Chrysler May Announce Key Reorganization : Iacocca Would Play a Lesser Role in Cars
Chrysler Corp. is expected to announce a reorganization today that will create a corporate umbrella, run by Lee A. Iacocca, over its car and truck business and its newly acquired finance and aerospace operations.
The realignment, expected to be approved today at Chrysler’s board meeting in New York, appears to remove Iacocca further from Chrysler’s core business of cars and trucks. The automotive unit is to be called Chrysler Motors and headed by current Vice Chairman Gerald C. Greenwald.
Sources close to the company said the reorganization is intended to reflect Chrysler’s recent and planned diversification moves to lessen its dependence on cars and trucks.
Company spokesmen refused to comment. However, sources close to Chrysler said the plan has been in the works for months and has been revised and delayed several times.
New York Move Rejected
One plan considered and rejected, these sources said, called for a holding company run by Iacocca to be set up, with its headquarters in New York instead of Detroit.
It was unclear what type of corporate entity is being created to oversee the operating units of the company or whether Chrysler plans to offer separate categories of stock, as General Motors has done in the case of certain acquisitions. However, the move does give the company’s different lines of business separate identities.
Chrysler this year has spent more than $1 billion in acquiring Gulfstream Aerospace of Savannah, Ga., a corporate jet maker, and financial-services units from Bank of America, E. F. Hutton and General Electric that will make Chrysler’s financial subsidiary the nation’s fourth-largest non-bank finance company.
Sources said the new alignment creates four distinct operating companies, including Chrysler Motors; Chrysler Financial, comprising the various financial units bought earlier this year as well as Chrysler’s big car-financing operation; Gulfstream Aerospace, and a new technology subsidiary apparently being set up to include Chrysler’s Huntsville, Ala., electronics operation and future high-technology acquisitions.
It isn’t clear how the new alignment will change the way that Chrysler’s automotive business is managed. Iacocca in recent years has gradually been turning over day-to-day control to Greenwald, who was among the first of the Ford Motor executives lured to Chrysler by Iacocca.
But the move inevitably will focus attention on Chrysler’s long-term prospects without Iacocca, who is 61. Colleagues say he is spending more and more time in New York, where his fiancee, Peggy Johnson, lives and the Statue of Liberty fund-raising effort that he heads is based. The new setup appears to free him even further from the demands of Detroit.
The reorganization will also probably fuel speculation about a political future for Iacocca. Though he has repeatedly denied any such ambitions, he continues to be mentioned as a Democratic presidential candidate.
