For the 1971 model year the "X" appearance/equipment trim package was introduced as a $300 option on the 4-passenger model and "proved extremely popular." It included body side tape stripes, body color front fascia, slotted road wheels with D70x14 Goodyear Polyglas tires, blackout grille insert, bucket seats, and "X" decals.
The 2-passenger Gremlin version entered into its second and final season. The 232 cu in (3.8 L) I6 engine that was optional for 1970 became standard, while a longer-stroke 258 cu in (4.2 L) version became the option. Compression ratios dropped from 8.5:1 to 8:1 for 1971, resulting in 135 hp (101 kW; 137 PS) (gross) from the 232 cu in (3.8 L) and 150 hp (112 kW; 152 PS) (gross) from the 258 cu in (4.2 L)
1971 Gremlin prices increased slightly (up by $20 to $1,899 for the base model), and sales for this first full model year rose to 53,480.
Changes were greater for 1976. Oval headlight bezels replaced the previous circular items. The grille shape became a stretched hexagon and included in its insert two opposing loops stacked atop each other and housing new rounded parking/turn signal lights. Front fenders were taller, with a slight finned effect. A new "Custom" trim line debuted, featuring a striped interior trim called "Potomac", as well as a spare tire cover and other minor details. The A models were given another new striping scheme: the hockey stick-style stripe of the previous year adding a secondary extension that ran from the door-handle straight back. The X package was now available only on Custom models. Due to flagging sales, the 304 cu in (5.0 L) V8 engine option (now downgraded to 120 hp (89 kW; 122 PS)) was cancelled at midyear, after only 826 installations. (A total of 40,994 Gremlins were equipped with the V8 engine from 1972 to 1976.) A 4-speed manual transmission was made available at midyear. Sales tapered slightly to 52,941 - a decline of 5.5%.
The introductory 1974 Gremlins became unique by incorporating the front clip of the 1974 U.S. AMC Hornet models. VAM never attempted to hide the relation between the two models, which never harmed the sales or image of either model and was favored by the public. The launch of the Gremlin in Mexico also meant the resurrection of the 232 cu in (3.8 L) I6 engine that was discontinued in 1972. The engine was practically the same as in its final year except for a slightly lower compression ratio (8.3:1 instead of 8.5:1). The advertised output was still the same at 145 gross horsepower at 4,400 revolutions per minute and was restricted to one-barrel carburetors. In contrast, since 1973 all VAM-based Hornets had the 258 cu in (4.2 L) six as the standard and only engine. VAM Gremlins were basic economy cars with manual 3-speed transmission, four-wheel drum brakes, manual steering, front sway bar, column-mounted shifters only, rigid four-bladed cooling fan, folding bench seats, two-point front seatbelts, electric wipers and washers, monaural AM radio, cigarette lighter, front and rear ashtrays, locking glovebox, flip-open rear side vents, roof rack, full carpeting with driver's side rubber mat, padded sunvisors, sound-insulating cardboard-type headliner, dual coat hooks and round dome light. Options for 1974 included a column-mounted automatic transmission, power steering, power drum brakes, heater, parcel shelf, light group, remote-controlled driver and passenger side outside mirrors, sports steering wheel, bright molding package, and wheel trim rings. All VAM Gremlins used the AMC's three-pod instrument cluster from the domestic-built Hornet with a blank in the third gauge position from the factory. The introductory year production was 2,137.