Ward Jr., combined resources to purchase the assets of the bankrupt American Austin Car Company in August of 1935 during liquidation.

The Austin engine was also redesigned with a new aluminum induction system and cylinder head, retaining the 45.6 cubic inch (747 cc) displacement, but while adopting a fully pressurized oil system, increasing the compression ratio by 40% to a 7:1 ratio and implementing plain babbitt crankshaft bearings to produce 20 horsepower at 4,000 rpm, a 50% improvement over the Austin engine.

[20][21] American Bantam delivered the first jeep to the QMC on September 23, 1940, at Camp Holabird, a U.S. Army base to the east of Baltimore, Maryland.

[16] The word "Jeep" was first used to describe US Army "midget cars" in a January 1941 newspaper article, mentioning "Bantam" as the manufacturer.

Some of the motors and chassis were imported from Toledo, Ohio; the original bodies were made at the American Bantam factory in Butler, Pennsylvania.

The Bantam company produced the most fuel-efficient engine and first prototype under the original U.S. Army tender specifications and was awarded the first contract.

However, because elements favorable to Ford within the Quartermaster Corps claimed[24] that Bantam lacked production capacity to produce the vehicle on the scale needed by the Army, the awarding of ongoing contracts was reopened.