AMC TO BEGIN PRODUCTION OF FOUR-WHEEL-DRIVE PASSENGER CARS.... Within six months, according to Gerald C. Meyers, chairman and chief executive officer of the firm. Meyers, in making the announcement at a stockholders meeting, said the products will set new standards in terms of traction, safety and versatility. With the severe Midwest winters, the company could be on hot, new market. In addition to producing the four-wheel-drive passenger units, the company will also add a third Jeep plant to its North American production operations to meet the demand for the utility vehicles. The company also reported record first quarter sales and earnings, with net sales hitting $715-million and earnings, $26.2-million.

HERTZ, AVIS AND NATIONAL REACH OUT OF COURT SETTLEMENT WITH BUDGET....on a lawsuit filed by the Transamerica subsidiary in 1977. The suit followed a 1976 consent agreement the three signed with FTC barring them from monopolizing airport rental locations. By signing the agreement, Hertz, Avis, and National admitted no wrongdoing, but agreed not to engage in such practices. Since 1976, the number of airport counters by Budget has increased from 94 to 159 and other rental companies have posted gains in airport operations. According to the Wall Street Journal, the settlement of the lawsuit is said to be more than $9-million.

FIAT ESTABLISHES FIAT CREDIT CORPORATION.... Headquartered in Chicago. The Italian automaker has established its own credit organization to help the U.S. dealer organization expand their operations. The financing may also help dealers to move into other areas such as leasing and rental. Fiat is a partner in the credit corporation with Deutsche Bank, A.G.

HIGHWAY USERS FEDERATION REPORTS THAT 19 STATES ARE LOOKING AT INCREASES IN THE MOTOR FUEL TAX...sometime this year. Meanwhile, five states, Arkansas, lowa, Michigan, Texas and Utah, are eyeing proposals to reduce the tax. The 19 states included Albama, Arizona, California, Colorado, Illionois, Indiana, Kansas, Maine, Massachusetts, Minnesota, Misouri, Montana, Nebraska, Nevada, New Hampshire, Pennsylvania, South Dakota, Vermont and Wisconsin. While 13 states last year. The federation reports that in all, 30 states are expected to consider legislation of some kind to raise, lower, or shift the method of motor fuel taxation.

EXTENDED SERVICE PROGRAMS COMING ON STRONG... as General Motors introduces its own plan with an extensive media blitz. Called GM's Continuous Protection Plan, it protects new vehicles for 36 months or 36,000 miles and ranges in price from $153 on the Chevette Scooter up to $295 on the Cadillac Seville. The plan pays for repair or replacement of most parts of nine major assemblies, including the engine, transmission, front and rear drive axles, steering, front suspension, brakes, electrical system and factory-installed air conditioning. There is a $25 deductible charge per repair and a rental allowance of up to $15 per day with a $75 maximum per occurrence.

SHORT TAKES... Volkswagen's Westmoreland, Pennsylvania plan recently began second-shift operations and the company hopes to hit and output of 800 cars per day by mid-spring. The plant is already building 400 Rabbits per day on the first shift operations. Start of the second shift brings current VW Westmoreland employment to 3,500 persons.... Advertising Age recently acquired a copy of Sears' five year plan and reported that the nation's largest retailer is considering opening a network of 500 automotive service centers across the county. The Sears plan reportedly calls for five stations to be opened on a test basis with the rest to follow....General Motors is presently working with the California Air Resources Board to iron out differences in the CARB's 1980 diesel emission requirements that would limit the oil burner's NOx emissions to 1.0 gram per mile over a 10 year and 100,000 mile period. The auto manufacturer has applied for a waiver for 1.5 grams per mile at 50,000 miles.