Skip to main content
Select Source:

Chrysler Corporation

Chrysler Corporation

12000 Chrysler Drive
Highland Park, Michigan 48288-0001
U.S.A.
(313) 956-5741
Fax: (313) 956-1462

Public Company
Incorporated:
1925
Employees: 128,000
Sales: $43.6 billion
Stock Exchanges: New York London
SICs: 3711 Motor Vehicles and Car Bodies; 3714 Motor
Vehicle Parts and Accessories; 6141 Personal Credit
Institutions; 5511 New and Used Car Dealers; 6311 Life
Insurance; 7510 Automotive Rentals, No Drivers

With famous lines of passenger cars, numerous major manufacturing subsidiaries, and a variety of important interests in foreign countries, the Chrysler Corporation is a strong, viable company, a formidable force in the international automobile market. In the late 1970s and throughout the 1980s, however, Chrysler was fighting for its life. It took a massive injection of government and private capital, extremely careful management, and some brilliant marketing to restore the ailing giant, a resurgence that was not completed until the mid-1990s.

The company was incorporated in 1925 by Walter Percy Chrysler, a former vice-president of General Motors. Resigning from GM over policy differences, Chrysler went on to restore the Maxwell Motor Corporation to solvency; in the process, he designed Maxwells Chrysler automobile. First exhibited in 1924, the car was an immediate success, and before years end the company sold 32,000 cars at a profit of more than $4 million.

The enthusiasm with which the vehicle was met encouraged Walter Chrysler to design four additional models for the coming year: the 50, 60, 70, and Imperial 80. These model numbers referred to the maximum velocity that the cars could reach on a level stretch of road. Until that time, Fords Model T had enjoyed the reputation of the fastest car, achieving a modest 35 mph. Alarmed by Chryslers technological breakthrough, the Ford Motor Company closed its doors for nine months and emerged with a replacement for the Model T. However, by 1927 the Chrysler Corporation (as it had been called since 1925) had firmly established itself with a sale of 192,000 cars, becoming the fifth largest company in the industry.

Walter Chrysler realized that in order to exploit his firms manufacturing capacities to their fullest, he would have to build his own plants. Since he could not afford the estimated $75 million to achieve this, he approached the New York banking firm of Dillon Read and Company. Dillon Read had bought the Dodge Corporation of Detroit from the widows of the Dodge brothers and was happy to reach an agreement with the now highly regarded Walter Chrysler. In July 1928, Dodge became a division of the Chrysler Corporation; overnight, the size of the company increased fivefold.

Walter Chrysler, carefully avoiding the dangers associated with rapid growth, discontinued his policy of manufacturing as many parts as possible for his cars. While he paid more for components than other car makers, he was able to maintain greater flexibility in models and designs. This proved to be extremely important in an age of rapid technological advance. Indeed, Walter Chryslers farsightedness helped the company to survive the Great Depression far better than most in the industry, and his strategy of spending money on research, no matter how gloomy the outlook, may have been responsible for his firms sound financial standing until well into the 1940s.

Along with the rest of Detroits motor industry, Chrysler converted to war production during World War II. The manufacture of its Chrysler, Dodge, and Plymouth cars was put on hold while the corporation specialized in defense hardware such as small arms ammunition and submarine nets. But chief among its war products were B-29 bomber engines and anti-aircraft guns and tanks. Chryslers wartime service earned it a special Army-Navy award for reliability and prompt delivery.

The corporations problems started in the immediate postwar period. The ambition and spirit which drove the company to constant innovation and experimentation in the early days had been lost. The auto market had exhausted fundamental engineering breakthroughs, and American tastes had changed. It seemed that the public was more excited by the sleeker, less traditional, and sometimes less reliable models being produced by Chryslers rivals. In short, the car industry was becoming a marketers game, and Chryslers management wasnt playing.

In 1950, L. L. Colbert, a lawyer hired by Walter Chrysler in 1929, became the corporations president. By this time, some major overhauling was necessary, and Colbert hired the management consulting firm of McKinsey and Company. Three reforms were instituted: Chrysler developed international markets for its cars, its management was centralized, and the role of the engineering department was redefined.

Colberts reforms did little to revive the companys flagging fortunes, and two years later there was another change of management. Lynn Townsend, the new corporate head, proved to be more effective. He consolidated the Chrysler and Plymouth car divisions, closed some unproductive plants, and generally tightened operations; he also reduced the work force and installed an IBM computer system to replace 700 members of the clerical staff. Most importantly, he enhanced sales by improving the quality of the Chrysler automobile, introducing the best warranty the industry had yet seen and instituting a more aggressive marketing policy. In less than five years, Townsend had revitalized the corporation.

Success led to expansion: a space division was formed, and Chrysler became the prime contractor for the Saturn booster rocket. By the end of the 1960s, Townsends international strategy yielded plants in 18 foreign countries. But before the decade was over, the domestic market was undergoing major changes. Inflation was taking its toll on U.S. auto manufacturers, imports of foreign vehicles had substantially increased, and the price of crude oil had risen drastically. Chryslers troubles were compounded by internal factors: it was more concerned with competing against Ford and General Motors than in adapting itself to the rapidly changing market; it did not produce enough of its popular compact cars to meet consumer demand; and it had an overstock of larger vehicles.

The corporation reported a $4 million loss in 1969 and was operating at only 68 percent of its capacity; the previous year, it had earned profits of $122 million. Car prices were substantially reduced, but this did little to solve the underlying problems. John J. Riccardo, an accountant, succeeded to the presidency and immediately set about reducing expenses. Salaries, work force, and budget were all cut, and the company experimented with the marketing of foreign-made cars.

Unfortunately, Chrysler seemed incapable of reading the public mood: it narrowed and shortened Dodge and Chrysler models to bring prices down, but sales also tumbled; it continued to make Imperials long after Cadillacs and Lincolns had demonstrated their superiority in the luxury market; and it greeted the 1973-74 Arab oil embargo with a large inventory of gas-guzzlers. 1974 losses totalled a massive $52 million, and the next years deficit was five times that amount.

The company experienced a brief respite in 1976 and 1977. Its trucks were in demand and foreign subsidiaries turned in good results, but domestic car sales remained a problem. Riccardo further consolidated North American operations and increased manufacturing capacity for compact cars. However, by the time Chrysler became a significant contender in that market, American car buyers were showing a distinct preference for the reliable and relatively inexpensive Japanese compacts. The days of United States manufacturing hegemony appeared to be over.

A loss of $205 million in 1978 led many industry watchers to wonder if Chryslers rollercoaster finances could rebound from this latest big dip. The syndicate of banks (with Manufacturers Hanover Trust in the vanguard), which for years had been pouring money into Chrysler, panicked. Incredibly, many of the smaller banks had agreed to virtually unlimited lines of credit on the assumption that the company would never need to use them.

But complex and highly charged negotiations eventually saved Chrysler from bankruptcy. The federal government agreed to guarantee loans up to $1.5 billion, provided Chrysler raised $2 billion on its own. However, politicians could not justify such a massive bail-out without changes in Chryslers management. Riccardo, who had diligently fought against heavy odds, had to go.

It was left to the charismatic Lee Iacocca to preside over Chryslers comeback. An ex-Ford man with a flair for marketing and public relations, Iacocca took Chryslers problems to the people, explaining that the companys failure would mean the loss of hundreds of thousands of jobs and could seriously damage the economy of the state of Michigan. Despite popular mythology and the near-adulation of Iacocca in some quarters, many observers suggested that Riccardo was largely responsible for forging the agreement that gave Chrysler a new lease on life.

Nevertheless, Iacoccas skills as a superb television salesman were of crucial importance. Under his stewardship, Chrysler battled back, and the road to recovery was a difficult one, demanding the closure of several plants and the reduction of the companys work force. In late 1987, Chrysler announced the temporary lay-off of employees at two assembly plants, then in 1988 closed an assembly plant in Wisconsin. Two additional plants were closed the following year, coinciding with a company-wide restructuring that cost Chrysler $577 million and left it with $359 million in net earnings for the year, significantly lower than the $1.05 billion recorded the year before. Once restructured, Chrysler scrapped its plans to diversify and divested the Gulfstream Aerospace unit it had purchased five years earlier, selling to a New York investment firm for $825 million in early 1990. Two other units in the companys Chrysler Technologies subsidiaryElectrospace Systems and Airborne Systemswere slated for divestiture as well, which underscored Iacoccas intent to create a leaner, more sharply focused company.

Reorganized as such, Chrysler entered the 1990s braced for a full recovery, but the economy did not cooperate. The decline in automotive sales during the fourth quarter of 1989the companys first fourth quarter decline since 1982portended a more crippling slump to come, as an economic recession gripped businesses of all types, both domestically and abroad. Net income in 1990 slipped to $68 million, then plunged to a $795 million loss the following year, $411 million of which was attributable to losses incurred by the companys automotive operations. The precipitous drop in earnings for 1991 was the latest in a nearly decade-long series of declines that saw Chryslers earnings fall each year from the $2.3 billion generated in 1984 to 1991s disappointing loss. Mired in an economic downturn, Chrysler appeared destined for more of the same, rather than headed toward recovery as Iacocca had hoped, but part of the reason for 1991s losses also led to the companys first step toward genuine recovery.

Partly to blame for the $795 million loss in 1991 were the high pre-production and introduction costs associated with Chryslers new Jeep Grand Cherokee and increased production costs at the companys St. Louis minivan plant. These two types of vehiclesminivans and sports-utility vehiclesrepresented the key to Chryslers recovery. The popularity of these vehicles, coupled with significant price advantages over Japanese models, fueled Chryslers resurgence. In 1992, when Chryslers rival U.S. manufacturer, Ford, registered a $7.38 billion loss, Chrysler turned its $795 million loss the year before into a $723 million gain. It was a signal achievement, accomplished in Iacoccas last year as chief executive officer, but still the debilitative economic climate clouded the companys future, tempering hopes that the company could expect further earnings growth.

Aside from the stifling economic conditions, there were challenges unique to Chrysler that needed addressing before the companys management could be optimistic. In the first quarter of 1993, Chrysler recorded a $4.4 billion charge for retiree health benefits, which led to a $2.5 billion loss for the year, a staggering financial blow but one irrespective of the companys ability to successfully sell automotive vehicles. That ability was demonstrated in the first quarter of 1994, when Chrysler posted $938 million in profits, the most recorded in the companys history and the greatest amount since the $801 million recorded in the second quarter of 1984.

Driven by the widespread demand for sports-utility vehicles and the waning prowess of Japanese car manufacturers, who were hobbled by the dollars strength against the yen, Chrysler entered the mid-1990s in a decidedly positive direction. As it charted its future, expectations for a recovery that had taken nearly a decade to realize were nearly complete, buoying hopes for a profitable conclusion to the 1990s and a strengthened position for the twenty-first century.

Principal Subsidiaries

Automotive Financial Services, Inc.; Acuflight, Inc. (67%); American Motors Pan American Corp.; Beaver Dam Products Corp.; Chrysler Corporation Fund; Chrysler International Corp.; Chrysler Pentastar Aviation, Inc.; Chrysler Technologies Corp.; Chrysler Transport, Inc.; Dealer Capital, Inc.; Jeep International Corp.; Chrysler Foreign Sales Corp.; AMC de Venezuela, CA; American Motors Overseas Corp.; Chrysler Canada Ltd.; Chrysler International SA; Chrysler Motors de Venezuela, SA; Chrysler Overseas Trading Co. Ltd.; Jeep Africa, Ltd. (51%); Jeep Australia, Pty. Ltd.; Jeep of Canada Ltd.; Jeep Japan, Ltd.; Chrysler de Mexico, SA (99.9%).

Further Reading

Abodaher, David, Iacocca, New York: Macmillan, 1982.

Gorden, Maynard M., The Iacocca Management Technique, New York: Dodd Mead, 1985.

Iacocca, Lee, with William Novak, Iacocca: An Autobiography, New York: Bantam, 1984.

Kerwin, Kathleen, The Big Three Are Learning to Hold a Lead, Business Week, April 26, 1993, p. 29.

Kujawa, Duane, International Labor Relations Management in the Automotive Industry: A Comparative Study of Chrysler, Ford, and General Motors, New York: Praeger, 1971.

Langworth, Richard M., and Jan P. Norbye, The Complete History of Chrysler Corporation, 1924-1985, New York: Beekman House, 1985.

Moritz, Michael, and Barrett Seaman, Going for Broke: The Chrysler Story, New York: Doubleday, 1981.

Pomice, Eva, Can Detroit Hold On?, U.S. News and World Report, April 15, 1991, p. 51.

Reich, Robert B., and John D. Donahue, New Deals: The Chrysler Revival and the American System, New York: Time, 1985.

Taylor, Alex, The New Golden Age of Autos, Fortune, April 4, 1994, p. 50.

Thomas, Charles M., Big 3 Picture Brightens after 89 Plunge, Automotive News, February 19, 1990, p. 1.

updated by Jeffrey L. Covell

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Chrysler Corporation." International Directory of Company Histories. . Encyclopedia.com. 19 Oct. 2017 <http://www.encyclopedia.com>.

"Chrysler Corporation." International Directory of Company Histories. . Encyclopedia.com. (October 19, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/chrysler-corporation-0

"Chrysler Corporation." International Directory of Company Histories. . Retrieved October 19, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/chrysler-corporation-0

Chrysler Corporation

Chrysler Corporation

12000 Chrysler Drive
Highland Park, Michigan 48203
U.S.A.
(313) 956-5252

Public Company
Incorporated:
June 6, 1925
Employees: 107,850
Sales: $22.5 billion
Market Value: $7.7 billion
Stock Index: New York London

With famous lines of passenger cars, numerous major manufacturing subsidiaries, and a variety of important interests in foreign countries, the Chrysler Corporation would appear to be a strong, viable company. But in the late 1970s Chrysler, the 14th largest industrial firm in the United States, was fighting for its life. It took a massive injection of government and private capital, extremely careful management, and some brilliant marketing to restore the ailing giant. The companys comeback is now legendary, but it would be premature to assume that Chryslers problems are all in the past.

The company was incorporated in 1925 by Walter Percy Chrysler, a former vice president of General Motors. Resigning from GM over policy differences, Chrysler went on to restore the Maxwell Motor Corporation to solvency; in the process he designed Maxwells Chrysler automobile. First exhibited in 1924, the car was an immediate success and before years end the company sold 32,000 cars at a profit of more than $4 million.

The enthusiasm with which the vehicle was met encouraged Walter Chrysler to design four additional models for the coming year: the 50, 60, 70, and Imperial 80. These model numbers referred to the maximum velocity that the cars could reach on a level stretch of road. Until that time, Fords Model T had enjoyed the reputation of the fastest car, achieving a modest 35 mph. Alarmed by Chryslers technological breakthrough, the Ford Motor Company closed its doors for nine months and emerged with a replacement for the Model T. However, by 1927 the Chrysler Corporation (as it had been called since 1925) had firmly established itself with a sale of 192,000 cars, becoming the fifth largest company in the industry.

Walter Chrysler realised that in order to exploit his firms manufacturing capacities to their fullest, he would have to build his own plants. Since he could not afford the estimated $75 million to achieve this, he approached the New York banking firm of Dillon Read and Company. Dillon Read had bought the Dodge Corporation of Detroit from the widows of the Dodge brothers and was happy to reach an agreement with the now highly regarded Walter Chrysler. In July 1928 Dodge became a division of the Chrysler Corporation; overnight, the size of the company increased fivefold.

But Walter Chrysler, carefully avoiding the dangers associated with rapid growth, discontinued his policy of manufacturing as many parts as possible for his cars. While he paid more for components than other car makers, he was able to maintain greater flexibility in models and designs. This proved to be extremely important in an age of rapid technological advance. Indeed, Walter Chryslers farsightedness helped the company to survive the 1930s Depression far better than most in the industry, and his strategy of spending money on research, no matter how gloomy the outlook, may have been responsible for his firms sound financial standing until well into the 1940s.

Along with the rest of Detroits motor industry, Chrysler converted to war production during World War II. The manufacture of its Chrysler, Dodge, and Plymouth cars was put on hold while the corporation specialized in defense hardware such as small arms ammunition and submarine nets. But chief among its war products were B-29 bomber engines and anti-aircraft guns and tanks. Chryslers wartime service earned it a special Army-Navy award for reliability and prompt delivery.

The corporations problems started in the immediate postwar period. The ambition and spirit which drove the company to constant innovation and experimentation in the early days had been lost. The auto market had exhausted fundamental engineering breakthroughs and American tastes had changed. It seemed that the public was more excited by the sleeker, less traditional, and sometimes less reliable models being produced by Chryslers rivals. In short, the car industry was becoming a marketers game, and Chryslers management wasnt playing.

In 1950 L.L. Colbert, a lawyer hired by Walter Chrysler in 1929, became the corporations president. By this time, some major overhauling was necessary and Colbert hired the management consulting firm of McKinsey and Company. Three reforms were instituted: Chrysler developed international markets for its cars, its management was centralized, and the role of the engineering department was redefined.

Colberts reforms did little to revive the companys flagging fortunes and two years later there was another change of management. Lynn Townsend, the new corporate head, proved to be more effective. He consolidated the Chrysler and Plymouth car divisions, closed some unproductive plants, and generally tightened operations; he also reduced the work force and installed an IBM computer system to replace 700 members of the clerical staff. Most importantly, he enhanced sales by improving the quality of the Chrysler automobile, introducing the best warranty the industry had yet seen and instituting a more aggressive marketing policy. In less than five years, Townsend had revitalized the corporation.

Success led to expansion: a space division was formed and Chrysler became the prime contractor for the Saturn booster rocket. By the end of the 1960s Townsends international strategy yielded plants in 18 foreign countries. But before the decade was over, the domestic market was undergoing major changes. Inflation was taking its toll on U.S. auto manufacturers, imports of foreign vehicles had substantially increased, and the price of crude oil had risen drastically. Chryslers troubles were compounded by internal factors: it was more concerned with competing against Ford and General Motors than in adapting itself to the rapidly changing market; it did not produce enough of its popular compact cars to meet consumer demand; and it had an overstock of larger vehicles.

The corporation reported a $4 million loss in 1969 and was operating at only 68% of its capacity; the previous year it had earned profits of $122 million. Car prices were substantially reduced, but this did little to solve the underlying problems. John J. Riccardo, an accountant, succeeded to the presidency and immediately set about reducing expenses. Salaries, work force, and budget were all cut and the company experimented with the marketing of foreign-made cars.

Unfortunately, Chrysler seemed incapable of reading the public mood: it narrowed and shortened Dodge and Chrysler models to bring prices down, but sales also tumbled; it continued to make Imperials long after Cadillacs and Lincolns had demonstrated their superiority in the luxury market; and it greeted the 1973-74 Arab oil embargo with a large inventory of gas-guzzlers. 1974 losses totalled a massive $52 million, but the next years deficit was five times that amount.

The company experienced a brief respite in 1976 and 1977. Its trucks were in demand and foreign subsidiaries turned in good results, but domestic car sales remained a problem. Riccardo further consolidated North American operations and increased manufacturing capacity for compact cars. However, by the time Chrysler became a significant contender in that market, American car buyers were showing a distinct preference for the reliable and relatively inexpensive Japanese compacts. The days of United States manufacturing hegemony appeared to be over.

A loss of $205 million in 1978 led many industry-watchers to wonder if Chryslers roller-coaster finances could rebound from this latest big dip. The syndicate of banks (with Manufacturers Hanover Trust in the vanguard) which for years had been pouring money into Chrysler, panicked. Incredibly, many of the smaller banks had agreed to virtually unlimited lines of credit on the assumption that the company would never need to use them.

But complex and highly charged negotiations eventually saved Chrysler from bankruptcy. The federal government agreed to guarantee loans up to $1.5 billion provided Chrysler raised $2 billion on its own. However, politicians could not justify such a massive bail-out without changes in Chryslers management. Riccardo, who had diligently fought against heavy odds, had to go.

It was left to the charismatic Lee Iacocca to preside over Chryslers comeback. An ex-Ford man with a flair for marketing and public relations, Iacocca took Chryslers problems to the people, explaining that the companys failure would mean the loss of hundreds of thousands of jobs and could seriously damage the economy of the State of Michigan. But despite popular mythology and the near-adulation of Iacocca in some quarters, Riccardo was largely responsible for forging the agreement that gave Chrysler a new lease of life.

Nevertheless, Iacoccas skills as a communicator and as a super television salesman have been of crucial importance. Remarkably, Chryslers recovery has been solid enough to enable it to buy from Renault its 46% stake in the Detroit-based American Motors Corporation. Iacocca claims that this acquisition will enhance Chryslers competitiveness in the 1990s and he believes that his company can substantially increase sales of the AMC Jeep. Even so, high expectations are tempered by doubts about the economy. In November 1987 Chrysler announced the temporary lay-off of workers at two plants to allow time for inventories to be reduced.

Principal Subsidiaries

Automotive Financial Serices, Inc.; Chrysler Overseas Capital Corp.; Chrysler Realty Corp.; Gulf stream Aerospace Corp.; Chrysler Financial Corp. The company also has subsidiaries in the following countries: Canada, Mexico, and the Netherlands Antilles.

Further Reading

International Labor Relations Management in the Automotive Industry: A Comparative Study of Chrysler, Ford, and General Motors by Duane Kujawa, New York, Praeger, 1971; Going for Broke: The Chrysler Story by Michael Moritz and Barrett Seaman, New York, Doubleday, 1981; Iacocca by David Abodaher, New York, Macmillan, 1982; Iacocca: An Autobiography by Lee Iacocca with William Novak, New York, Bantam, 1984; The Iacocca Management Technique by Maynard M. Gorden, New York, Dodd Mead, 1985; The Complete History of Chrysler Corporation, 1924-1985 by Richard M. Langworth and Jan P. Norbye, New York, Beekman House, 1985; New Deals: The Chrysler Revival and the American System by Robert B. Reich and John D. Donahue, New York, Time, 1985.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Chrysler Corporation." International Directory of Company Histories. . Encyclopedia.com. 19 Oct. 2017 <http://www.encyclopedia.com>.

"Chrysler Corporation." International Directory of Company Histories. . Encyclopedia.com. (October 19, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/chrysler-corporation

"Chrysler Corporation." International Directory of Company Histories. . Retrieved October 19, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/chrysler-corporation

Chrysler Corporation

CHRYSLER CORPORATION


Chrysler Corporation is the number three auto maker in the United States behind General Motors (GM) and Ford Motor Company, producing nearly 3 million vehicles a year. After its $38 billion merger with German luxury carmaker Daimler-Benz in 1998, Chrysler is now known as DaimlerChrysler Corp., a North American Subsidiary of DaimlerChrysler AG. With joint headquarters in Auburn Hills, Michigan, and Stuttgart, Germany, the newly formed business is Europe's number one industrial company, and the fifth largest car manufacturer in the world. It employs over 200,000 persons worldwide, and sells vehicles in over 140 countries.

Chrysler Corporation was originally founded by Walter Percy Chrysler (18751940) in 1925. Chrysler, a former vice president at GM, designed Maxwell Motor Corporation's original Chrysler automobile in 1924. The car was enormously popular in its first year, selling approximately 32,000 units at a profit of $4 million. The next year Walter Chrysler took over Maxwell and renamed the corporation after himself.

In 1926 Chrysler introduced a series of models that could travel between 50 and 80 mph. It called the cars the "Model 50," "Model 60," etc. Until then, most of the fast motor vehicles in North America were expensive luxury cars, but since Chrysler's fast cars were mid-priced, they were more accessible to consumers. In 1928 Chrysler increased the size of its company fivefold by acquiring the Dodge Corporation. That year also marked Chrysler's introduction of the low-priced Plymouth and the more extravagant DeSoto. Chrysler's emphasis on innovation and research helped increase the company's market share during the Great Depression (19291939) and surpass Ford in sales in 1933. Since Chrysler bought more components from parts manufacturers than its competitors, it had greater flexibility than its rivals, but it was a flexibility born of necessity. It did not have the financial resources to make everything within the company and had to pay more for them. In 1937 Chrysler followed the lead of General Motors in signing a labor contract with its workers, represented by the United Automobile Workers (UAW).

During World War II (19391945), Chrysler's focus turned to military production, manufacturing tanks, trucks, bomber engines, submarine nets, antiaircraft guns, and small-arms ammunition for the Allied forces. Chrysler's efforts during the war earned the company a special Army-Navy award for reliability and prompt delivery.

But, Chrysler began encountering problems almost immediately after the war. Its relationship with its workers was not always smooth because of Chrysler's sometimes sloppy maintenance and unsafe plants. These problems stemmed from Chrysler's lack of resources; its pockets were not as deep as Ford's or GM's. Even when it managed to placate the leadership of the union, the company was often the target of "wildcat strikes" by disaffected rank and file workers. The company also seemed to have lost some of its earlier ambition and design innovation. Other manufacturers started introducing new cars with more features, while Chrysler's line remained largely static. Chrysler was soon out of step with consumer tastes. During the 1950s the company was selling larger, boxier automobiles when most Americans were buying sleeker cars from Ford and GM. In the 1960s Chrysler introduced a line of smaller cars just as Americans wanted power and luxury. When the OPEC oil embargo of the early 1970s tightened America's wallet, Chrysler maintained its line of inefficient large cars. By 1979 Chrysler's share of the U.S. car market was just nine percent, a decline of 12 points from 1952.

Teetering on the brink of bankruptcy, Chrysler turned to Lee Iacocca (1924) and the federal government for help. Iacocca, a former executive with Ford, had been named president and chief executive officer of Chrysler in 1978. In 1980 Iacocca convinced Congress to guarantee $1.5 billion in loans to Chrysler, stressing his company's historical role in car manufacturing and its importance to the economy.

The billion-dollar bailout was unpopular with many Americans. But that did not prevent the charismatic Iacocca from trying to revitalize Chrysler. He took his case to the American people, starring in 61 television commercials, exhorting consumers to "buy American," staking his reputation on every Chrysler that left the plant, and otherwise personalizing the company. After suffering losses of $1.1 billion in 1979, $1.7 billion in 1980, and $475 million in 1981, Chrysler started turning a profit in 1982. In 1983 Chrysler repaid all of its federal loans, seven years before they were due.

Chrysler's recovery was stimulated by a successful new line of cars. The K-car debuted in 1981, and in 1982 Chrysler downsized the New Yorker, which introduced a six-cylinder Fifth Avenue model. In 1984 Chrysler pioneered one of the first mini-vans, a prototype of the Dodge Caravan. Over the next fifteen years the Caravan was the best-selling vehicle of its type. In 1986 Chrysler entered a joint venture to sell Mitsubishi cars in the United States, and the next year it purchased American Motors Company, maker of Eagle cars and four-wheel drive Jeeps.

But Chrysler's recovery was not one of uninterrupted success. In 1987 Chrysler laid off workers at two plants while reducing inventory. In 1991 the company lost $795 million because of a recession and weak consumer demand. Three years later the company suffered through a series of embarrassing recalls, including 115,000 Jeep Cherokees with flawed steering columns. In 1997 nearly 2000 engine-plant workers went on strike for a month, Chrysler's longest work-stoppage in 30 years.

Regardless of its success or failure in any particular year, Chrysler developed a reputation of investing heavily in the people and communities that surround its corporate plants. When Chrysler returned to South Africa in 1996, it donated $1 million to President Nelson Mandela's Children's Fund. From 1995 to 1997 Chrysler donated $13 million to Detroit area arts and cultural organizations. In 1998 it gave another $1 million to a pre-college engineering program for minority students in Michigan.

At the same time, Chrysler's merger with Daimler-Benz caused some thorny public-relations problems. A substantial number of Jewish shareholders opposed the deal because of the German company's links with Nazis during World War II (19391945). After DaimlerChrysler incorporated in Stuttgart, Standard & Poor's 500 announced that it would not allow the company into its elite group of businesses traded on the New York Stock Exchange, since it was no longer technically an American business. By March, 1999, German shareholders owned 60 percent of the company, with the ratio of American-owned shares dropping from 44 to 25 percent in five months.

See also: Automobile Industry, Walter P. Chrysler, Lee Iacocca


FURTHER READING

Babson, Steve. Working Detroit. Detroit: Wayne State University Press, 1984.

"DaimlerChrysler AG." Hoover's Online, [cited April 20, 1999] available on the World Wide Web @ www.hoovers.com.

"DaimlerChrysler," [cited April 12, 1999] available on the World Wide Web @ www.daimlerchrysler.com.

Konrad, Rachel, "Germans Surpass Americans as Major Stockholders in DaimlerChrysler." Knight-Ridder Tribune Business News, March 16, 1999.

"Chrysler Corporation." Microsoft Encarta Online Encyclopedia, 1999. Available on the World Wide Web @ encarta.msn.com/EncartaHome.asp.

Vlasic, Bill, "DaimlerChrysler era begins: Legal work closes stock swap, creating new company, but official start is Tuesday." The Detroit News, November 12, 1998.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Chrysler Corporation." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. 19 Oct. 2017 <http://www.encyclopedia.com>.

"Chrysler Corporation." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. (October 19, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/chrysler-corporation

"Chrysler Corporation." Gale Encyclopedia of U.S. Economic History. . Retrieved October 19, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/chrysler-corporation