Iacocca Back in Spotlight, but It’s Just Not the Same : Autos: Chrysler’s new TV ad campaign fails to boost sales. Some say it smacks of desperation.
Lee A. Iacocca, who became a national hero after resurrecting Chrysler Corp. in the early 1980s, has again taken center stage as the United States’ No. 3 car company mounts a major marketing assault aimed squarely at the Japanese.
New television commercials depict the company’s flamboyant chairman arguing that the American people aren’t getting the real message about Chrysler cars: that they are every bit as good as Japanese autos. Using Chrysler-commissioned surveys, Iacocca even argues that, given a choice, Americans will choose Chryslers over Hondas.
So does Iacocca still have the charisma to rally the American public? Judging by recent sales, not so far.
In the first 10 days of May, Chrysler sold 21.3% fewer cars and trucks than in the comparable period a year ago. Moreover, there are signs that Chrysler’s Japanese competitors aren’t taking him very seriously, either.
Some market analysts argued that the aggressive new marketing campaign, dubbed “Advantage: Chrysler,” is really an act of desperation, a tacit admission that maybe the Japanese are just better at making and selling cars.
Others criticize the marketing campaign as hypocritical “Japan-bashing,” especially since Chrysler was one of the first joint-venture partners with the Japanese and still imports Mitsubishi cars under its own nameplate. Mitsubishi even designed Chrysler’s new Dodge Stealth sports car, which will be introduced in the fall.
Some suggest that Iacocca should be leveling his attacks not at the Japanese, but at himself for neglecting Chrysler affairs to the point that sales plummeted in the mid-1980s. And they argue that the days are over when Iacocca could sell cars through sheer dint of his personality.
Consider this episode:
Mitsubishi Motor Sales of America, the Cypress-based U.S. marketing arm of the Japanese auto maker, held a meeting of district sales managers about a month ago at which they screened a parody of an Iacocca commercial.
An Iacocca character stalks a Chrysler boardroom, fuming over the way American car buyers chose a Japanese-branded car over an American-branded one--even though the cars are identical and made in the same factory. In the parody, Iacocca’s voice is dubbed to make it appear that he is praising the Japanese and saying he wishes he had their sales force.
The line raised a cheer among the Mitsubishi executives. That’s because Mitsubishi is actually Chrysler’s partner in a joint venture called Diamond-Star Motors in Illinois that builds cars for both companies--the cars that Iacocca alludes to in the commercial.
“I smile, because (in the real Chrysler commercial) he’s giving us credit for doing a better job of marketing our products out of Diamond-Star than he did,” said Richard D. Recchia, executive vice president and chief operating officer of Mitsubishi Motor Sales.
At American Honda Motor Co., the target of some Chrysler ads, officials have no plans to respond to Chrysler’s offensive. “We’re not making any comment about” the ads, said Robert Butorac, a Honda spokesman. “We think the sales numbers speak for themselves.” In the first 10 days of May, sales of U.S.-made Hondas were up 32.3%.
At Thursday’s annual meeting of Chrysler shareholders in Universal City, Iacocca stoutly defended his campaign, saying that it’s high time that Chrysler started tooting its own horn. He denied that the campaign was Japan-bashing, calling that term a code word for racism.
“I had some strong words about Japan’s trade policies, and even stronger words about our own government for letting Japan get away with them,” he said. “But I never said a negative word about the Japanese people, whom I happen to respect, or about the products they make, which are damn good--yet I’m called a Japan-basher.”
He added: “We’re not going to be intimidated by that kind of gutter innuendo. I’m sorry to say it seems to come with the territory these days, if you’re an American trying to peddle your wares and you have the audacity to say they’re as good as the other guy’s--and that’s all we’re saying.”
Iacocca left the meeting without answering reporters’ questions.
However, Gerald Greenwald, Chrysler’s vice chairman and the likely successor to Iacocca when he leaves the chief executive’s suite at the end of 1991, conceded in an interview that the campaign could be viewed as an admission that Chrysler hadn’t sold itself well enough in the past.
“We were being self-critical of our own communications capabilities, and we were trying with regard to the issue of marketing to be provocative in the minds of the American consumer,” he said.
But he denied that the campaign was an act of desperation, or that Chrysler’s troubles stem from any inattention by Iacocca during the mid-1980s.
He also denied any hypocrisy in the campaign, arguing that it was aimed at specific Japanese competitors, not at all Japanese autos. He pointed out that Mitsubishi imports account for only a fraction of Chrysler’s sales, and that Chrysler is scaling back such sales.
Of course, not everyone is critical. Chrysler has taken steps to pull up its market share, and the quality of its products has improved, some analysts said.
“(Chrysler) is confident about the gains they have made in product quality and reliability, as well as in new technology added to the vehicles, and they are trying to get that message across to consumers,” said Chris Cedergren, an automotive market analyst and director of competitive assessments at J. D. Power & Associates, an Agoura Hills-based market research firm.
Chrysler needs a breakthrough. Its share of the U.S. market for cars and light trucks fell to 12.4% in the first four months of 1990 from 14% in the same period last year, according to Ward’s Automotive Reports. By contrast, Toyota’s total share jumped to 7.2% from 5.6% and Honda’s to 5.7% from 5%. In sales of cars alone, Honda, with 8.5% of the market, is closing in on Chrysler, with 8.8%.
It’s quite a change from the heady days when Iacocca brought Chrysler back from the brink of bankruptcy with such innovative products as the K-car, the minivan and the LeBaron convertible.
But in the mid-1980s, Iacocca’s attention was distracted from Chrysler business by his work with the Statue of Liberty restoration, a divorce, books and other outside activities, critics said.
At the same time, a former executive, who asked not to be identified, said many Chrysler executives may have been cowed by the cult of personality that grew up around their boss. Iacocca failed to heed the advice of his lieutenants to go forward with development of a V-6 engine, leaving Chrysler to rely on a Mitsubishi engine for some of its models, the executive said.
Analysts questioned several other decisions, including the purchase of American Motors Corp. several years ago. It saddled Chrysler with enormous costs and a sizable underfunded pension liability. In addition, the company cut a $250-million deal with Italy’s Maserati car company that resulted in an expensive but poor-selling luxury sports coupe.
Meanwhile, Chrysler’s main product line has developed notable gaps, particularly a subcompact to replace the defunct Dodge Omni/Plymouth Horizon and a mid-sized passenger car to compete with the likes of Ford’s Taurus, analysts said.
But there are signs that Iacocca has placed his hands back on the wheel. The company is cutting $1.5 billion in costs and has sold off non-automotive divisions. And Chrysler will bring out several new models by the mid-1990s to rejuvenate its passenger car line, including the much-anticipated Dodge Viper sports car premiering in late 1991.
In the meantime, will the “Advantage: Chrysler” campaign work? “From the beginning, there was a fear that that there may be some backlash from consumers” who might resent the implication that they were being duped by the Japanese, said George Peterson, president of AutoPacific Group, a Santa Ana-based automotive marketing and product-consulting company.
But, he added, “That does not seem to have been the case based on our own research.”
