La Budd costruì la XR-400 come proposta per la American Motors per una convertibile a basso costo su base Rambler. Nonostante fosse in anticipo di almeno sei mesi rispetto alla Ford Mustang (che lanciò la moda delle pony-cars) la American Motors rifiutò l'idea.
La Budd tenne il prototipo per se, e dopo averlo rinominato "XR-Budd" lo usò per scopi promozionali.

The Budd Company built the XR-400 as a proposal to American Motors for a low-cost Rambler-based "sports convertible". Though it could have appeared at least six months before Ford's similar Mustang started the "ponycar" craze, AMC didn't have the crystal ball and rejected the idea.
Budd kept the lone prototype, but later renamed it "XR-Budd" and used it for promotional use.
The XR-400 was styled by Budd, which also planned to supply bodies and major sub-assemblies for AMC's production version. Prototype was built on a 108-inch '62 Ambassador chassis, the same wheelbase used for early Mustangs.