The introduction of the dirt cheap Yugo GV and Hyundai Excel for 1986 caused many alarms to go off in Detroit. The Big Three automakers were still trying to compete with Japan’s lower manufacturing costs, and now here were two new entrants at even lower price points. Chrysler Chairman & CEO Lee Iacocca, a marketing master extraordinaire, saw it as an opportunity to breathe new life into two cars – really one car with two nameplates – that were about to drive off into the sunset. The result was a resounding success to the extent that it did it again a year later with two more moribund cars.
Each manufacturer responded to the Yugo/Excel in their own way. GM assumed that the imported Chevrolet Sprint (Suzuki Cultus), which was introduced the previous year, and the ancient Chevette, both with starting prices in the mid-five thousand price range, could cover that end of the market. Ford wouldn’t field a competitor in that price range until 1988 with the Korean-built Festiva (Kia Pride).
Chrysler’s Dodge Omni and Plymouth Horizon were in their 9th model year. Revolutionary when they were introduced in the fall of 1977 as the first American-made, transverse-engine, front-drive compacts from one of the Big Three manufacturers, they were now outclassed by nearly every competitor save the Chevette. Their intended replacements, the Dodge Shadow and Plymouth Sundance, were only months away.
The Colt, which was a rebadged Mitsubishi Mirage, and Omni/Horizon started at either side of six thousand. Chrysler knew the Omnirizon could still be competitive, but not at $6,209 for a 9-year-old car that didn’t give you anything more than the fresh-faced $4,995 Excel or the $3,998 Yugo (being based on the Fiat 127 introduced in 1971, its face wasn’t quite so fresh). The base 1986 Omnirizon was powered by a Peugeot-supplied 1.6-liter engine and 4-speed manual transaxle which was not far removed from the 1.5-liter/4-speed combo in the base Excel, with no radio, basic instrumentation, no power steering, no air conditioning (not even optional with the 1.6), and no rear defroster or wiper. Not a lot of value for the price. Just lowering the price wouldn’t cut it, either, as there was not enough margin to make it meaningful.
However, Chrysler still cut the margin as much as they could. Since the tooling had long-since been paid for, and the price of the pair had only risen since their introduction, there was more margin to play with than there would have been earlier.
The second component was simplification. The eighties were still the Burger-King-Have-It-Your-Way era for the Big Three, and you could equip your Omnirizon like a stripper (not the good kind), little two-tone luxury car, outlandish hot hatch, or anywhere in between. With the America program, Chrysler did a complete 180. The old base/SE/GLH trim lines went away, and now there was just one trim, coincidentally called “America”. The 10+ solid colors and various two-tone options were trimmed to just six solid colors. Option choices went from twelve to five, with three discount packages, air conditioning, and AM/FM cassette stereo. Overall, there were 704 fewer parts for the factories to manage according to Car & Driver’s interview with Don Gshwind, Vice President of Product Development, in the review of the Horizon America (Oct. 1986).
The third component was value. As I described above, the base Omnirizon wasn’t far removed from the base Excel. Therefore, added to the list of standard equipment were the previously optional 2.2-liter engine (which was now the only engine), 5-speed manual transaxle, Rallye instrument cluster with tachometer, and rear window defroster with wiper. And, of course, it still came with Chrysler’s famous 5-year/50,000-mile powertrain warranty, which it had come with since 1982. An ’86 model in this configuration would be a $6,899 car.
Even with reduced margin and simplification, this would still not get the price competitive with Hyundai. Therefore, the fourth component was outright cost cutting. According to Gschwind, Chrysler convinced suppliers to lower their prices. In addition, they negotiated a much more favorable labor contract with the Belvidere plant UAW, got the State of Illinois to pay for job training, and persuaded the dealers to reduce their profit margin.
The America was released in May 1986 with an astonishingly low $5,499 price tag – just $500 more than the Excel – though Chrysler increased the price to $5,799 in October. In May alone, sales jumped 43.2%. Overall Chrysler sold 146,356 units for the 1987 model year (which was actually slightly less than the shortened 1986 model year, but it includes a 6-month shutdown while the tooling was moved to a new factory). Chevrolet responded by cutting the price of the Chevette to $4,995 for its final model year but it was gone before the calendar flipped to 1987.
The strong 1987 showing for the Omnirizon is impressive considering they were sharing the showroom with the cars that were intended to replace them. The Shadow/Sundance, which were introduced the month after the America cars, sold 151,735 units that year, split almost evenly between Dodge and Plymouth, and that’s where Chrysler reclaimed much of the lost profit margin. Since the decision was made to keep the Omnirizon around, the new K-based twins were marketed as “premium” subcompacts. The two-door started at $7,599, with an additional $200 for the four-door, and were relatively well equipped. “Premium” options included items usually reserved for larger cars at this time, like power windows/locks/mirrors, turbo engine (as an option on any model, not just a limited-edition sports model like the GLH), tilt steering wheel, cruise control, and alloy wheels.
The America initiative was not applied to the Charger/Turismo, which received the standard price increases over the 1986 models. However, you could still get the hot Shelby edition of the Charger, including the turbo engine, for those who missed the GLH. They were gone after the 1987 model year.
Based on the success of the Omnirizon America, Chrysler introduced the Aries/Reliant America for 1988. Trims were cut down to just the LE with roughly same standard equipment as the Aries SE/Reliant LE of 1987. Color choices were cut from 8 to 7, but the number of options were reduced and grouped into packages. In an apples-to-apples comparison, the 1987 Reliant LE was $8,134 and the 1988 model was $6,995. I couldn’t find any information on whether the same cost-cutting measures were applied to the Aries/Reliant America, but I can only assume that they were based on how much less the latter car retailed.
For the 1987 model year, pre-America combined sales totaled 203,252. For 1988, it was 237,670, a 16.93% year-over-year increase. It was a very short-term effort as production of the twins ceased at the Jefferson Avenue plant on December 9, 1988. Oddly, this was to make way for the Omnirizon, which had been assembled at AMC’s old Kenosha plant after moving there from Belvidere. While the Omnirizon moved from Belvidere to make way for the C-Body New Yorker and Dynasty, the Kenosha plant was ignominiously shut down. Although Chrysler promised to keep the Omnirizon alive until the end of 1991 (they promised the same thing to Kenosha), production ceased on February 2, 1990, which is when the old Jefferson Avenue plant itself was closed.
The “America” designation was applied to the Shadow and Sundance for 1991, but that was just a stripper entry-level trim to replace the departed Omnirizon. As far as I know, the America concept – a significant price cut (rather than just rebates or other incentives) backed by aggressive cost-cutting PLUS additional standard equipment PLUS discounted equipment packages, a catchy name, advertised heavily on a national basis rather than just regionally, and using a well-known, influential face (in this case Lee Iacocca’s) on the whole thing saying something like “This is how we beat the imports” – was never again applied to any model sold in the U.S. by any manufacturer.
The question is why not?
First and foremost, many of these tactics began to be applied across the industry. Over the next several years the Burger King method gave way to the option package concept when manufacturers saw how much they could increase the average transaction price. For example, on the Omnirizon, power steering was only available in one of the discount packages, and more than 93 percent of 1987 America models came with power steering, so buyers needed to spend significantly more to get it than they spent for the stand-alone power steering option on the 1986 model (having had both an Omni and Horizon without power steering, I can tell you the car desperately needed it). In addition, buyers could not get the stand-alone air conditioning or the cassette player unless they also ordered one of the discount packages. It’s not hard to see why this has become common, and therefore why simplification would not work as well now as it did then.
As for getting part suppliers to cut their price, this was also the beginning of the era of guys like José Ignacio López de Arriortúa (Lopez Effect), Jacques Nasser (Jac the Knife), and Carlos Ghosn (Le Cost Cutter) who knew how to squeeze suppliers until their eyes popped. Throughout the industry, this type of practice was applied to every car, leaving little room to extract any further concessions to try to effect a price cut.
Chrysler promising both Kenosha and Jefferson Avenue that they would be building the America cars for a certain period to extract a favorable contract – then reneging on that promise – would likely make any union suspicious of future promises of that nature.
Substantial price cuts by themselves do still happen, however, but these cuts tend to be the higher-priced trims and models. Stellantis itself recently cut the price of the Durango R/T Plus from $54,990 to $47,490. However, I believe that was due more to too-aggressive pricing – something Stellantis is egregiously guilty of – than from gaining any kind of efficiencies.
Besides to not having the ability to bring about something like the America program again, there are also the intangibles to consider. While it was great that the Omnirizon held on to so many sales after the introduction of the Sundance/Shadow, how many higher-margin sales did Chrysler lose out on to people who bought the lower-margin car? In addition, having such old models hanging around the showroom isn’t great for brand image.
Furthermore, the America program, while attracting new customers and keeping existing customers who were ready to trade in their old cars, also alienated many recent customers. How would you have liked being that person who paid, say, $5,500 after rebates and a little negotiation for a base Horizon in early 1986 just before the America was introduced? Not only did you miss out on all the additional standard features, but now your new Horizon was worth considerably less than it was just a few months before and you still had 43 payments to go.
Another aspect of the market that has changed which would discourage manufacturers from this type of program today is the increased popularity of leasing, and that where you typically see the most aggressive discounts. The issue is that it’s strongly reliant on the mythical “residual value.” In the example above, any leased 1986 Omnirizons – not that there were likely many leases on this type of model back then – would be worth significantly less than the contracted residual at the end of the lease, with Chrysler left holding the bag. In addition, with so many off-lease one- to three-year-old late model vehicles on the market, many available as certified pre-owned with an extended warranty, how much of a market would there be for an obsolete new car at about the same price point?
There have been some aspects of the America program since then, such as keeping a current model in production with limited trims and options after the new model has been introduced at a higher price point, or restructuring the prices and options on a long-in-the-tooth model until the replacement arrives, but manufacturers had been doing that long before. There have also been some novel pricing programs, like Ford’s “One Price” Escort 3- and 5-door hatchback in 1993 which added power steering, stereo, rear-window defroster, dual power mirrors and intermittent wipers for a non-negotiable $9,995 (a roughly $750 savings for those that don’t negotiate).
But there’s been nothing like the America program, which was a fascinating experiment in keeping an older model relevant, at least for the time. Do you think there’s an opportunity for an America-type car today? With car prices entering the stratosphere, there might be an argument for one.
Again, a big thank you to Aaron Severson and his extensive industry knowledge for his help with this post.
Related Reading:
Vintage Reviews: Car And Driver 1987 New Car Issues – Short Take Reviews For Domestics
COAL: 1989 Dodge Omni – My First (And Last) Brand-New Car
Curbside Classics: Plymouth Horizon And Dodge Omni – Detroit Finally Builds A Proper Small Car
Curbside Classic: 1988 Plymouth Reliant America – Mom And Dad, Please Don’t
CC Capsule: 1989 Plymouth Reliant America 2-Door – Staring Down Extinction
COAL: 1988 Plymouth Reliant SE : Grandpa’s Legacy
COAL: 1988 Dodge Aries America: O K Car
This “America” series reminds me of a similar marketing campaign in Canada at that time: the “Expo” line. I recall it having the same purpose.
Good point. I’m not positive about this, but I think the Omni/Horizon were rebranded as the “Expo” as part of this series and the Aries/Reliant equivalents were known as the “Canada K.”
I guess the “America” badging wouldn’t have sold too well in Canada, eh?
Looking back, the America line seems like a precursor to the way everything is built now. Very limited color selections and an almost complete absence of Ala carte options in favor of pre-selected packages.
“ Looking back, the America line seems like
a precursor to the way everything is built nowHonda’s longstanding approach towards availability. Very limited color selections and an almost complete absence of Ala carte options in favor ofpre-selected packages.distinct trim levels with specific uniform feature content.”American Honda’s fixation on that has long been borderline pathological. It was NOT how Honda did business in the home market, it was something the U.S. sales organization settled on in the ’70s, back when it might have made some kind of sense, and they cling to it like a dog that won’t let go of a dead bird.
Aaron, I must say I had to recheck the name after thinking for sure I was reading a Jason Shafer comment “…and they cling to it like a dog that won’t let go of a dead bird”. I will have to incorporate that into my own verbiage somehow, it’s good (and hilarious)!
You speak the truth though. I expect you are like me in that you can somehow look at practically any Honda from the 90s and identify the trim level by a simple 2-step mental flow chart from almost a block away on a rainy night – 1. Look at roof, if sunroof then it’s an EX. No sunroof, go to step 2. Look at door handles or mirrors – if body color it’s an LX. If black then it’s a DX. And you probably can recite the features list of each level on command too.
And also how American Honda senselessly insisted on treating cars with ABS and later side airbags as “separate models.”
One of the more interesting cars I acquired for my kids was a 1986 Plymouth Turismo 2.2. It had the sporty 2 dr hatchback body. As I dug into it, I found it had the special decked block, the 1 tooth shorter timing belt, chrome valve cover and air cleaner. Spark computer number came up as “Shelby GLH”. What we had was the Plymouth vesion of the Omni GLH, it also had the nice 14″ aluminum rims.
Yup, starting in model year ’84 the (non-turbo) “high output” version of the 2.2L engine that had debuted in the early Shelby Charger and Omni GLH also became available with the “Charger 2.2” and “Turismo 2.2” packages, which was an upgrade distinct from base Chargers/Turismos equipped with the regular 2.2L.
How un-American to offer it in three other colors besides just Red, White, and Blue. What were those three other (clearly commie) colors that branded one as a non-conformist flag-burner to be relegated to the no-fly lists and non-warranted ICE raids of the future?
Whilst a proponent of choice, I don’t think I’ve ever actually ordered a burger at BK differently than the stock configuration, I just don’t want to think about someone handling my burger at all back there. And I will say I appreciate the fact that they did bundle the stuff that was clearly the most desirable (bigger engine, AC, etc) in somewhat logical order and then dropped the price a lot. Of course then people bitched that based on the new low price that wouldn’t be possible otherwise, they were still being charged for crap they didn’t want with it bundled into packages even if the total was less than it would have been otherwise, so you can’t really win. Not that you should really expect the Grey Poupon while on a French’s budget but that’s how freedom of choice conditions one. (Freedom isn’t free, as they say).
The big winners that shouldn’t be forgotten here were of course all of the “The Price Is Right” finalists going forwards, the vehicle invariably breathlessly yet confidently described as “Equipped with all the standard features!” suddenly got a lot more attractive.
Adam, I like your writings. Keep ’em coming, clearly we are of the same era…
Thank you!
Mom was one of those people who bought just before this was announced. I’m not sure what the price difference was – hers cost around $8k with options similar to the America package (deluxe seats, AT, PS, FM but no a/c or tape deck) so I suspect it was an actual difference under a grand, but still.
Resale value was irrelevant since she kept it until 1995 in a time and place where 10 years was considered the lifespan of a car before it succumbed to rust (the fact that some of them were now making it to that point with original paint was eye-opening, but the rear bumper had fallen off from bimetallic corrosion at least once); she ended up selling it to some family members for one dollar more than the lowball offer the dealer she bought it from offered in trade for a new Neon. In between, it was the car I learned to drive on, along with the Driver’s Ed Escort and the Chevy Sprint a FOAF taught me to drive stick on.
I do not see any possibility of applying this concept today, as mainstream model choices are already over-simplified, with manufacturers even moving away from option packages and simply forcing a step up to a higher trim to have additional equipment over the base model.
The equivalent in spirit would be developing a vehicle using paid off and older technology, and having a reduced set of standard features; not unlike what Renault did with Dacia in Europe, with the Sandero being, not by chance, the most sold car model in the EU
Great article. It really brought back some fond memories for me personally. First from the article: I recall when these first came out and thought they were a great value. There were a LOT of these sold in the Midwest where I lived. I was so impressed with them, that when a buddy of mine was looking to get a new or used car, I encouraged him to get an Omni America. I even went with him to look at and drive one, which said a lot since I was then a new sales person with a Buick, Cadillac, GMC and Honda dealer. He had asked me to look for a nice used car in that price range since he couldn’t afford any of the new cars I sold. The one we looked at was the light blue and had most of the features. I recall how nice I thought the seats were and it had auto, delay wipers, cassette stereo, A/C, etc. with a price tag around $8,800. In the end, he didn’t buy it and instead purchased a used Olds Calais 2 door. Nice enough car, but I thought he should have gotten the brand new Omni America instead.
The second trip down memory lane was from some of the comments above. Like I said, I began selling cars in 1988 and we had brand new “demo’s” back then. My first demo was a 1988 Buick Skylark Custom loaded up car in Ruby Red. I loved it. When that one sold, the manager decided to put me in a 1988 Honda Accord DX base model with auto. That was when you had to add the A/C and radio if you wanted one. Well, at least they added those two things, but man I hated that car. After driving the Skylark loaded up car, the DX base Accord was like stepping back for sure. And the car was so noisy compared to the Buick and it had tons of wind noise. Enough that my girlfriend at the time accused me or having the window down when I didn’t. I was so happy when that sold and fully expected to get another Buick, but no. That manager was trying to force me to fall in love with Honda’s, so they put me in an Accord LX sedan with auto for the next car. It was better than the DX by far, but still no Buick. After that demo sold, I went back to Buick’s and never looked back.
But back to this story. America really needs something like a lower priced “American” line again.
Lower now means “under, 32K”..lol Still wouldn’t be available to many of us.
2026 Corolla starts at $23,125 and is equipped far better than anything mentioned above as well as being built in the USA.
2026 Chevy Trax starts at $21,700, also far better equipped, but is imported from South Korea.
2026 Kia K4 sedan starts at $22,290, also well equipped, and is built in Mexico.
American manufacturers unfortunately do not seem interested in competing at this end of the market with domestic built product. Weirdly enough lots of “import” brands do support American labor at this end of the market.
I just looked it up. A car with a list price of $8,800 in 1988 would be just under $25,000 car today. So it’s sad to see how few “affordable” vehicles we have today.
Like Jim K said, there’s a few out there as such. I think the most affordable vehicle sold today is the Trax LS. And it’s a very nice car.
I’m just surprised that we’re all supposed to get excited that Ford is planning to launch a new sedan in the U.S. for less than $40k. Is this the new “low cost” standard?
The last year of the at that point well-amortized Ford Fusion in the US was 2020, by all accounts a decent product with room for the family. It base priced at $23170 in 2020 and supposedly was mostly cancelled due to an inability of Ford to make enough profit on it even though it was built in Mexico. $23170 in 2020 is worth about $29812 today. And Ford’s new sedan will be “less than” $40k, so almost $10k higher? Ok… Why wouldn’t/shouldn’t I just buy a Camry that starts at under $30k today (effectively what a Fusion would/should cost if it were still made today), is built in the U.S.,is a 50mpg hybrid as its base trim, isn’t plagued with anywhere near the number of recalls as most Ford models have been for the last I don’t even know how long, and has stellar resale value?
Ford seems to want or need to make an F150-sized profit on everything it sells otherwise doesn’t want to bother. I don’t begrudge them a profit at all but I do think they are being more than a bit disingeneous. Making your base price sedan cost anywhere near $40k isn’t going to stop people clamoring for “affordable” cars especially when $40k already easily gets you more than one very well equipped and competent sedan option from every other mass-market player in the field today that Ford felt they couldn’t profitably compete with the last time around, what’s different now?
I would say that “considering” rather than “planning” a new sedan. We shall see…But if gas prices stay escalated for some time, the odds for it improve.
These were marketed in Canada as the Expo Edition, presumably because Vancouver hosted an Expo in 1986. The car market was a lot different then. Back in the day, people (in Canada, anyway) didn’t automatically buy the biggest vehicle they could swing. Rather, the bought cars they actually needed. The Expo Horizon was a great car for a young family. Most were sold off lease at really low prices, the perfect car for a navy mom. There were also loads of Chevrolet Sprints and Chevettes.
Now young people go out and buy vehicles they really can’t afford. Marketing has convinced them they need a huge machine to go grocery shopping.
I guess the “America” badging wouldn’t have sold well in Canada, eh?
Considering it’s near impossible to find a car with a manual transmission, manual brakes and crank up windows today; the price of a new car reflects many of the features we take for granted. Comparing my 2012 Escape vs. 2025 Rav4, the electronics alone are out of this world (and very annoying).
Our expectations are a lot higher than in the past. McMansions with Silverados & Suburbans parked in the driveway are the new norm. Note that Chevrolet doesn’t even list a 2 door pickup on its website; they are all crew cabs.
Adam, an excellent post about a pivotal moment in the industry. Part of what led to this is that car price inflation in the 1980s was exceptionally high, despite inflation overall being quite modest. The Voluntary Import Restrictions Japan agreed to had a huge effect on this, as the Japanese increased their prices viciously due to high demand and low supply. This allowed the domestics to increase their prices substantially too. So there was a real opening in the market for the Yugo and Excel, and Chrysler made a smart move with these. And as always, there was plenty of opportunity to upsell buyers who came in the door because of these America models.
One could say that these were a turning point, as car price inflation finally moderated in the 1990s as the Japanese opened plants in the US and supply increased.
I saw all of this coming a couple of years ago and bought a leftover ’24 Versa with a stick a year ago. $19,100 out the door, and I have to think that compares with the relative cost of the America mopars when adjusted for inflation. Even this lowly Versa is luxuriously equipped verses any base model economy car of the late 80’s.