Editor’s note: He was the driving force behind the Ford Mustang, as well as the Ford Pinto, intended to be the compact car that save Ford from the imports. Later, at the helm of Chrysler, Lee Iacocca would spearhead the development of the domestic minivan, but not before rescuing the ailing automaker from potential bankruptcy with government loans and the practical, affordable K-car. On Tuesday, July 2, Iacocca died in his Bel Air, California home, age 94.
In 2012, Jim Donnelly interviewed Iacocca for an article in Hemmings Classic Car magazine. As a tribute to one of the iconic figures of the automotive industry, we’re reprinting it below.
One of the things that Lee Iacocca likes to talk about of late is his villa in Tuscany, a better refuge from the turmoil of another Detroit new-car season. He laughs loudly when an observer brings up his family’s original business, Yocco’s, which sells delightful combos of loaded hot dogs and fried pierogies around his native Allentown, Pennsylvania (and is still there, with one location conveniently just off Interstate 78 for those en route to Carlisle, Hershey or Macungie). At age 86, he still enjoys cars, and not just those he helped create decades ago. He’s a philanthropist. He likes to speak loudly about affordable health care, the pension time bomb and war profiteering.
Like everyone in the upper strata of the auto industry, Lido Anthony Iacocca has a legacy, genuine star power. It soared skyward based on his salesmanship and his understanding of customers. In that respect, he can rub shoulders with Joseph P. Frazer and Alfred P. Sloan. The supporting evidence, at two automotive giants, is plain.
Iacocca did not “invent” the original Ford Mustang, but since he convinced Henry Ford II to let it be built, even after the Edsel’s failure had humiliated Dearborn, he might as well have. In 1964, when Iacocca was Ford’s executive vice president, he envisioned a kicky little pony sourced from the parts bin, with appeal to everyone from first-time buyers to two-car families. He quickly tasked Ford product chiefs, led by Donald Frey and Don Petersen, to create it. Jack Telnack, who later drew the first Ford Taurus, was on one such planning team. Iacocca even threw a Motown Records shindig at the Rouge when assembly got under way.
The Mustang’s staggering success, his green-lighting of Ford’s global 1960s racing campaign, the Maverick, the Pinto, the Cougar, the Continental Mark III, his meltdown with Henry Ford II, and his comeback as rescuer of the seemingly doomed Chrysler were all in the future. Getting into the Ford management pipeline came first.
“I decided to go into marketing, even though they hired me out of engineering school. I went to Lehigh University for four years, then Princeton for two years to get an engineering degree,” he told us. “But I fell in love with cars early on, especially Fords. Our family liked Fords. I went out of Lehigh into Ford through a family connection. There was a Ford dealer and family friend named Charles in Bethlehem, Pennsylvania. I hung at his dealership and got really hooked on it. I always wanted to work for Ford.”
Engineering trainees like Iacocca commonly did a stint working on the floor at the Rouge, but he wanted to sell cars, not build them. In 1949, he transferred back East as fleet sales manager for Ford’s Chester, Pennsylvania, zone office. If you ever wondered how Iacocca ever persuaded Henry II to build the Mustang or got Congress to help tide over Chrysler via loan guarantees, or to make ordinary folks wish he’d run for president, the answer is that he learned his skills in Chester. One promotion he brainstormed is still known in Ford folklore as the Iacocca Plan. In 1956, buyers in the Chester territory were offered a new 1956 Ford for $56 a month. It was thunderously successful. Iacocca was yanked back to Dearborn and became head of Ford Division in 1961, when Robert McNamara headed for the Pentagon.
Every financial, professional and cosmic force was aligned perfectly when Iacocca was on his rise. “A lot of cars went through the mill, but the Mustang dwarfed everything. It’s beyond belief how it became a cult. Then the K-car at Chrysler was a sleeper, but it became a cash cow, which was also beyond belief to me.”
He concedes that Chevrolet’s teething problems with the Corvair were one impetus to make the Mustang mechanically simple, and thus profitable. But he gives its backers a lot of credit. “Ed Cole was a great friend of mine, a great car guy, and he died a very tough death. Lots of good car men were out there. John DeLorean was a good car man, even though he got a little screwy at the end. Pete Estes, over at Pontiac, was another really good car guy. Hal Sperlich was a genius. We were all pretty good friends, even though we were tough competitors, and back then, car companies were run by car guys, not bean counters.”
Iacocca lists the Gene Bordinat-penned Mark III as one of his favorite cars. Another is the lowly original K-car in its Dodge Aries and Plymouth Reliant guises. These bookended the most turbulent years of his life. Iacocca was elevated to Ford president in 1970, after Semon E. “Bunkie” Knudsen’s abrupt ouster. Despite his successes, the historical record shows that Iacocca’s relationship with the increasingly unhealthy and distracted Henry Ford II deteriorated in the 1970s. Publicity and lawsuits over Ford Pinto fires in rear impacts didn’t help. Iacocca was made the third man in a three-way power triumvirate that included Ford and his eventual successor, Philip Caldwell. In July 1978, the Deuce dropped the hammer and Iacocca was out.
Chrysler, by comparison, was out on its feet. Its board quickly snatched Iacocca up as president. The company’s biggest management upheaval had previously occurred with president Lynn Townsend’s retirement in 1975 amid worsening chaos. The mid-1970s Plymouth Volare and Dodge Aspen luxury compacts quickly fell victim to assembly blunders that cost $200 million to fix in one year alone, in addition to experiencing premature rust. Among other crucial mistakes, Townsend ordered Chrysler to build its cars for a “sales bank,” not to fill legitimate dealer orders. Poorly finished cars were rushed off the lines to meet production quotas, which made for enormous inventory costs. That’s when the rebate programs came in and Joe Garagiola cried, “Buy a car, get a check!”
From the standpoints of liquidity and operating capital, Chrysler was busted. Even if it had been financially strong up to that point, the company still faced a deep recession, crushing interest rates on car loans and an energy spike when Iacocca took Chrysler’s presidency in September 1978. The first step was a near-total housecleaning of Chrysler’s executive suite; many of the ousted executives were replaced by Iacocca’s car guys, with Sperlich as the first. The search for capital, led by Michigan politicians, was another obvious priority.
Like the vampire that can’t be staked, the myth goes on that Iacocca alone somehow glad-handed Congress into bailing out Chrysler. That’s not true, never was true, and he wants people to know it.
“It was an era when we were in trouble, and it took awhile for the advertising people to convince me of it. But the advertising people told me, ‘You’ve got to get desperate. You’ve got a lot of problems here,’” he recalls today. “‘You’ve got to look into the camera and talk to them.’ A few guys wrote me and said they tried a K-car, but they still went out and bought another car. But it clicked with the public. We made a promise and kept it. I did it long enough to do 61 commercials.”
His pitch line was, “If you can find a better car, buy it.” It was the new generation of K-body front-drivers, a nearly complete break with past Chrysler practice unless you count the Omni/Horizon hatchbacks. Even though they weren’t huge sellers when they first appeared in 1980–Chrysler sales were still under a million units two years later–it’s impossible to overstate how deeply the company’s future was staked on this car. By that subjective judgment, the somewhat dowdy Plymouth Reliant and Dodge Aries may have been the most crucial offerings produced by any American firm in industry history.
Once the Carter administration approved $1.5 billion in loan guarantees, United Auto Workers president Douglas Fraser joined Chrysler’s board at Iacocca’s request. Some $300 million was invested in Chrysler plants, and service engineers worked with UAW teams on build quality. The new compact models weren’t totally trouble-free, but quality was light years ahead of past Chrysler practice. The company inched back into the black by 1983.
Very early in his Chrysler tenure, Iacocca’s signature appeared on an ad in The Wall Street Journal, run under the headline “Chrysler’s problems ultimately won’t be solved in Congress, but in the marketplace.” With Sperlich in charge of its development, the K-car theme became the blueprint for Chrysler’s long-term future (a redesigned Imperial that appeared about the same time he did was largely a sales flop). The T-series minivans, which appeared in 1984, were not an instantaneous brainstorm by the Chrysler team. Besides the fact that Fiat had sold the innovative Multipla in the United States during the 1950s, Iacocca and Sperlich had unsuccessfully pitched a compact van idea to Ford II.
K-cars, and especially their minivan spinoffs, became everything to the Chrysler lineup–almost. Iacocca bossed the buyout of American Motors in 1987, which, to the chagrin of AMC’ers, was all about bringing the Jeep brand over to Auburn Hills, especially its about-to-debut Grand Cherokee. New K-based cars emerged though 1989, by which time about a quarter of Chrysler’s U.S. sales were minivans. The Jeep deal, in particular, wasn’t universally beloved in the executive suite; Sperlich split soon afterward.
In Iaccoca’s 2008 memoir, Where Have All the Leaders Gone?, one chapter was called “Resist the urge to merge.” At his 1992 retirement, Chrysler was profitable. Iacocca picked General Motors Europe chief Robert J. Eaton as his successor, notably bypassing a widely touted in-house candidate, Robert Lutz. Iacocca has publicly called it “the worst decision I ever made,” since the result was the DaimlerChrysler union. In 1995, financier Kirk Kerkorian came to Iacocca, proposing an idea to take Chrysler private, a deal that he said would have turned 20 percent of the firm to the workforce. Instead, Iacocca asserts, Eaton ran to Germany for cover. “Eaton was my call, and I screwed up. I can’t even blame the board. They trusted me on this.”
The succession struggle, amid the run-up to the innovative LH sedans and the Kerkorian-Eaton fallout, were, relative to others, minor issues. Iacocca’s wife, Mary, died in 1983 of complications from diabetes. He created the Lee Iacocca Foundation to fund research into a cure, in part with proceeds from his post-Chrysler company, Olivio, which makes olive oil-based spreads. The Lee Iacocca Award, presented each year with the assistance of the National Parts Depot, is one of the most prestigious any old-car person can receive.
“I have some leftover cars in my garage. The first Viper is in there, taking up space. Great car, by the way. I used to collect a lot of cars, had a lot of Ferraris, bought the Lamborghini company and then sold it. I still have my MG TC, which I gave to my granddaughter, and an old Ford truck.”
Of course, there’s a Mustang–several of them, actually, including two of the 45 copies of the Iacocca Silver 45th Anniversary Edition Mustang that Ford produced in 2009. That’s distinction.