When it comes to the Big 3, Chrysler has often been a case of “one of these things is not like the others”. It spent most of the postwar era being outsold by GM and Ford by staggering margins. Interestingly though, Chrysler’s market share has managed to stay within a narrow band going back to the 1960s while the Blue Oval and the General have imploded. The story of one CEO’s tenure illustrates Mopar’s sinusoidal fortunes better than any other.
As I’ve stated before, the 1970s were a rough time for Detroit. But for Chrysler, things were especially bad.
The Dodge Dart and its twin, the Plymouth Valiant, were well regarded models in what was then considered the compact class. They were reliable, sturdy cars that sold well. Even in 1974, 7 years after their last full redesign, Mopar managed to move 720,000 of these A-bodies. That doesn’t even do justice to their importance. In 1974, in the middle of the energy crisis, Chevrolet and Ford managed to sell 600,000 and 400,000 full sized models, respectively. Plymouth, which was supposed to be Mopar’s volume division, only sold a pathetic 110,000 Furies, with most of those probably ending up with light bars on their roofs. Even Pontiac managed to move 170,000 big cars. Chrysler knew it could not screw up when they replaced their valiant (insert rimshot) A-bodies.
And boy did they screw it up. Chrysler, presumably wanting to quickly have a new compact to meet the challenge from the redesigned Chevy Nova and all-new Ford Granada, chose to rush the F-body Dodge Aspen and Plymouth Volare into production. It would be the mistake GM made 4 years later. And just like the Citation, the F-bodies set a record for NHTSA recalls with 8 (GM later beat them out with 9). The most prominent one was premature rusting of the front fenders. Fixing that problem cost Chrysler $109 million, which was big money at the time.
There were more problems. In the 1960s, Chrysler wanted to build an international empire like Ford and GM had. They bought out the British Rootes Group and French Simca. Chrysler Europe was hemorrhaging money and had to be sold in 1978 to Peugeot.
In 1978, Chrysler posted a $250 million loss. It was in this environment that in November, they chose to bring in a new CEO.
Lee Iacocca had a long tenure at Ford. He took over in 1961 after Robert MacNamara was appointed Secretary of Defense and would start a 17 year career that saw everything from the launch of the Mustang to the Pinto recall. He left in 1978 and was headhunted by the board of Chrysler just days later.
Chrysler’s problems were mounting rapidly. Without an infusion of cash, the company was headed for bankruptcy. So Mr. Iacocca went to Washington.
Congress was not keen on bailing out Chrysler. Conservatives saw it as excessive intrusion into private enterprise while Liberals saw it as corporate welfare. Iacocca needed to convince them that the company had a future and all it needed was some money. However, most of the company’s lineup did not help make that argument.
In addition to the aforementioned F-bodies which by now were considered intermediates as car sizes shrank, there was the full sized R-bodies. Chrysler did not have the money to design all new downsized large cars, so all they could do was slap new styling on the intermediate B-bodies and label them full sized. They could not hold a candle to the competition, even the fleet buyers who used to love big Mopars (think of the Blues’ Brothers Dodge Monaco) shunned them.
There was also the Dodge Colt. It was a reliable subcompact, but that was because it was a rebadged Mitsubishi, so it didn’t count.
There was also the Chrysler Cordoba and Dodge Magnum. They had sold well for their first three years but by this point were considered gas guzzling dinosaurs, Soft Corinthian Leather or not.
But, wait, what’s this? A glimmering beacon of hope? The Dodge Omni and Plymouth Horizon, developed with help from Chrysler Europe, were a pair of modern, chic, and fun to drive compacts. Their design was a blatant ripoff of the VW Golf, they even used VW engines. They were the first mass market American cars with front wheel drive. Iacocca used these cars as examples that Chrysler had a future. Congress, seeing this evidence of competence and not wanting the job losses that would’ve come from Chrysler going bankrupt, approved a $1.5 billion emergency loan, on the condition that Chrysler came up with an addition $2 billion in savings. This came from wage cuts and asset sales. The Loan Guarantee Act was signed by President Jimmy Carter on January 7, 1980
1981 brought the 2 cars that would decide the company’s future. The new K- platform would underpin a pair of new front wheel drive midsized cars, the Dodge Aries and Plymouth Reliant, to replace the infamous Aspen and Volare. Chrysler had thankfully not screwed up. They proved to be reliable models and they managed to sell 300,000 in their first year.
In 1982, the Chrysler name appeared on a K-car with the LeBaron. This was a bold step for a marque which 20 years earlier advertised that it would never make small cars. Notably, it offered the first convertible from Detroit since the 1976 Cadillac Eldorado. It brought back droptop motoring.
In 1983, Lee got a little cocky. He realized that the k platform could form the basis for a wide variety of cars without the development costs of engineering new platforms. The first variant would be the stretched E body. The k platform would go on to be the basis of nearly 50 different models during the 1980s, everything from the Dodge Daytona sports coupe to the Plymouth Voyager minivan. 1983 marked the turning point. It saw the company’s first profits since 1977 and saw the company paying off its federal loans with interest.
By 1984, Chrysler was done surviving and started living. The company came up with a bold idea; a small van that would offer the practicality of the traditional family station wagon but in a smaller more fuel efficient package. The minivan was born. Also, more importantly, on the dashboard of these vans were two little depressions where you could put 2 cups of coffee. This, my friends, is where cupholders began.
But soon, Lee was drunk on success and in the second half of the decade made a few ill advised acquisitions. In 1985, the company bought the Gulfstream jet company for $637 million. In 1987 they bought the Italian exotic automaker Lamborghini. As it turns out, just like how rich people with poor money habits will blow their cash on Gulfstreams and Lamborghinis, rich companies with poor money habits will blow their cash on the Gulfstream and Lamborghini companies.
Perhaps the worst idea he had was to take advantage of the 15.6% stake the company held in Maserati (in an odd twist, today both companies are together again under the Fiat corporate umbrella) to create a k-car based roadster billed as the TC by Maserati. It looked just like the much less expensive Lebaron GTC convertible and sold poorly.
In 1990, Chrysler was in trouble again. They were in the red with that year’s recession and the company was suffering as the K-car platform was now long in the tooth. In 1992, Lee Iacocca was forced to resign. This, however was not the end of the story.
In 1987, Chrysler bought American Motors. Since Studebaker went bust in 1966, it had been the last independent carmaker in America. By the 80s it was suffering from an outdated lineup consisting of variants of a compact dating back to 1970 and a bunch of Renaults. Lee was not particularly interested in this. what mattered to him was that AMC owned Jeep.
Even in the 80s (hell, even in the 40s) the fledgling SUV market was extremely profitable. And Jeep was working on a new model to replace the Wagoneer, it would become known as the Grand Cherokee.
This would be an extremely brilliant gamble. SUVs have proven to be far more popular than anyone could’ve guessed. Jeep is now Chrysler’s main means of support and has driven them to largely abandon passenger cars.
So that sums up the relationship between Chrysler and Lee Iacocca. A man who was drafted in during the company’s darkest hour, led them to prosperity and then into depression and, through one of the luckiest brand acquisitions ever, brought them even more prosperity.