In January 1954, Nash announced the acquisition of the Hudson Motor Car Company as a friendly merger, creating American Motors Corporation (AMC). To improve the financial performance of the combined companies, all production, beginning with the 1955 Nash and Hudson models, would happen at Nash's Kenosha plant. Nash would focus most of its marketing resources on its smaller Rambler models, and Hudson would focus its marketing efforts on its full-sized cars.
One of the first things Mason did as CEO of the new company was to initiate talks with James J. Nance, president of Packard, for parts-sharing arrangements between AMC and Packard. At this time, AMC did not have its own V8 engine, and an agreement was made for the new 320 CID Packard V8 engine and Packard's Ultramatic automatic transmission to be used in the 1955 Nash Ambassador and Hudson Hornet models.
In July 1954, Packard acquired Studebaker to form Studebaker-Packard Corporation,[43] however, further talks of a merger between AMC and Packard-Studebaker were cut short when Mason died on 8 October 1954. A week after his death, Mason's successor, George W. Romney, announced "there are no mergers under way either directly or indirectly".[44] Nevertheless, Romney continued with Mason's commitment to buy components from Studebaker-Packard Corporation. Although Mason and Nance had previously agreed that Studebaker-Packard would purchase parts from AMC, it did not do so. Moreover, Packard's engines and transmissions were comparatively expensive, so AMC began development of its own V8 engine, and replaced the outsourced unit by mid-1956.[45]
For the 1955 model year, all the large Nash and Hudson automobiles were based on a Nash-derived shared unitized body shell using styling themes by Pinin Farina, Edmund E. Anderson, and Frank Spring. Each had individual powertrains and separate, non-interchangeable body parts.[46] This mimicked the longtime practice Big Three (General Motors, Ford, and Chrysler) that allowed for maximum manufacturing economy. Anderson set up separate design studios for Nash, Hudson, and Rambler.
George Romney ordered the removal of the front fender skirts on Nashes and Ramblers for the 1955 models. Customers disliked this feature, yet it was reportedly demanded by George Mason, who liked their appearance.
Even with the merger forming AMC, they were held to a total of about four percent of the market and thus were under pressure to lower expenses and tooling costs for new models, perhaps by innovation.[47]
The Nash Metropolitan, marketed under either the Nash or Hudson brands, became a make unto its own in 1957, as did the Rambler. By this point, Rambler sales comprised most of AMC's volume, so George Romney decided to phase out the Nash and Hudson nameplates and focus solely on Rambler. This move would pay off the following year when an economic recession struck the United States and created a strong demand for economical compact cars.[48] Nash and Hudson production ended with the last Hornet made on 25 June, 1957.[49] From 1958 until 1962, Rambler and the Metropolitan were the only brands of cars sold by AMC. By 1965, the Rambler name would begin to be phased out, and AMC would take over as the brand name until the 1988 model year.
In 1970, American Motors acquired Kaiser Jeep (the descendant of Willys-Overland Motors) and its Toledo, Ohio, based manufacturing facilities. In 1979, AMC established a technology partnership with Renault. In 1987, Chrysler Corporation made a public offering to acquire all shares of AMC on the NYSE. The shareholders approved the offer, and AMC became a division of Chrysler Corporation.
