Auto industry's plight is all about Iacocca


George Bush's upset tummy may have had nothing to do with the flu. It may have been caused by spending all those hours with Lee Iacocca.

If you wanted concessions from the Japanese, would you have brought Iacocca to Japan with you?

It's like bringing David Duke to Nigeria. Or Louis Farrakhan to Israel.

Iacocca, the chairman of Chrysler, is one of America's leading Japan-bashers. But at least he's got a good reason: Japan makes better cars than he does.

And this drives him wild. Which is why, soon after getting back from Japan, Iacocca made yet another rude speech about the Japanese.

"We rattled their cage," Iacocca crowed. "When they see the Big Three (CEOs of Ford, General Motors and Chrysler) going in a room arm-in-arm with the president of the United State . . . they don't like that. They said, 'My God, these guys have got their act together.' "

Right. I'll bet those Japanese automakers are really scared of the American Big Three (or even George Bush, for that matter).

"I, for one, am fed up hearing from the Japanese, and I might say some Americans, too, that all our problems in this industry, all of our problems, are our own damn fault," Iacocca said.

Iacocca believes all of our problems are Japan's damn fault. We give Japan an open market to sell cars here, but they close their market to American cars.

To find out where the fault really lies, I got out my copy of "The 1992 Buying Guide Issue of Consumer Reports." Consumer Reports, which accepts no advertising, has an unsullied history for being fair and impartial.

Under compact cars for 1991, I looked up the Honda Accord (the No. 1-selling car in America) and Iacocca's Chrysler LeBaron.

Under Honda Accord, it said: "Predicted reliability: Much better than average."

Under Chrysler LeBaron Coupe/Convertible, it said: "Predicted reliability: Worse than average."

OK, so maybe Chrysler had an off year or an off model. So I turned a few more pages to the charts listing all the cars from 1985 to 1990.

I examined all the Honda models listed and all the Chrysler models listed. I looked at the "Trouble Index" for each car and year. Here are the results:

Some 93 percent of Hondas got a "Much Better than Average" rating and the remaining 7 percent got a "Better than Average" rating.

Chrysler was quite a different story.

Chrysler got zero percent in the "Much Better than Average" category, 4 percent in "Better than Average," 42 percent in "Average," 35 percent in "Worse than Average," and 19 percent in "Much Worse than Average."

Now make a few more comparisons between Chrysler and Honda:

Lee Iacocca made $4.5 million in 1991.

The chief executive officer of Honda made about $400,000 in 1991.

Chrysler is expected to report a loss of $1 billion for 1991. Yet last month, Chrysler paid $12 million in Christmas bonuses to its white-collar employees.

"What the hell," Iacocca said. "That's a drop in the bucket, with all the money we're losing."

Honda made money in 1991. And it also brought out a new lean-burn engine on its popular Civic model, which now gets 48 miles in the city and 55 on the highway. Which will probably make Honda even more money.

Do you need more examples of why Honda is doing well and Chrysler is doing poorly?

Contrary to Chairman Lee, the reason has almost nothing to do with tariffs and free trade.

American automakers do not really want free trade.

American automakers do not really want to sell their cars freely in Japan. (Who would buy them?)

What American automakers really want is to keep the Japanese from freely selling their cars in America.

American automakers do not want American consumers to be able freely to choose between Japanese cars and American cars.

They want Congress to pass laws bashing the Japanese and forcing us to buy American autos.

This is not, however, what the American people want.

What the American people want, I think, is for American automakers to build cars that are as good as the Japanese cars.

That's all. Build them as good and price them fairly, and we will buy them.

What, however, is Lee Iacocca's incentive to do this?


He gets a huge salary no matter how lousy his cars are, no matter how poorly his company does.

Asked to justify this, Iacocca once said: "That's the American way."

Sadly, that is one of the few things Iacocca is right about.

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