Iacocca Admits Mileage Tampering Was ‘Dumb’ : Apologizes for Chrysler’s New Car ‘Test-Drives’ by Its Managers With Odometers Disconnected
Acknowledging that Chrysler had been “dumb” to disconnect the odometers on new cars being test-driven by company managers before they were sold, Chrysler Chairman Lee A. Iacocca asked the nation for forgiveness Wednesday.
“Did we screw up? You bet we did,” Iacocca conceded during a press conference at Chrysler’s headquarters. “We’re human, and sometimes people do some pretty dumb things.”
In an effort to turn around public opinion in a scandal that has bred a major crisis of confidence for the nation’s third-largest auto maker, Iacocca publicly apologized for the first time since a federal indictment was handed down last week in St. Louis. The indictment alleged that Chrysler had conspired for nearly 40 years to defraud the public by selling cars as new when they had actually been driven extensively while their odometers were disengaged.
Throughout his press conference, the normally gregarious and outspoken Iacocca was unusually somber and contrite.
“We did do something to make our customers question their faith in us,” Iacocca admitted.
‘All the Way Out to Stupid’
“The first thing was just dumb. We test-drove a small percentage of our cars with the odometers disengaged and didn’t tell our customers. The second thing, I think, went beyond dumb, and reached all the way out to stupid--a few cars were damaged in testing badly enough that they should never have been sold as new. Those are mistakes we will never make again. Period.”
Still, Iacocca continued to deny that the auto maker had committed any illegal acts, and he stressed that Chrysler will fight the federal indictment against the corporation and will defend the two Chrysler executives also charged personally. If convicted of those charges, Chrysler could be fined $120 million.
“The only law we broke was the law of common sense,” Iacocca said. He and other Chrysler executives stress that the company’s attorneys believe that the federal law prohibiting odometer tampering on used cars does not apply to new vehicles that are still at the factory.
Iacocca also denied that he had any personal knowledge of the company’s practice of disconnecting odometers; he said he first heard about it last October, when he was told by his staff that a federal investigation into the policy was under way. “To be honest with you, I didn’t know what our policy was. . . . I didn’t get into it. In retrospect, I wish I had.”
‘Ourselves to Blame’
He added that “a lot of people must have known” about the practice, but he has not yet disciplined or fired anyone in the corporation for fostering the policy.
But Iacocca did concede that, while Chrysler’s sales have not dipped as a result of the widespread press reports about the federal charges, the scandal has led to “confusion and concern” among many customers. “We simply cannot tolerate that,” Iacocca said.
“We asked them (our customers) to trust us, and they did, and now they’ve been given a reason to question that trust. Simply stated, that’s unforgiveable, and we’ve got nobody but ourselves to blame.”
To regain customer loyalty, Iacocca announced that Chrysler will offer a two-year, 20,000-mile warranty extension for customers who purchased cars that had their odometers disconnected during test-drives at Chrysler assembly plants; about 60,000 cars will be covered.
Iacocca added that customers who bought 40 cars damaged during test-drives over the years--and later sold as new vehicles with no mileage showing on their odometers--will be offered new replacement cars free. The company plans to back up the offer with an advertising campaign that begins today, apologizing for the practice of disengaging odometers.
The odometer-tampering scandal involves a Chrysler test-drive program that is similar to those conducted by other major auto makers. Like Ford and General Motors, Chrysler allows its employees to drive a few newly built cars home each night and then report back on the quality of the vehicles. Although the federal indictment alleges that some cars were driven for up to five weeks with their odometers disengaged, Chrysler’s employees are only supposed to keep the cars overnight; Chrysler says the test-drives average just 40 miles.
But, unlike Ford and GM, Chrysler continued--until the federal investigation began last fall--a longstanding policy of disconnecting the odometers on many of the cars included in its test-drive program.
Still, Iacocca insisted that the policy of disengaging odometers that now threatens Chrysler’s reputation was once the norm throughout the auto industry. Iacocca, who had been president of Ford before coming to Chrysler in 1978, said that, while he didn’t know what Chrysler’s current policy was until informed of the federal probe, he did know that disengaging odometers had been common practice at all of the companies in the old days.
“Going back through my 41 years in the business, a lot of test cars have been driven with the odometers unhooked,” Iacocca said. “Naively or not, we always thought the testing was part of the manufacturing process.”