US states are being played off of one another in a competition for Japanese auto factories in the US. Iacocca believed in 1984 that the Japanese were outcompeting the US because of the close ties between management and government officials in Japan. Like China today, Japan according to Iacocca in 1984 was manipulating the yen by pegging it to the US dollar.

In 1984, Iacocca believed that the US was a free trade bastion and Japan had many restrictions for US trade. Japanese car prices fluctuate based on where they are being sold around the world for example in Paris a car would sell at $10,500, San Francisco at $7,200 and $9,000 in Frankfurt, there was no free trade policy in Japan in the 1980s. Iacocca advocates for economic nationalism and protectionism by restricting the number of Japanese cars sold in the US market (with the benefit going to Chrysler, of course). Iacocca believes in dependency theory when he asks: “Question: What do you call a country that exports raw materials and imports finished goods? Answer: A colony.”

This is a synopsis & analysis based on Iacocca: An Autobiography and other miscellaneous research sources. Enjoy.

Hal Sperlich and Lee Iacocca had initiated the K-car series in 1977 with the intention of bringing these four cylinder, 25 miles per gallon vehicles into market. The Aries and the Reliant were genuine sellers for Chrysler. All new cars were derived from the K-car platform including the LeBaron, Chrysler E Class, the New Yorker, Dodge 600 etc. Instead of creating a car for the different price ranges in the 1980s every car was built on the same chassis to save money. Building a new car off of the old was common in Detroit, considering the Mustang was a retooled Falcon.

Initially, these K-cars were priced at $5,880 but with options that would hike the price up to $8,000 or $9,000. This triggered sticker-shock for consumers because too many Chryslers were released with multiple-options. Also, in 1980, the interest rates were as high as 18.5% and as low as 13.5%. And because the government loans came in 3 installments the publicity was bad every time a cheque was carved. For the last loan, Chrysler had to find more concessions from banks. The government even made Chrysler sell the private jets even though they were used to get a top manager from plant to plant quickly. The corporate jet was not a perk but rather a necessary tool for completing their work.

This is a synopsis & analysis based on Iacocca: An Autobiography and other miscellaneous research sources. Enjoy.

When the Shah fell in January 16^th, 1979, the price of gas doubled. Gas guzzlers like RVs were the first to stop selling. The myth that the Big Three could have anticipated the spike in gas prices is foolish according for Iacocca. Until 1979, the customers wanted big V8 engines and demand was very high. Iacocca argues that small cars do not sell well in good times. The customers were leading the way. In 1978, Chrysler had small car but customers did not want to buy them. Period.

Customers were not interested in small cars before 1979 as evidenced by Honda and Toyota who were not performing well in the US. The fact is that Toyota and Honda built nothing BUT small cars so whenever the shift occurred they would benefit. Everything changed when 700,000 Toyotas were sold at black-market prices with $0.65 per gallon price tags. There was a 15% rise in demand for small cars in the first 5 months of 1979. This is a catastrophic shift. In one day, van sales fell by 42%. Iacocca was ready with plans for his K-car but the recession nosedived Chrysler towards a brutal destruction.

This is a synopsis & analysis based on Iacocca: An Autobiography and other miscellaneous research sources. Enjoy.