Autos: Life Without Father

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AMC has other problems. While the rest of the industry is enjoying near record earnings, AMC's profits have dipped from a 1959 peak of $60 million, nearly 7% of its sales, to an estimated 3.5% return for the business year ended this week. AMC is the only U.S. automaker so far this year to raise prices on a significant number of new models; its Classics and Ambassadors will be tagged $30 to $40 higher.

On to 50%. Chairman Cross attributes AMC's decline in profits chiefly to rising labor costs. There are other factors, notably a high-priced drive to build sales, and costly retooling for the '63s.

In the future, the retailing problem may grow. For if it succeeds in wooing younger drivers, who generally crave frequent, thoroughgoing model changes, AMC may be forced to choose between its new public and its resistance to extensive restyling. AMC hopes to stick with its basic '63 styling for at least three years. Says Cross: "We haven't opened Pandora's box." Nor has the company any hankering to stray outside the compact field. "The most rapidly expanding part of the auto market today is the compact segment," says President Abernethy. "It currently accounts for 38% of the market, and we expect it to go up to 50% before long." AMC's 1963 sales goal: 620,000, up 28% over 1962.

If success means that AMC must raise money for a new plant, the company is in excellent shape to do so. Last month it paid off an $80 million loan, became the only U.S. automaker free of long-term debt. Says Cross: "If we have any problems, they are the kind you like to have —problems growing out of success."