A new TREMEC 170-F four-speed manual transmission with Hurst linkage came from the factory, although VAM was not able to fully standardize it and several Hurst-linked three-speed 1975 American Rally versions were built. Since 1973, the growing problem of air pollution (especially in Mexico City) forced the Mexican government to begin emission certification of all engines produced in the country starting in 1974. This would affect all high-compression engines of all marques. For this reason, the I6 had dropped from an 8.5:1 to 8.3:1 compression ratio in the change between 1973 and 1974. However, this change was not enough to comply with the government standards and VAM was forced to decrease compression even more in mid-1974. This meant a final 7.6:1 compression ratio for the I6 for the second half of the year production of the 1974 Rambler American Rally. For this reason, the aforementioned model along with the 1975 American Rally became the lowest-performing examples of VAM's original compact sporty model, ending even below the stock 155 hp I6 of the 1969 Rambler American Rally and the stock 232 1970–1972 Rambler American two-door sedans. Improvements in the form of the four-speed transmission and electronic ignition were insufficient. In 1976, VAM introduced the Gremlin X for the first time in Mexico, retaking the economical sporty concept originally held by the Rally model. Engineers improved the power output of the I6 without rising gas emissions with a higher, 8.0:1 compression ratio. This, along with the subcompact's lighter body, made the 1976 Gremlin X outperform the low-compression 1975 American Rally even though it was not offered with the new four-speed transmission. To avoid internal competition in both performance models as well as further pushing the line's concept change, VAM proceeded to upgrade the American Rally to differentiate it from the new subcompact version. The 1976 models switched to the 7.7:1 compression ratio VAM I6 with Holley 2300 two-barrel carburetor and 266-degree camshaft, shared with the VAM Pacer and all Classic models. This marked for the first time the presence of VAM's largest engine in the Hornet-based compact line. Changes to the 258 six were still in process as well for the 282, thus the existing version was continued. The 1976 American Rally had improved performance with its higher displacement, large-diameter valves, larger intake manifold, and larger carburetor. The model outperformed its predecessors with the exception of the 1972 Rambler American Rally with