sales for AMC (which included the newly introduced 1967 models) were disappointing. AMC recorded a balance sheet
loss of $12,648,000 for the year. The 1965 and 1966 Ambassadors represented a crossroad in AMC's history, one at which some historians would say it took the wrong turn.
The company changed leaders from the likes of Romney, who defined the compact car segment, to that of Abernethy, "a likeable super salesman who unfortunately landed at the top as the market began to quickly change." The problems facing AMC at this juncture were the result of incorrect assumptions. Abernethy presumed that customers needed more choices among those available from the Big Three with their new models in the compact car market. History had already proven this strategy wrong. For example, the Kaiser-Frazer Corporation tried unsuccessfully to challenge the Big Three market leaders in their existing product segments.
Abernethy’s strategy put AMC in a precarious situation. In the five years of his tenure as president, the company had gone from a profitable operation to a losing one. Abernethy was forced to "drop out of management team" from the company by taking an "early retirement" on January 9, 1967.
After the departure of Abernethy, AMC's management decided to enter motorsports as a method to gain exposure, publicity, and a develop a "performance" image. A new position, Performance Activities Director, with Carl Chamakian, was established to get AMC automobiles in racing that would attract a younger customer base during the height of the muscle car
era.
Abernethy had two children, one boy, Lee Roy Abernethy (retired as a senior vice president at the Bank of New York
, was a consultant to the Bank of Taiwan
), and one girl, Phyliss Abernethy Hendry.
. This citation recognizes individuals currently employed in the industry or recently retired who have significantly improved the industry or their respective organizations.
Automotive industry
The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue....
, serving as CEO
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of American Motors Corporation
American Motors
American Motors Corporation was an American automobile company formed by the 1954 merger of Nash-Kelvinator Corporation and Hudson Motor Car Company. At the time, it was the largest corporate merger in U.S. history.George W...
(AMC) from February 1962 to January 1967. Prior to his tenure at AMC, Abernethy had been with Packard
Packard
Packard was an American luxury-type automobile marque built by the Packard Motor Car Company of Detroit, Michigan, and later by the Studebaker-Packard Corporation of South Bend, Indiana...
Motors and Willys-Overland
Willys
Willys was the brand name used by Willys-Overland Motors, an American automobile company best known for its design and production of military Jeeps and civilian versions during the 20th century.-Early History:In 1908, John Willys bought the Overland Automotive Division of Standard Wheel Company...
. Abernethy replaced George W. Romney
George W. Romney
George Wilcken Romney was an American businessman and Republican Party politician. He was chairman and CEO of American Motors Corporation from 1954 to 1962, the 43rd Governor of Michigan from 1963 to 1969, and the United States Secretary of Housing and Urban Development from 1969 to 1973...
who resigned from AMC to become Governor of Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
.
Background
Roy Abernethy began his automotive industry career in 1926 as an apprenticeApprenticeship
Apprenticeship is a system of training a new generation of practitioners of a skill. Apprentices or protégés build their careers from apprenticeships...
mechanic
Auto mechanic
An auto mechanic is a mechanic with a variety of car makes or either in a specific area or in a specific make of car. In repairing cars, their main role is to diagnose the problem accurately and quickly...
at luxury automaker, Packard
Packard
Packard was an American luxury-type automobile marque built by the Packard Motor Car Company of Detroit, Michigan, and later by the Studebaker-Packard Corporation of South Bend, Indiana...
, earning 18 cents
Cent (currency)
In many national currencies, the cent is a monetary unit that equals 1⁄100 of the basic monetary unit. Etymologically, the word cent derives from the Latin word "centum" meaning hundred. Cent also refers to a coin which is worth one cent....
per hour
Hour
The hour is a unit of measurement of time. In modern usage, an hour comprises 60 minutes, or 3,600 seconds...
. He then moved up establishing success in auto sales reaching US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
1,000,000 in Packard vehicles in a single year from his dealership in Hartford, Connecticut
Hartford, Connecticut
Hartford is the capital of the U.S. state of Connecticut. The seat of Hartford County until Connecticut disbanded county government in 1960, it is the second most populous city on New England's largest river, the Connecticut River. As of the 2010 Census, Hartford's population was 124,775, making...
. Abernethy also held the post of vice president of sales at Willys
Willys
Willys was the brand name used by Willys-Overland Motors, an American automobile company best known for its design and production of military Jeeps and civilian versions during the 20th century.-Early History:In 1908, John Willys bought the Overland Automotive Division of Standard Wheel Company...
.
Changing AMC
American Motors was formed from the merger of Nash MotorsNash Motors
Also see: Kelvinator and American Motors CorporationNash Motors was an automobile manufacturer based in Kenosha, Wisconsin, in the United States from 1916 to 1938. From 1938 to 1954, Nash was the automotive division of the Nash-Kelvinator Corporation...
and Hudson Motor Car Company
Hudson Motor Car Company
The Hudson Motor Car Company made Hudson and other brand automobiles in Detroit, Michigan, from 1909 to 1954. In 1954, Hudson merged with Nash-Kelvinator Corporation to form American Motors. The Hudson name was continued through the 1957 model year, after which it was dropped.- Company strategy...
and the company hired Abernethy in 1954. During AMC's formative years, the company struggled with costs and sales. Abernethy concentrated on building AMC’s sales and distribution network. Abernethy was the vice president of sales, and kept many of the dealers allied with AMC, thus helping to keep the corporation afloat, until AMC found its compact car niche under Romney's leadership. He was known to fly 50000 miles (80,467 km) miles a year to make AMC synonymous with the compact car
Compact car
A compact car , or small family car , is a classification of cars which are larger than a supermini but smaller than or equal to a mid-size car...
. Abernethy achieved sales successes for the company and by 1962, Rambler was number three in sales rank among all the brands of cars sold in the United States.
On February 12, 1962, the AMC board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
selected the 56-year old Abernethy to replace Romney. This was also the first time that the company separated the position of president from the chairperson of the board. Abernethy became responsible for day-to-day operations as president, while Richard E. Cross
Richard E. Cross
Richard Eugene Cross was an American business executive in the automotive industry and a lawyer.- Career at AMC :Richard E. Cross was a "quiet, analytical attorney" who served as legal counsel for American Motors Corporation . He drew up the 1954 merger papers that created the new company from...
, the automaker's legal counsel and new chairman was now called AMC's Chief Executive Officer.
Both took command of a financially strong company (working capital
Working capital
Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is...
increased from a low of $46 million in 1957, to $103 million, and the firm eliminated all long-term debt), with sales increasing from $362 million (91,469 automobiles) in 1957, to more than $1 billion (422,273 total units) in 1960. Abernethy was predicting a total of 450,000 Ramblers to be delivered for the 1962 year, despite increasing competition from the new domestic-made compact cars offered by the Big Three.
Roy Abernethy instituted the automaker's prohibition on automobile racing. He was against a renewal of the auto industry's horsepower race by offer ever more powerful engines, as well as corporate sponsorship of activities that glamorize speed and performance. As AMC's market performance reached record levels in 1964 placing the Rambler brand in third place position in the domestic sales race. At the same time AMC publicly disavowed any interest in automobile competition. Corporate advertising answered the question "Why don't we enter high-performance Rambler V-8s in racing?" with "Because the only race Rambler cares about is the human race."
However, Abernethy is now known for reversing Romney's plans for AMC that involved maximum parts compatibility for all lines of AMC vehicles. Abernethy was a big man of 237 pounds (108 kg) — smoking ten corona cigar
Cigar
A cigar is a tightly-rolled bundle of dried and fermented tobacco that is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, the Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Philippines, and the Eastern...
s a day, — and had big ideas for the company. He was convinced that with the right marketing AMC could take on the “Big Three” (General Motors
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
, Ford
Ford Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
and Chrysler
Chrysler
Chrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
) model for model, if the company could shed its "economy car
Economy car
An economy car is an automobile that is designed for low cost operation. Typical economy cars are small, light weight, and inexpensive to buy. Economy car designers are forced by stringent design constraints to be inventive...
" reputation.
Abernethy said repeatedly that AMC's "main problem was its image lag — the fact that too many people still thought of American Motors as the builder of plain jane compacts." He also started to move the Ambassador upscale to compete with other manufacturers' full-size car
Full-size car
A full-size car is a marketing term used in North America for an automobile larger than a mid-size car. In the United States, the EPA uses "large car" to denote full-size cars....
s. Moreover, larger models typically return bigger profits. Offering larger, and often more prestigious or "halo cars
Halo effect
The halo effect is a cognitive bias whereby one trait influences another trait or traits of that person or object. This is very common among physically attractiveness...
", can also help make the firm's smaller models look more attractive to consumers. Thus, as part of this vision, Abernethy put into a motion a total remake of AMC's corporate identity
Corporate identity
In Corporate Communications, a corporate identity is the "persona" of a corporation which is designed to accord with and facilitate the attainment of business objectives...
and its marketing mix
Marketing mix
The term "marketing mix" was coined in 1953 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients",...
that would divorce its larger car lines from its Rambler
Rambler (automobile)
Rambler was an automobile brand name used by the Thomas B. Jeffery Company between 1900 and 1914, then by its successor, Nash Motors from 1950 to 1954, and finally by Nash's successor, American Motors Corporation from 1954 to 1969...
brand and his perceived "negative" compact car
Compact car
A compact car , or small family car , is a classification of cars which are larger than a supermini but smaller than or equal to a mid-size car...
image.
The first models with Abernethy’s corporate strategy
Strategic management
Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments...
"in the business world's toughest race — the grinding contest against the Big Three automobile makers" were the cars introduced for the 1965 model year. They were billed as the “Sensible Spectaculars”. The 1965 models were a major makeover of the completely new platform
Automobile platform
An automobile platform is a shared set of common design, engineering, and production efforts, as well as major components over a number of outwardly distinct models and even types of automobiles, often from different, but related marques...
that was just introduced in 1963. American Motors' new cars included the stretched and more luxurious Ambassadors
AMC Ambassador
- 1958 :American Motors planned to produce a stretched a wheelbase version of the Rambler platform for Nash dealers to be the new Nash Ambassador, and another for Hudson dealers...
, as well as new convertibles for the large models. New styling, the more powerful engines, as well as numerous comfort and sports-type options were now emphasized. Abernethy even switched the automaker's advertising agency to promote "a better luxury and sports car image". However, Abernethy had his critics who contended that AMC "had its great success when it was doing what the Big Three weren't doing".
The objective was to position the 1967 AMC Rebel
AMC Rebel
The AMC Rebel is a mid-size car produced by American Motors Corporation from 1967 to 1970. It replaced the Rambler Classic. The Rebel was replaced by the similar AMC Matador for the 1971 model year...
and Ambassador designs on an equal basis with competitive models marketed by the Big Three. The new 1967 models also came with completely modern "GEN-2" AMC V8 engine
AMC V8 engine
American Motors Corporation produced a series of widely-used V8 engines from the mid-1950s before being absorbed into Chrysler in 1987. Chrysler kept the AMC V8 in production until 1991 for the Jeep Grand Wagoneer....
s. Furthermore, AMC introduced a revolutionary guarantee. The engine and drivetrain
Powertrain
In a motor vehicle, the term powertrain or powerplant refers to the group of components that generate power and deliver it to the road surface, water, or air. This includes the engine, transmission, drive shafts, differentials, and the final drive...
were covered for five years or 50000 miles (80,467 km). The media was positive in covering the new models, with experts such as Tom McCahill
Tom McCahill
Thomas Jay McCahill III was an automotive journalist, born the grandson of a wealthy attorney in Larchmont, New York. McCahill graduated from Yale University with a degree in fine arts....
highly praising the new car's performance and ride comfort.
The results
The evidence suggests that Abernethy was correct in making the Ambassadors more upscale with sales of the new models, that combined luxurious packaging and reasonable size, jumped from 18,647 in 1964 to over 64,000 in 1965 and then in 1966 they went even higher, to more than 71,000. However, there were serious problems. The company’s manufacturing facilities were ill equipped to take on the job of multiple chassis models. The costs of developing the new cars and engines meant managers now had problems in securing working capitalWorking capital
Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is...
to keep the company going. American Motor's automobile sales dropped twenty percent in the first half of 1966, and the firm reported a fiscal six-month loss of $4.2 million on sales of $479 million. The situation was so bad that Robert B. Evans
Robert B. Evans
Robert Beverley Evans, Sr. was an automobile industry executive, a prominent Republican, an industrialist, a socialite, and an avid sportsperson...
invested more than US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
2 million because AMC's stock was selling for only 60 percent of the company's net worth
Net worth
In business, net worth is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time...
, thus becoming its largest stockholder and was named its chairman.
Abernethy was spending so much money that it was difficult for the company to turn a profit and rumors started to have a snowball effect on the company. With the financial health of the company in question - as well as the future of the company - even an extra long engine warranty appeared to be not enough to instill confidence among consumers. The last quarter sales for AMC (which included the newly introduced 1967 models) were disappointing. AMC recorded a balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
loss of $12,648,000 for the year. The 1965 and 1966 Ambassadors represented a crossroad in AMC's history, one at which some historians would say it took the wrong turn.
The company changed leaders from the likes of Romney, who defined the compact car segment, to that of Abernethy, "a likeable super salesman who unfortunately landed at the top as the market began to quickly change." The problems facing AMC at this juncture were the result of incorrect assumptions. Abernethy presumed that customers needed more choices among those available from the Big Three with their new models in the compact car market. History had already proven this strategy wrong. For example, the Kaiser-Frazer Corporation tried unsuccessfully to challenge the Big Three market leaders in their existing product segments.
Abernethy’s strategy put AMC in a precarious situation. In the five years of his tenure as president, the company had gone from a profitable operation to a losing one. Abernethy was forced to "drop out of management team" from the company by taking an "early retirement" on January 9, 1967.
After the departure of Abernethy, AMC's management decided to enter motorsports as a method to gain exposure, publicity, and a develop a "performance" image. A new position, Performance Activities Director, with Carl Chamakian, was established to get AMC automobiles in racing that would attract a younger customer base during the height of the muscle car
Muscle car
Muscle car is a term used to refer to a variety of high-performance automobiles. The Merriam-Webster dictionary defines muscle cars as "any of a group of American-made 2-door sports coupes with powerful engines designed for high-performance driving." Usually, a large V8 engine is fitted in a...
era.
Abernethy had two children, one boy, Lee Roy Abernethy (retired as a senior vice president at the Bank of New York
Bank of New York
The Bank of New York was a global financial services company established in 1784 by the American Founding Father Alexander Hamilton. It existed until its merger with the Mellon Financial Corporation on July 2, 2007...
, was a consultant to the Bank of Taiwan
Bank of Taiwan
The Bank of Taiwan is a bank headquartered in Taipei, Republic of China . It is administered and owned by the Executive Yuan of the Republic of China.-History:...
), and one girl, Phyliss Abernethy Hendry.
Award
In 1971, Abernethy received the "Distinguished Service" citation from the Automotive Hall of FameAutomotive Hall of Fame
The Automotive Hall of Fame is an American museum and hall of fame covering automotive innovations.-Location:Located in the metro Detroit suburb of Dearborn, Michigan, the museum shares a parking lot with The Henry Ford.-External links:*...
. This citation recognizes individuals currently employed in the industry or recently retired who have significantly improved the industry or their respective organizations.