Would You Buy a New Car From This Man?



The Iacocca Legacy.

By Doron P. Levin.

Illustrated. 354 pp. New York:

Harcourt Brace & Company. $25.

Although the United States has always been a nation unabashedly devoted to commerce, Americans have not traditionally made heroes of their businessmen. Thomas Edison and Henry Ford were revered as inventors rather than as industrial magnates. Only recently have those with the Midas touch received the kind of treatment once reserved for victorious generals. Alas, America’s taste in its business heroes is questionable. Almost without exception the celebrity businessmen whose biographies climb the best-seller lists have been promoters rather than producers, experts in making deals rather than in making high-quality products. The central message of “Behind the Wheel at Chrysler” is that Lee A. Iacocca, the first and most enduring of our modern business heroes, has run true to type. That is, Mr. Iacocca is a brilliant salesman who has shown remarkably little interest in producing genuinely good cars. Among the things he has sold so well is, of course, himself; for a while he achieved an extraordinary fusion of personal celebrity and corporate marketing, in which Chrysler advertisements promoted Mr. Iacocca’s image even as his autobiography sold Chrysler’s cars.

Doron P. Levin, a reporter for The Detroit Free Press and the author of “Irreconcilable Differences: Ross Perot Versus General Motors,” tells three interlocking stories: the story of Lee Iacocca as corporate leader, the broader story of Chrysler during the Iacocca years, from 1978 to 1992, and the still broader story of the American automobile industry and its Japanese nemesis. The Iacocca who emerges from this book was someone who could take a basically mediocre product and wrap it so cunningly—in chrome, in vinyl and in patriotic imagery—that customers were convinced they were buying the best. He first rose to fame in 1964 with Ford’s phenomenally successful Mustang, a car that was marketed as sporty and fun yet was in reality, according to Mr. Levin, “a gussied-up Ford Falcon with sexy new sheet metal, redesigned upholstery and a fancy new dashboard.”

In his early years at Chrysler’s helm, Mr. Iacocca applied the same trick, “stretching, adapting, tweaking” a single platform (the so-called K-car), which had already been developed before he arrived, into many seemingly different cars. “Iacocca took a basic, no-frills Reliant, added a flashy chrome grille, lined the roof with vinyl, stuck an ornament on the hood, swathed the interior with ‘Corinthian leather’ and created a luxo-barge. With fake wire wheels, pin stripes and a muffler that permitted more engine noise, the same car was a sporty model.”

While ingenious, this strategy suggests a certain contempt for one’s customers. Nor did Mr. Iacocca apparently think much of his workers. In an unguarded moment, he explained away the superior productivity of Japanese auto plants in the United States: “So I should go to Iowa to build a plant and screen the workers to make sure they’re young and haven’t been on drugs?” And for most of the 1980’s, Chrysler’s manufacturing operations were overseen by an Iacocca favorite who sounds here like a character from a satirical novel about the dumbing down of America—constantly squeezing an exercise grip so that he could deliver bone-crushing handshakes, insisting on hiring subordinates who had participated in contact sports “where you are willing to risk getting hurt.”

The story of Chrysler the corporation is, inevitably, less colorful than that of Iacocca the man. Yet this story, in its own way, is even more interesting, because of the light it sheds on both the working of a major American company and the interaction between such corporations and the United States Government. Chrysler’s recovery under Mr. Iacocca was, after all, not your ordinary corporate success story. If Mr. Iacocca pulled the company back from the brink of bankruptcy, he did so not only with the aid of Federal loan guarantees but also behind the protection of an import quota, the “voluntary” limits on Japanese exports negotiated in 1981. The story of Chrysler is not about free enterprise as we have known it, but about a kind of business-government partnership that may yet turn out to be the wave of the future.

So it is instructive to ask what the detailed history of Chrysler’s strategy says about the effectiveness of such partnerships. It is now conventional wisdom among many in Washington, especially in the think tanks that have played a major role in spurring our recent confrontation with Japan, that Government intervention in the auto industry in the early 80’s was a great success. Faced with a surge of Japanese imports, the industry was threatened with collapse: the import limitations, these people claim, gave it time to improve productivity and introduce new technologies, and thus to regain its health. A dose of protectionism, in other words, was just what the car business needed. But Mr. Levin’s account contradicts this view. As Chrysler’s profitability soared in the first half of the 80’s, Mr. Iacocca seems to have been determined to spend the cash flow on almost anything other than the development of new technologies. Chrysler bought a manufacturer of corporate jets and a limousine-rental company; it bid for Hughes Aircraft; above all, the company used its profits to buy back its own stock, in the hope of increasing its price. Meanwhile, the development of a successor to the K-car was pushed off into the indefinite future. Incredibly, Chrysler did not even begin working on that successor until 1989, almost a decade after the first surge of Japanese imports, and long after the import restrictions against Japan had lapsed. In other words, Chrysler seems to have made absolutely no attempt to use the breathing space afforded by import quotas to improve its ability to compete against its foreign rivals.

The weakest aspect of “Behind the Wheel at Chrysler” is its discussion of the broader trends in the automobile industry, and in the United States economy more generally. Mr. Levin’s discussion of the rise of the Japanese car industry is rambling and repetitive, and he is clearly uncomfortable with economics. Still, even here there are fascinating insights. I was shocked to learn that American auto manufacturers did not really come to appreciate the obvious—that Japanese companies had substantially higher productivity levels than they did, based on a fundamentally better production system—until very late in the game, in some cases as late as 1989.

The author’s evident intimate knowledge of the auto industry sometimes seems to have been achieved at the cost of his ability to place that knowledge in a wider context, even in seemingly trivial ways. For example, Mr. Levin’s account of board-room politics at Chrysler would surely have been not only more entertaining but more enlightening had he pointed out the roles that some of the key figures involved—like the board member J. Paul Sticht, a former chairman of R.J. Reynolds—have played in other recent corporate power struggles. The book is also confusingly constructed; I found myself having to draw my own time lines to figure out how the chronology of corporate intrigue at Chrysler matched up with those of market developments and economic policy. But never mind the book’s defects. The story it tells is fascinating and terribly important—a story that reveals a great deal about modern America, about our susceptibility to hucksterism, about our problems in facing difficult realities. Everyone who cares about American industry should read it.

Originally published, 7.23.95