(EXPANDED FROM 10/11/2021)
The death of Lee Iacocca in 2019 brought forth much praise for one of the American auto industry’s most visible leaders. Generally lacking from the obituaries was an acknowledgement that Iacocca’s success was heavily colored by being in the right place at the right time.
Iacocca rose to power when domestic competition within the auto industry was at its weakest. Detroit had become so sclerotic that even a moderately street-savvy auto executive could really stand out — particularly if they had a flair for publicity.
Stories about Iacocca’s automotive career invariably emphasized his marketing abilities. For example, long-time auto analyst Maryann N. Keller told the Washington Post 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, his marketing abilities were hardly unique. As a case in point, if we were able to magically conduct a laboratory experiment where a series of chief executives ran the Chrysler Corporation in the late-1970s and early-80s, it is entirely plausible that others might have managed to be similarly successful in gaining approval for a government bailout and beginning to rebuild public trust in Chrysler products.
In addition, Iacocca suffered from four major weaknesses that contributed to the decline of both Ford and Chrysler. Those weaknesses made it easier for foreign automakers to gain dominance over the once mighty Big Three automakers.
Before proceeding, I should note for new Indie Auto readers that this is an opinion piece — like everything else on our website (go here for further discussion). Also note that I have emphasized Iacocca’s weaknesses because I think that they ultimately weighed more heavily than his strengths. As you can see in the comment thread, some readers came to different conclusions.
1. Iacocca was more a penny-pincher than an innovator
One of Iacocca’s greatest strengths — and weaknesses — was his penny-pinching proclivities. This is ironic given his constant battles with bean counters during his tenure at the Ford Motor Company (Johnson, 2005).
For example, one of Iacocca’s biggest positive contributions at Ford was arguably his championing of a succession of hits based on a Ford Falcon platform introduced in 1960. The Mustang, Cougar, Maverick and Granada variants likely generated an exceptionally high return on their investment because the compact platform they shared was kept in production far longer — and at higher volume — than that of any other domestic automaker.
One could argue that some of the cars Iacocca championed were “innovative,” such as the Mustang. However, none of them broke new ground when it came to engineering advances or major improvements in manufacturing quality and customer satisfaction. If anything, Ford backslid in all of those areas during the 1970s. Iacocca’s great strength was dressing up an aging product 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 so much smaller than General Motors. That said, his emphasis on making a big splash with new models such as the Mustang could distract Ford from protecting core markets.
The Chrysler Corporation needed even more help increasing its economies of scale in the late-70s and early-80s. To a meaningful degree Iacocca delivered by developing a remarkable number of derivatives from the K-car platform. He also deserves credit for championing the minivan, which was one of the more 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 seemed to be more focused on expanding Chrysler’s range of conventional passenger cars such as sporty coupes and luxury sedans. Yet these cars didn’t turn out to be all that competitive with other domestic automakers, let alone the imports.
2. Iacocca was addicted to badge engineering
At both Ford and Chrysler, one of Iacocca’s biggest mistakes was to depend entirely too heavily on badge engineering. As a case in point, during the second half of the 1970s Ford arguably fell further behind General Motors in sales because its mid-sized cars shared too much sheetmetal (go here for further discussion).
Then, at Chrysler, Iacocca went way overboard. Whatever brand equity was left in Plymouth was completely drained away by the mid-80s because its entire lineup was badge engineered for too many years. Although the Chrysler brand had a bit more individuality, it was still given a number of thinly disguised models such as the Laser sporty coupe, which was almost identical to its sibling the Dodge Daytona.
At Chrysler the root of the problem was that the automaker was not large enough to adequately support two dealer networks and three brands. One of the biggest mistakes Iacocca made when restructuring the corporation 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 the Plymouth brand, which had become redundant with Dodge.
Ford’s situation was murkier. The Mercury brand name 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 entire Mercury line had become little more than tarted-up Fords. This stood in stark contrast to only a decade earlier, when Ford invested considerable money into giving unique sheetmetal to each Mercury entry.
3. Iacocca couldn’t transcend larger luxury cars
When Iacocca landed at Chrysler he quickly focused on building a broad lineup of relatively small, front-wheel-drive cars. That decision went a long way toward saving the troubled automaker. However, this would appear to have been a tactical decision rather than because Iacocca’s heart was into it.
At Ford he tended to champion bigger cars. He was successful in killing Ford’s subcompact Cardinal (later renamed the Redwing), which was planned for introduction in 1962. Then, in 1966 he bumped the compact Falcon onto Ford’s mid-sized platform. These two actions made it much more difficult for Ford to compete against resurgent imports in the second half of the 1960s.
Also see ‘Was Ford right to kill the front-wheel-drive 1963 Cardinal/Redwing?’
Once Iacocca moved over to Chrysler he never transcended his tendency to bet on bigger and more expensive cars. For example, in the midst of Chrysler’s financial crisis he did not pull the plug on a substantial redesign of the Cordoba for 1980.
Although the personal coupe was downsized somewhat, it would have made more sense to place it on a modestly changed Volare/Aspen body or even the subcompact K-car platform. To make matters worse, Iacocca brought back the Imperial as a high-priced sibling to the Cordoba. Both cars sold poorly (go here for further discussion).
Iacocca partly learned his lesson. Later in the 1980s he launched another foray into the premium and luxury car markets but this time used a stretched version of the K-car platform. It made some sense to invest in an updated New Yorker, but Iacocca jumped the shark by reviving the Imperial once again.
Meanwhile, he somehow thought that the K-car could be turned into a high-priced two-seater. Not surprisingly, the Chrysler TC by Maserati went down without a ripple.
4. Iacocca’s stylistic taste fell behind the times
Iacocca’s instincts on the original Mustang were pretty good. The car was so successful partly because its styling was well executed. Unfortunately, over the rest of his career Iacocca’s stylistic taste did not evolve with the marketplace.
As the 1970s progressed, Ford’s vast 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 Continentals. Even the 1974-78 Mustang II didn’t stray very far from that basic 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. For example, if he had headed American Motors in the 1970s he clearly would not have squandered the automaker’s limited resources on highly speculative bets such as the ill-fated Matador coupe and Pacer like Roy D. Chapin Jr. did (go here for further discussion).
And even though Iacocca started off as an engineer, his did not get sidetracked like some of his colleagues over at GM, whose infatuation with the rear-engined Corvair and aluminum-engined Vega backfired.
Also see ‘Bigger didn’t prove to be better for General Motors in late-70s and 80s’
Iacocca was a meat-and-potatoes kind of automotive executive. He was at his best squeezing the last drop of profit from evolutionary designs. The other side of the coin is that he repeatedly did not adapt quickly enough when the market began to dramatically shift. I would suggest that the key problem wasn’t a lack of resources. Iacocca’s fatal flaw was that he could not transcend Detroit’s bigger, glitzier, more powerful mindset.
This essay generated a fair amount of pushback, so I wrote a follow-up piece here. One of the key points I made was that it’s not enough to say what Iacocca did well. If we are being honest about his role at Ford and Chrysler, we also need to consider more deeply how he contributed to the US auto industry’s decline.
NOTES:
This story was originally posted on Oct. 11, 2021 and expanded on July 18, 2023.
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.
ADVERTISING & BROCHURES:
- oldcaradvertising.com: Chrysler Laser (1984); Chrysler Imperial (1982; 1992); Dodge Aries (1981); Dodge Daytona (1984)
- oldcarbrochures.org: 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.