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Under the Spell
The Long and Tumultuous Life Of The Avanti
If entrepreneur Mike Kelly hadn’t been arrested on felony charges 10 years ago, the Studebaker Avanti might still be around today. Although production wasn’t continuous, when the dust from three states and two countries settled in 2007, the Avanti had survived for 45 years — eclipsed only by icons like the VW Beetle and Morgan Plus 4. Considering history’s long list of defunct cars like the Bricklin, DeLorean and Tucker, the Avanti’s survival — and the story behind its extended run — is nothing short of remarkable.
It all started innocently enough. In 1961, Studebaker’s new president, Sherwood Egbert, decided the struggling company needed a sporty car to juice up showrooms. He engaged designer Raymond Loewy — known for the streamlined Broadway Limited train, railway stations, Shell and Exxon logos, vacuum cleaners, the John F. Kennedy postage stamp, even the iconic Studebaker logo. Loewy assembled a talented team of designers, secreted them in a rented house in Palm Springs and gave them a few weeks to design a sporting four-seat GT on a modified Lark convertible chassis. Upon its debut in 1962, Road & Track called it “a radical departure from the commonplace.” With a standard V-8, fiberglass body and a $4,445 price tag, it cost about the same as a four-speed-equipped Corvette coupe.
Fresh as it was, the Avanti wasn’t enough to fix Studebaker’s money troubles and was quickly deemed a luxury the company couldn’t afford. After a year-and-a-half, the Avanti was axed and Studebaker moved remaining auto production to Canada. That might have been the end of the story but for Nate Altman and Leo Newman.
The partners owned a Studebaker-Packard dealership in Studebaker’s hometown of South Bend, Indiana. Altman and Newman are now deceased, but one of their associates, attorney Bob Lee, recalls those days. “Nate searched to find another automaker interested in building the Avanti. People thought he was crazy. No one [including Checker] was interested, so then he decided: ‘If it’s going to get done, I’ll have to do it.’” Perhaps Altman was crazy. In its short run, Studebaker had sold roughly 5,000 Avantis, less than a quarter of the Corvettes purchased in the same period. It’s hard to imagine a legitimate business case, but Altman was clearly smitten. The Avanti had found its first angel.
According to Lee — a later investor in Altman’s car-making venture — the initial deal with Studebaker called for the new Avanti Motor Corporation team to go into Studebaker and “take everything we could — all work in process, all tools, all parts.” The deal included replacement parts for Studebaker light trucks and older cars. Selling those items provided the cash flow until Avanti production resumed in 1965.
The only significant change came in the engine bay. Studebaker had switched from making its own engines to buying them from Chevrolet. Altman followed suit.
While Studebaker finally went bust in 1967, the Altman/Newman-run Avanti Motors sold Avantis direct from the factory through 1982. For years, the operation ran smoothly and turned a modest profit while producing between 50 and 200 cars annually. The Avanti evolved as parts supplies ran out and new sources were needed — often from the RV industry. The biggest change came in 1976, when Nate Altman died suddenly. As Bob Lee recalls, “The plant was shut down and we all went to the funeral.” Following the funeral, says Lee, “Factory manager Harold Simmons said to the employees, ‘Nate didn’t build the car, we did. He’s gone and we’re still here,’” which motivated the team to carry on. One thing they wouldn’t have anymore, though, was a president who switched the phone to ring at his home every night.
Nate’s brother, Arnold “Ari” Altman took over. While Ari wasn’t a visionary like Nate, he did keep things going until the Avanti’s next angel appeared. That was in 1982, when Steve Blake stepped in and Avanti Motor Corporation had about 120 employees who had built just under 200 cars. Blake had big plans for the nearly 20-year-old and fundamentally unchanged design.
Blake was a Washington, D.C., developer with a passion for the Avanti and dreams of being an automaker. He had purchased several Avantis from Ed Waterman, a dealer who was one of six investors in Blake’s car-building endeavor. Unfortunately, Blake’s dreams didn’t always match reality.
Blake was determined to bring the Avanti up to date and to expand the product line, all in record time. There were plans for new-car launches, a racing program and convertible with a top “like the one on a Rolls-Royce,” according to convertible top engineer Curt Fischbach. The trouble was that Blake had used most of his cash for the initial purchase of the company, so he resorted to bank loans to finance the improvements.
According to Avanti historian John Hull, in 1984, production climbed to 265 units, and a new paint system was introduced. By June, most of those cars had to be repainted due to blistering — a huge financial hit. Only 99 Avantis were completed in 1985; there were none in 1986. The bank moved in, rejecting Blake’s planned reorganization and move to Detroit. Avanti was for sale again.
This is the point where the Avanti probably should have had a noble end. But there’s something intangible about the car that drives folks nuts. If you take a straw poll of people in our office, the majority don’t see anything special in the Loewy design. It’s interesting for sure, but more deserving of survival than DeLorean or Tucker? Dave Kinney, publisher of the Hagerty Price Guide, is one of the nuts. He’s owned over 100 Avantis. “It first captured me when I was 9. I just bonded with the look of the thing and I never got it out of my system.” Ed Welburn, the retired Vice President of Global Design for General Motors, concurs, calling the Avanti “a very progressive design that remained fresh.”
Finding the roots of a man’s passion is, of course, a fool’s errand. In any case, businessman and South Bend native Mike Kelly picked up the baton. He soon enlisted investment from shopping-mall developer J.J. Cafaro. The renamed New Avanti Motor Corporation was moved near Cafaro’s headquarters in Youngstown, Ohio. With fresh capital, the company announced a 1987 model line that included the standard coupe, the longer SLC coupe, a two-door convertible and a mid-engine Avanti based on the Brazilian Puma. But before the mid-engine car could advance, Cafaro, who had fallen hard for the Avanti, bought out Mike Kelly in September 1988.
Cafaro’s dream was luxury. He contracted with Callaway Advanced Technology for a new chassis and he announced a four-door that could be stretched. And he delivered, selling 97 four-doors in 1990. But that wasn’t enough to justify the investment. In 1991, Cafaro moved only 17 cars, mostly convertibles. The factory was shuttered; the Avanti name was again dormant.
In 1997, retired adman Jim Bunting decided to peer into the future. He enlisted Tom Kellogg, part of the original Loewy team, to update the Avanti’s design into a coupe for the ’90s. Drawings in hand, Bunting then hired Pennsylvania hot-rodder Bill Lang to build a prototype on a Firebird chassis. Since Cafaro owned the Avanti name, Bunting called his one-off AVX, for “AVanti Experiment.” Lang ultimately built a T-top and convertible version (Camaro chassis), but Bunting decided against production. His real interest had been in the design exercise.
Several years passed with no Avanti. But remember, this is the car with nine lives. In 1998, Avanti veterans — historian John Hull and former Avanti Motors sales rep John Seaton — took the reins. They attempted to purchase the name from Cafaro and marry it to the AVX prototype. As negotiations dragged on, Hull dropped out, but serial Avanti owner Seaton kept at it and acquired the Avanti name and pieces from Cafaro.
Driven by passion, Seaton finally owned Avanti, but he lacked the capital to restart production. And here’s where Mike Kelly — remember him, owner number three? — stepped back in. Kelly kicked in some cash, and the company’s assets were moved to Villa Rica, Georgia, about 30 miles west of Atlanta.
The plan was to build a slightly tweaked AVX on a Pontiac Firebird chassis. Two prototypes, both convertibles (one with a supercharger), were introduced in October 2000 as 2001 models. Then things got even more complicated.
John Hull joined the operation as a minority equity holder and CFO. After years as an observer, he was finally on the inside. Despite Seaton’s passion for Avanti, his tenure was brief. Kelly, who was working from Cancun, Mexico, where he was managing his resort properties, bought him out in November 2001 as the economy slowed following the September 11 terrorist attacks. As if being an independent automaker virtually starting from scratch in a somewhat depressed financial climate wasn’t tough enough, in August 2002, GM announced the Firebird’s demise. Once again the Avanti, which at times rode on Monte Carlo and Impala platforms, would be a car without a chassis. All this drama was going on while lots of cash was going out but little was coming in.
Kelly managed to build roughly 53 Firebird-based Avantis in 2004. Meanwhile, development work had switched to the new-for-2005 Mustang platform and a few other projects — including an SUV — to broaden the lineup. While all this was in progress, however, according to John Hull, on August 18, 2004, Kelly made a public announcement that the Avanti Motor Corporation would be sold to the highest bidder on October 1, 2004. No acceptable bids were received, and the company didn’t sell. After roughly eight 2005 Avantis were completed, Kelly moved the company to Cancun, where a sparkling new facility was opened on October 27, 2006. With a new car on a fresh Mustang chassis, a new headquarters, a new distribution facility in Georgia and, potentially, an expanded product line, the Avanti’s future looked bright.
But just two months after the gala celebration in Cancun, Kelly was at the Mayo Clinic in Minnesota for a check-up when the FBI arrested him on charges of running a Ponzi scheme. According to Naomi Nix of the Chicago Tribune, roughly 7,000 investors — many of them senior citizens — lost $342 million in what a U.S. Attorney called “a fraud of massive proportions.” Ultimately, Kelly pled guilty to lesser charges in an agreement that would allow him access to chemotherapy for colon cancer. He died in December 2013.
Kelly’s arrest may well have been the Avanti’s end. No new angel has appeared in the past 10 years, but with a car that survived so many owners, it would be unwise to deliver a eulogy just yet. Perhaps someone else will catch the bug that inspired Nate Altman and Leo Newman — and all who followed — to invest everything in the Avanti and keep it alive as more than just a memory.