Recognising the impossibility of sustaining the Amilcar business with a single model, but unsure of how to finance or produce another, management turned to Hotchkiss which had recently taken a large shareholding in "Sofia", Amilcar's holding company. Hotchkiss had problems of their own at this time, their hugely lucrative armaments business having recently been nationalised by the left-wing Blum government, while their middle-market automobile business was under increasing pressure as volume automakers became more effective in pushing their own ranges upmarket with models such as the Peugeot 402 and the Citroën Traction. Henry Mann Ainsworth, the Automobile Director at Hotchkiss, had already been presented, by the high-profile engineer Jean-Albert Grégoire, with a promising prototype (at that stage based on an Adler chassis) for a lightweight 7CV category, small, technically advanced family car. It was agreed that the automotive businesses of Hotchkiss and Amilcar would be merged and the prototype would be developed into an Amilcar model that would become the Amilcar Compound.