(EXPANDED FROM 7/18/2023)
Our discussion about the Ford Maverick got me thinking about Lee Iacocca. More than any other car, the Maverick reflected how Iacocca’s sensibility differed from that of Robert McNamara, the father of the Falcon. Whereas McNamara championed a utilitarian compact, Iacocca insisted on it being flashy looking.
The latter approach sort-of worked for a while. However, I would suggest that the U.S. auto industry did not adequately respond to the imports primarily because of executives such as Iacocca who did not focus enough on improving the car-ownership experience.
Earlier versions of this essay generated major pushback from readers. Some argued that I was too negative and pointed to Iacocca’s positive qualities. I have responded to some of those comments but continue to emphasize Iacocca’s weaknesses because I think that they weighed more heavily.
Below are five specific ways Iacocca contributed to the decline of Ford and Chrysler. But first some background.
Iacocca stood out when Detroit was at its most sclerotic
The death of Lee Iacocca in 2019 elicited much praise, but obituaries usually failed to acknowledge that his success was heavily colored by being in the right place at the right time.
Iacocca rose to power when Detroit had become so sclerotic that even a reasonably street-savvy executive could stand out — particularly if he (auto executives were all men back then) had a flair for publicity.
Stories about Iacocca invariably emphasized his marketing abilities. For example, auto analyst Maryann Keller stated that “he was able get people to overlook the limitations of Chrysler automobiles and he was able to get Congress to overlook the fact that the company really was in financial trouble. . . . He made people believe in him” (Barnes, 2019).
Iacocca should get credit where credit is due. However, if we could magically conduct an experiment where a series of chief executives ran Chrysler, it is plausible that others might have also gained approval for a bailout and rebuilt public trust in the automaker’s products.
1. Iacocca’s forte was penny-pinching gimmicks
One of Iacocca’s greatest strengths was his penny-pinching proclivities. This is ironic given his battles with Ford Motor Company’s bean counters (Johnson, 2005).
For example, one of his biggest contributions at Ford was championing of a succession of hits based on a Ford Falcon platform introduced in 1960. The Mustang, Cougar, Maverick and Granada variants likely generated a high return on their investment because the compact platform they shared was kept in production longer — and at higher volume — than that of any other U.S. automaker.
One could argue that some of those cars were “innovative,” such as the Mustang. However, none broke new ground when it came to advances in engineering or manufacturing quality. Iacocca’s strength was dressing up an existing platform by responding to emerging trends — particularly with gimmicky styling and marketing.
Iacocca’s ability to find clever ways to squeeze more profits out of Ford’s platforms helped to improve the automaker’s economies of scale. This was important because Ford was much smaller than General Motors. That said, his emphasis on making a big splash with new models arguably took resources away from protecting core markets.
2. Iacocca tended to play follow the leader
The Chrysler Corporation needed even more help increasing its economies of scale than did Ford. To a meaningful degree Iacocca delivered by developing a remarkable number of derivatives from the K-car platform.
He also deserves credit for bolstering the automaker’s presence in the growing sport-utility-vehicle market by purchasing Jeep and championing the minivan, which was one of the most important packaging innovations of the 1980s.
To a meaningful degree the minivan carried the company in the 1980s, yet it received surprisingly meager follow-up attention. Iacocca focused more on expanding Chrysler’s range of conventional passenger cars that competed more directly against larger domestic competitors.
Perhaps most notably, Iacocca foolishly tried to revive the Imperial not once but twice, and followed General Motors into the high-priced two-seater market with the Chrysler TC.
3. Iacocca couldn’t transcend larger luxury cars
When Iacocca landed at Chrysler he focused on building a lineup of small, front-wheel-drive cars. That decision went a long way toward saving the troubled automaker. However, this would appear to have been merely a tactical decision.
At Ford he heavily championed bigger cars. He killed the subcompact 1963 Cardinal (go here) and in 1966 he moved the compact Falcon onto a mid-sized platform. This arguably made it more difficult for Ford to compete against resurgent imports in the second half of the 1960s.
At Chrysler he never transcended his tendency to bet on bigger and more luxurious cars. For example, in the midst of Chrysler’s financial crisis he did not kill a redesign of the Cordoba for 1980 and a revival of the Imperial (go here for further discussion).
Later he launched another foray into higher-end markets with a modified K-car platform. It made sense to invest in an updated New Yorker, but Iacocca overreached when he tried to revive the Imperial once again and come out with the Chrysler TC.
4. Iacocca was addicted to badge engineering
At both Ford and Chrysler, one of Iacocca’s biggest mistakes was to depend too heavily on badge engineering. As a case in point, during the second half of the 1970s Ford arguably fell further behind GM in sales because its mid-sized cars shared too much sheetmetal (go here for further discussion).
At Chrysler Iacocca pulverized whatever brand equity was left in Plymouth by the mid-80s because its entire lineup was badge engineered for too long. The Chrysler brand had more individuality, but it was still given thinly disguised models such as the Laser, which was almost identical to the Dodge Daytona.
The root of Chrysler’s problem was that it was not large enough to upport two dealer networks and three brands. One of the biggest mistakes Iacocca made when restructuring the automaker following its financial collapse in the late-70s was to not merge the Chrysler-Plymouth and Dodge dealer networks. That would have allowed Iacocca to discontinue Plymouth, which had become redundant with Dodge.
Ford’s situation was murkier. Mercury was fairly strong up through the mid-70s. In addition, pairing dealers of the low-volume Lincoln with the higher-volume Mercury made some sense. The problem was that by the time Iacocca was fired as Ford president in 1978, the Mercury line had become little more than tarted-up Fords. This stood in contrast to a decade earlier, when Ford had given unique sheetmetal to each Mercury entry.
5. Iacocca’s stylistic taste fell behind the times
Iacocca’s stylistic instincts on the original Mustang were pretty good. The car was so successful partly because it had a well executed design. Unfortunately, over the rest of his career Iacocca’s taste did not evolve with the marketplace.
As the 1970s progressed, Ford’s lineup of passenger cars started to look increasingly homogenous. Variations on radiator grilles and landau rooflines were used on everything from the Granada to the Lincoln Continental. Even the 1974-78 Mustang II didn’t stray very far from that formula.
The Chryslers of the 1980s and early-90s mostly carried on this neo-classical look. As a case in point, the subcompact Plymouth Sundance and compact Acclaim had strikingly similar profiles to the larger Chrysler New Yorker and Imperial.
Chrysler arguably should not have even tried to reenter the luxury car field, but Iacocca didn’t improve his odds by clinging to neo-classical styling. By the same token, the Chrysler TC’s viability was hardly improved by slapping on a generic radiator grille and a roofline that evoked the 1955-57 Thunderbird — but not in a very aesthetically pleasing way.
Iacocca’s talent was no match for fast-changing times
I grant you that Iacocca wouldn’t have lasted as long as he did if he had less managerial talents. If he had headed American Motors in the 1970s he likely would not have squandered the automaker’s limited resources on the ill-fated Matador coupe and Pacer like Roy D. Chapin Jr. did (go here).
And even though Iacocca started off as an engineer, he did not get sidetracked like Ed Cole over at GM, whose infatuation with the rear-engined Corvair and aluminum-engined Vega arguably backfired.
Iacocca was a meat-and-potatoes kind of executive. He was at his best squeezing the last drop of profit from evolutionary designs. The other side of the coin is that he did not adapt quickly enough when the market began to dramatically shift. His key problem usually wasn’t a lack of resources, but rather a mindset that was too old school.
NOTES:
This story was originally posted on Oct. 11, 2021 and expanded on July 18, 2023 and Sept. 3, 2025.
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Barnes, Bart; 2019. “Auto industry icon Lee Iacocca dies at 94. He helped launch the Ford Mustang and saved Chrysler from bankruptcy.” Washington Post. Posted July 2.
- Johnson, Richard A.; 2005. Six Men Who Built the Modern Automobile Industry. Motorbooks, St. Paul, MN.
- Torchinsky, Jason; 2021. “How The Chrysler TC By Maserati Could Set Itself On Fire With Its Own Window.” Jalopnik. Posted June 3.
- Wikipedia; 2025. “Chrysler TC by Maserati.” Page last edited Aug. 14.
ADVERTISING & BROCHURES:
- ads.aacalibrary.org (Antique Automobile Club of America): Chrysler TC (1989)
- oldcaradvertising.com: Chrysler Laser (1984); Chrysler Imperial (1982; 1992); Dodge Aries (1981); Dodge Daytona (1984)
- oldcarbrochures.org: Chrysler Cordoba (1980); Dodge Caravan (1990); Ford Falcon (1960); Lincoln Versailles (1980); Mercury Cougar (1969, 1978)
Thank you for the interesting take. Stylistically, I recall thinking then how staid and old most ’80s Chrysler designs had become. A few thoughts:
The article overlooks a hugely important decision made by Iacocca: the purchase of AMC (for $1.5B according to an NYT article) which is often credited with pushing Chrysler’s new wave of cars, pickups and success prior to the Daimler merger or takeover.
Ate Up With Motor in their Mustang article–well worth the read for more about Iacocca–spoke of how we are now “surrounded by the results” of Iacocca’s Mustang “applied psychology” marketing scheme: “when you pick up a Razr or an iPhone, load music into your iPod, or stand in line for an over-hyped blockbuster like Transformers, you’re participating in a consumer culture that the Mustang helped to shape.”
Allpar, in its “Creating the Plymouth, Dodge, and Chrysler Minivan” article, quotes director of product planning Burton Bouwkamp on the origins of the minivan: “In the early and mid-1970s, our Advance Design, Advance Engineering, and Advance Product Planning offices designed first generation versions of the minivan.” This, of course is pre-Iacocca.
The article later quotes Bouwkamp again regarding credit for the minivan: “Hal Sperlich and Lee Iacocca should get credit for the final (front wheel drive) design execution and the decision to go ahead with production of the mini-van program at Chrysler – but not the idea.”
Welcome to Indie Auto, John. I agree that the purchase of AMC was one of the more important moves Iacocca made at Chrysler. However, it also added to the dysfunction that was Chrysler’s already unwieldy dealer networks and roster of brands. I would suggest that the Eagle was an evolutionary wrong turn — and it illustrated his inability to step away from badge engineering.
Yes, the Mustang helped to shape a “consumer culture.” It also did not help Ford in the long run as much as Iacocca wanted us to believe (go here for further discussion).
Regarding the minivan, I’m glad that Allpar dug into the details of who “invented” it. My interest in this article was executive-level decision making. David Halberstam noted that the basic idea of a minivan had been kicking around at both Ford and Chrysler for quite awhile. At Ford, sir Henry vetoed it. Once Iacocca moved over to Chrysler he got it into production.
Thank you for the response. I’m very happy I found the site.
In reverse order, the Allpar article also mentioned minivan interest at Ford, GM and even earlier at VW. An interesting detail has Iacocca replacing an assistant treasurer at Chrysler who claimed he could not find minivan development funds with a new assistant treasurer who apparently could.
Thank you for the additional Mustang link. I will read that later.
That the AMC purchase created chaos at Chrysler cannot be argued. I read at least one account where AMC and Chrysler managers were basically thrown together into a development group and left to figure things out for themselves.
Eagle was an issue as you mention, but it was more than badge engineering at least at the beginning. Eagle was set up as the import fighting division which included the Premier; co-developed by Renault and AMC and built in a brand new factory. If I recall correctly, Chrysler had some contractual obligations with Renault that the Premier helped satisfy. Jeep, on the other hand, was the pearl of the AMC buyout including its status as the sales leader of FCA as least through the fourth quarter of 2020.
John, that’s interesting about the Chrysler assistant treasurer. Iacocca was a determined leader.
I agree that he had to navigate some challenging technicalities in buying AMC, such as obligations around the Premier. They had to do something with that car, and it did give them a more contemporary design until the LXs showed up. Some have argued that Iacocca shouldn’t have nixed the two-door version of the Premier, which might have better rounded out the lineup.
A big part of the problem with creating the Eagle brand was that there wasn’t enough there there to sustain it. The only reason the Eagle wasn’t initially dominated by badge-engineered models was because of Chrysler’s obligations to Renault. And once they were completed, look at what happened. Chrysler was simply too small to field so many brands.
Now, perhaps Chrysler’s intent with the Eagle was to create a throw-away brand that would help them integrate Jeep into the rest of Chrysler’s dealer network. But if so, why didn’t they move more quickly in that direction?
Every individual’s comment and the original article is excellent. i would add that Iacocca’s ego got the better of him at Ford and later at Chrysler. While I believe Iacocca to be a leader, he was always for Iacocca first, the corporation second, as opposed to the corporate first thinking of Alfred P. Sloan.
I guess Iacocca’s ego could be one of the factors that lead him to be fired by Henry Ford II.
While I respect that the author appears to have researched the subject matter of his article, I strongly disagree with the conclusions reached. I also feel the author has an unrealistic picture of the business world generally.
Lee Iacocca had automotive hit after hit after hit after hit (may I humbly suggest the author read this information on Iacocca’s input to the Lincoln Mark III and Mark IV (www.macsmotorcitygarage.com/iacoccas-lincoln-the-inside-story-of-the-1969-71-continental-mark-iii) which was not cited as source material for his article. If Iacocca had owned a record company, it would have been Capitol Records.
As for getting the most “bang for the buck” out of the Falcon Platform, that’s the way it’s done successfully, my friend. We don’t go out and spend the cash to build a whole, new platform when one we already have can do the job just as well and certainly more cheaply. It also appears the author did not live through the period Lee Iacocca rescued Chrysler. I did. In 1979, Chrysler was the ugly, bloated goat of American Industry; forget its immense, past engineering firsts and feats. In 1979 America’s view was that “The Japanese are here, they have a better way, and we have to keep up with them.” Let’s bury Chrysler now because the USA has slipped too far to save them (if it sounds like industrial panic, that’s kind of what it was.) That was 1979. Nobody wanted Chrysler and — NOBODY — wanted to head Chrysler, whatever past glories it had.
Lee Iacocca had the courage to see the true value of Chrysler and its superlative engineering talent, tell the truth, save a company, and save plenty of American Jobs at a time when they were sorely needed. Thanks to the “Reagan Recession” (and it was a *big* one), that was the early ’80s. Come on now, Iacocca just had too many successes during an extremely difficult period of the American Auto Industry to be classified as a “One hit wonder”,or “in the right place at the right time” kind of guy. May I respectfully request the author to do more in depth research and possibly to adopt a more objective perspective? I think the author will reach more accurate conclusions if he does. Thank you.
Keith, I have just posted a follow-up story that addresses some of your main points. Take a look here.
On the subject of Iacocca’s styling tastes, while Ford could have benefited from the involvement of Ford Europe’s Ghia in remedying their styling issues. What would have helped Chrysler?
Could Chrysler have made better of someone like Roy Axe if not someone else or even the likes of Fissore (who produced the Aspen-based Monteverdi Sierra)?
I prefer boxy styling and like most of Iacocca’s vehicles, but I know most don’t. I do think today people look more favorably upon the stretch K cars that were more durable than Lutz’s fragile LH cars and cloud cars that replaced them.
I admire Lee Iacocca not just for the real successes he had at Ford primarily – but for things he could’ve done – if not for a weak kneed Henry II. Granted he upsized the Falcon – but that was what the market wanted at the time. He introduced the Maverick 2 and 4 doors – solid hits – even got to stay in production longer than planned. Back to the 1960’s He had no Cardinal – but he did have the Ford Cortina – imported from England. The Pinto a mixed bag – infamous maybe – but loved as a car – and lasted almost a decade – bad rep and all. The Versaille was awful and un needed – just a cooked up competitor to the Nova based Seville. The big Merc was NOT badge engineered any more that any GM product was. It evolved into a bargain Lincoln and was compared favorably to the Cadillac – even the Ford LTD’s were ! Sure there were other faux pas but not significant enough to mention. The downsized effort of GM – Iacocca rejected. Some people wanted them and so he was not going to force a down sized car upon America – as GM did – whether or not you wanted one. His well known penny pinching was just what Henry II wanted and a reminder of Mc Namara – sales at all costs – to get them to market. He couldve had Honda – Henry said no – same as the minie van. That was a Ford invention also. Chrysler was a different story for a different time. He was again the hero – nearly killing himself to save that miserable and unhappy company. The K based lux cars ? Awful. As were many other Chrysler cars – but guess what ? Jeeps became the rage – and he had them. I dont see a credible case to diminish a herculean record at 2 companies – esp Ford.
Phil, as a point of process, paragraph breaks make for easier reading. By the time Iacocca left Ford the Mercury lineup had MUCH less distinctiveness than it did in the early-70s. The only reason the pre-1979 big Mercury had unique sheetmetal was because it was a holdover — and it didn’t look all that different anyway because Ford styling had become so generic. Iacocca really beat the brougham look to death.
I suppose Ford perfected the ”brougham ” look. Ford LTD and esp the Merc MArquis carried the look to its limits. This was the 1970’s . We were going to dance away the rest of the decade because we knew there was automotive revolution in the air. After 1980 – we will think of something – the party line seemed to be.
By 1979 when the Ford and Mercury were so similar – that was a harbinger of things to come. Our beloved brougham mobiles survived – but with some changes.