Chrysler chairman tries to make amends - and boost image
He has become the consummate American businessman, a symbol of integrity for millions. And it is going to take all the skill Chrysler Corporation chairman Lee Iacocca can muster to get his company out of its latest fix. Seven years ago, Mr. Iacocca pulled out all the stops to convince the United States Congress to authorize the multi-billion dollar loan guarantees to keep Chrysler in business, and then get Americans to start buying Chrysler products again. Now he is trying to convince buyers his company has not been masterminding a 38-year-long con game, selling used cars as new.
``We asked [customers] to trust us, and they did,'' Iacocca said. ``Now they've been given a reason to question that trust. Simply stated, that's unforgivable.''
On June 24, the federal government handed down a 16-count indictment alleging that Chrysler has regularly disconnected odometers on cars coming out of its factories since 1949, turning the vehicles over to company executives for their personal use. Eventually, the government charges, the odometers were reconnected, and the cars delivered to unsuspecting buyers.
Approximately 60,000 vehicles built during an 18-month period in 1985 and 1986 were involved in the alleged odometer fraud. But over the 38-year period, millions of vehicles may have been tampered with.
What was worse, federal authorities claim, is that some cars were damaged while in the hands of Chrysler drivers, repaired, and then sold, again as new.
The indictment brought stinging headlines from around the country and abroad. Some observers questioned why Iacocca remained silent in the days following the government's action. But others familiar with his outspoken style said it was only a matter of time before he went back on the offensive, using his own reputation to quell public concern.
The initial company reaction to the government indictment was that the charges were outrageous. And when Iacocca finally made his appearance Wednesday, he continued to defend his company against the 16 felony counts by arguing that ``the only laws we broke were the laws of common sense.''
But for the public, Iacocca pleaded mea culpa.
``Did we screw up? You bet we did,'' Iacocca admitted. Perhaps with the thought of two recently filed class-action lawsuits in the back of his mind, Iacocca said ``a simple apology is not enough.''
Iacocca acknowledged that 40 cars involved in the test program were damaged in accidents during the period covered by the indictment, including one that skidded off the road, causing $950 in damage.
``We're offering to replace any vehicles damaged during our test program,'' he said. ``It doesn't matter how slight the damage. Those customers get a brand new car or truck, if they want one, no questions asked.'' They will be replaced with vehicles of comparable value.
As for the owners of other vehicles secretly tested by Chrysler, they will have their warranties extended by two years or 20,000 miles.
The big question now is whether the Chrysler chairman's response to the allegations will restore Chrysler's - and Iacocca's - image.
``It was public relations genius,'' says Tony Franco, head of Anthony M. Franco, Inc., a Detroit public relations firm. ``They acted quickly, decisively, and used the best spokesman to do it. ... I think they'll turn [a potential disaster] into a selling event and sell more cars.''
Auto analyst Maryann Keller, of Furman Selz, in New York, says she believes Chrysler has effectively ``neutralized'' the negative publicity of the government's indictment. More importantly, the perks being offered to owners of tested cars will make it harder, she believes, for the two class-action suits to succeed.
Over the next week, Chrysler will run newspaper and television advertisements outlining the new program and apologizing for disconnecting odometers on test cars.