Iacocca Steps In to Close Chrysler Credibility Gap
Chrysler’s public image, badly damaged over the last few weeks by federal charges of odometer tampering on newly built cars, seems to be on the mend, marketing specialists believe.
And Chrysler has one of its biggest assets--the enormous personal popularity of Chrysler Chairman Lee A. Iacocca--to thank for the turnaround, image and marketing consultants say.
Sparked by a 16-count federal indictment against Chrysler and two of its executives, Iacocca’s response to the public relations crisis has been simple and direct and has played on his public image as a man of high personal integrity.
Calling it “dumb” for Chrysler to allow its managers to test-drive newly built cars with their odometers secretly disengaged, Iacocca apologized to the nation at a July 1 press conference in Detroit and later in national advertising. He assured the public that he would never allow the practice to be repeated. Meanwhile, he announced that Chrysler would give extended warranties to customers who had purchased the 60,000 cars that had been driven with disconnected odometers and then sold as new, and will provide new cars to customers who purchased 40 that had been damaged during their test-drives.
“I think in the annals of public relations history, the way Iacocca has handled this will be a model for what should be done,” says Philip Kotler, a business professor at Northwestern University and author of “High Visibility,” a study of how celebrities, including Iacocca, manage their high public profiles.
“Chrysler turned this around very well,” adds John Merriam, publisher of Corporate Exposure, a newsletter that measures the impact of media coverage on businesses. The newsletter found that in the two-week period during which the the federal indictment was issued and Iacocca’s press conference was held, Chrysler received the second-largest amount of media coverage of any corporation in America. It was virtually all negative before Iacocca’s public response and then positive following his press conference.
Meanwhile, Chrysler’s own surveys show that Iacocca has been extremely effective in turning public opinion around.
A quick national survey, conducted for Chrysler immediately after the indictment was issued in late June, found that 69% of those surveyed had heard about the odometer tampering and more than half of them thought it was a serious problem.
A survey of 800 adults nationwide, conducted by Market Opinion Research for Chrysler after Iacocca’s press conference, found that 54% of the people were aware of Iacocca’s response, and 67% of those said it was sufficient to repair the damage done to Chrysler. Just 18% said Chrysler had not gone far enough. As a result, Chrysler officials say they don’t feel the need to take any further action to bolster the firm’s image, according to company spokesman Baron Bates.
Even the wide publicity given to the news early last week that Chrysler had agreed to pay a record $1.6-million fine to the Labor Department for health and safety violations at one of its biggest plants hasn’t convinced Chrysler it needs to follow up on Iacocca’s odometer campaign with an expanded public relations offensive, Bates said.
‘Done Enough’
Industry analysts seem to agree that the company has done enough, and now doubt that the odometer scandal will have much of an effect on Chrysler’s car sales.
“The company couldn’t have done much more--Iacocca dealt with it in a forthright manner,” said John Hammond, an analyst with J. D. Power & Associates, a Westlake Village automotive market research firm. “Iacocca knew just the right tone needed to get the consumer back on his side--he has a genius for that.”
“The jokes about buying used cars will pass, and I don’t think they will lose too many sales,” added Al Hample, an advertising and media consultant in New York.
Indeed, Chrysler officials insist they have not seen any impact on car sales from the odometer scandal. While Chrysler’s sales are down, they have been on the decline for months, both because of the sluggishness of the overall car market and a factory conversion that has forced Chrysler to temporarily halt production of subcompact models.
Spent Some Reserve
Still, marketing experts also warned that Iacocca may have spent some of his reserve of public good will in the scandal since he has been forced to lay his reputation on the line by personally guaranteeing that the odometer tampering won’t be repeated. Any further problems could thus devastate his public image. And Kotler pointed out that if Iacocca ever changes his mind and really does run for president, his opponents are sure to bring up the scandal and ask the public whether “they would buy a used car from this guy.”
“The nationwide image of Iacocca is that he stands for a lot of the American values--hard work, determination, success,” said C. Samuel Craig, a professor of marketing at New York University’s Graduate School of Business. “But he did use up some of his credibility by saying it’s not going to happen again. If it does happen again, it will be a serious problem for him.”
