If you've been tracking the situation with Daimler-Benz's announced intent to sell Chrysler, this Forbes interview with former Chrysler Chairman Lee Iaccoca says it all. Chrysler saved Daimler-Benz several years ago when the German auto maker was in the red. Now, when Chrysler is having trouble, Daimler-Benz is giving up on their American subsidiary without making any effort to invest in long-term solutions that would bring the company back to a healthy state. It wouldn't be difficult: Chrysler has some of the best cars on the road--what they lack is corporate management that is invested in the company, its cars, its dealers and its people. They could start by improving their cars' warranty, and by adopting a world-class marketing campaign that focuses on the quality of their automobiles. They could also treat their dealers--even their small dealerships--as partners rather than as competitors. Fixing Chrysler's current problems will require visionary leadership in the tradition of Walter P. Chrysler and Lee Iaccoca...qualities Daimler-Benz apparently lacks.
With DaimlerChrysler (Charts) looking to unload its troubled U.S. division, Fortune's Alex Taylor III caught up with Iacocca, the 82-year-old former Chrysler chairman and CEO, to talk about the future of Detroit - and the fate of his old company.
I give [GM CEO] Rick Wagoner a lot of credit. He had a lot of pressure on him, but he kept his cool and he stayed with his plan. Their styling is getting better, and they're doing better. Ford (Charts) has more difficult problems than GM (Charts). It has so much invested in the truck business; it has got to get some good cars. I think this new guy from Boeing [CEO Alan Mulally] knows the business pretty well - not the auto business, but he knows what it takes to run a big organization and deal with the labor unions. As for Chrysler, [president] Tom La Sorda is doing a great job in manufacturing, but I don't know what's going to happen. I'm reading about it every day. I would hate to see Chrysler go under. It would be tough to live with.
There are four apparent bidders for Chrysler, including Kirk Kerkorian's Tracinda, which has offered $4.5 billion. What is your take?
He's a gambler, and I don't know what his end game would be. He'll be 90 years old in June, but he's a healthy guy and he exercises a lot. Twelve years ago we [Kerkorian and I] tried to take over Chrysler, and we couldn't raise the money. I've decided to stay neutral on this one.
Who do you think will end up with Chrysler?
Who knows? Private-equity funds scare me. Do they really understand the car business? I would like to see somebody with a leadership group that has the experience to handle the dealers and the employees. If I had the money, I'd buy it. I'd come out of retirement to buy it. Chrysler builds great cars. Maybe you can sell off Jeep, but I'd hate to see it busted up.
Why did the merger fail?
There were no synergies. None. And culturally the Germans operated differently than the Americans. Chrysler was like a renegade outfit compared to them. It was emotional when Chrysler sold out to the Germans. It's extra-emotional now that the Germans are selling - they're throwing us to the curb, in effect.
If you were back as chairman and CEO of Chrysler, what would you be doing?
To succeed today, you have to set priorities, decide what you stand for. You can't do all things for all people. I think the model lines are too complicated at all the Big Three - too many different kinds of cars for customers to assimilate what they're being sold. There's no easy answer. It's hard work. Find good people, stay with it, and things will be okay. President Bush said the auto companies should get relevant and compete, and I got the shivers.