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GALLAGHER: Lee Iacocca wasn't perfect: 3 times the auto icon got it all wrong

• Jul 12, 2019 at 7:00 PM

The tributes to Lee Iacocca, who died last week, have been heartfelt and deserved. During his decades in Detroit, Iacocca fashioned some of the auto industry's proudest moments, from the creation of the Ford Mustang to the 1970s-era rescue of Chrysler from bankruptcy with government help.

But a full accounting of his career must include his resistance to fuel economy and safety standards, and his woeful underestimation of the threat posed by foreign automakers.

Iacocca was hardly alone in these shortcomings. Virtually all of Detroit's major auto companies and their leaders moved in lockstep with him in resisting government fuel standards and in pooh-poohing the appeal of the small, fuel-efficient cars offered by the likes of Toyota, Nissan and Honda.

Even as we remember Iacocca's accomplishments, let's not forget that his career, like the record of the entire domestic auto industry, is a legitimate subject of debate.

Looking backward

Start with fuel economy. Beginning in the 1970s, first at Ford and later at Chrysler, Iacocca lobbied against legislation and regulation that would have raised fuel economy standards by cutting back on tailpipe emissions. Like other auto execs, Iacocca protested that his industry would go broke, or even shut down, if forced to obey tough new standards.

Events proved him wrong. Fuel economy has improved dramatically since those early days and continues to do so even as vehicle sales remained strong.

"Mr. Iacocca’s legacy on safety and environment is not very good," Dave Cooke, senior vehicles analyst for the Union of Concerned Scientists, said in an email to the Free Press. "American automakers have a multi-decadal history of fighting against pretty much all regulations imposed upon the industry to protect the American people, and companies under his leadership were no different."

'Safety doesn't sell'

Iacocca also downplayed the necessity for airbags and other improvements, proclaiming that safety didn't sell. Only when it became clear that safety did sell, and that Iacocca's Chrysler was ahead on that score in some of its new vehicles, did he begin to tout the new safety features as a competitive advantage.

As Cooke added, "Mr. Iacocca may have been revered as a visionary within the auto industry, but when it comes to the public’s health and welfare, he was always looking backwards.”

Underestimating the threat

Iacocca came along at a time when tail fins, throaty engines and flashy extras sold new cars. What he too late realized was that his foreign competitors from Japan were offering something new — small but reliable cars that started every time, were fun to drive, and that appealed to the legions of women who were emerging as the new power behind auto buying decisions.

Author David Halberstam, in his landmark book “The Reckoning,” captured the way Iacocca and other Detroit auto barons grossly underestimated their new competitors.

As Halberstam tells it, in 1971, race driver Carroll Shelby was offered a big Toyota dealership in Houston. He asked his friend Iacocca whether he should make the investment.

“Let me give you the best advice you’ll ever get. Don’t take it,” Iacocca said.

“Why not?” Shelby asked.

“Because we’re going to kick their asses back into the Pacific Ocean,” Iacocca said.

Shelby later estimated taking Iacocca’s advice cost him something like $10 million. And much worse: Hundreds of thousands of American workers and their families would pay dearly for such egotistical misjudgments on the part of Iacocca and other Detroit execs.

Indeed, Iacocca made that particular boast at a time when the Detroit Three companies — Ford, General Motors and Chrysler — still owned more than 80 percent of the domestic auto market. Today that figure is under 50 percent, a legacy not only of the appeal of foreign makes and models but of the misjudgments of the Detroit auto leadership.

A balanced legacy

None of this erodes the significance of Iacocca's achievements. The Ford Mustang that he shepherded to life in the 1960s proved an instant hit and remains an American icon. He championed Chrysler's first minivans that became for a time the U.S. family station wagon.

And probably nobody could have sold the government and the public on bailing out Chrysler in the 1970s than Lee Iacocca, the nation's consummate salesman.

So it's a balance legacy. Yes, Lee Iacocca provided some of the auto industry's happiest moments. But there was more than one wrong turn along the way.

About the writer: John Gallagher writes for the Detroit Free Press (distributed by TNS). You may contact hims at 313-222-5173 or by email at gallagher@freepress.com.

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