Iacocca's Tightrope Act

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braggadocio, the longer, lower, wider mentality that economy-and quality-conscious buyers would eventually find objectionable. He was a used-car dealer writ large. At Ford, where the real power flowed like sap from the family tree, lacocca managed to tap in through the sheer force of personality. A cadre of lacocca subordinates grew up who owed their fealty to him, not to the boss whose name was on the cars. One of lacocca's weapons was a black book he carried, itemizing each manager's quarterly goals, a tradition he transferred to Chrysler. Those who did not live up to their targets rarely forgot it. Says William Fugazy, the New York travel and limousine owner who has known lacocca for 25 years: "I've seen him just ream guys out for not getting the job done. He'll turn to one of his top people and say, 'I told you what I wanted done. It hasn't been done. Now do it, and I don't want any crap.' He never wants any crap. It's one of his favorite expressions."

Inevitably, President lacocca and the equally strong-willed Henry Ford II clashed. On July 13, 1978, the chairman called lacocca into his office and fired him. At the time a story made the rounds that Ford, by way of explanation, offered this: "Let's just say I don't like you." lacocca insists that is apocryphal, but says he is keeping the real story for an autobiography he is writing. Whatever was said, it was apparently enough to last a lifetime. Neither man has spoken to the other since lacocca walked out of Ford's office.

lacocca was evicted from Ford world headquarters in Dearborn and given an obscure office several miles across town to serve out the four months until he could collect his retirement benefits. Already a millionaire, he might have ended his business career then; there are few successful second acts in the automotive industry. But lacocca loves a challenge. On Oct. 30, 1978, lacocca was officially through at Ford. On Nov. 2, Chrysler made two announcements: 1) the company had just lost a record $158.5 million in the third quarter, and 2) lacocca would become Chrysler's president.

Joining Chrysler presented lacocca with the chance to be his own boss at last and to put his unmistakable stamp on the industry. While the top jobs at GM and Ford had passed on to drab managerial types, Chrysler remained a company where a single, forceful personality could make a difference. It had, in fact, had a succession of strong-willed leaders, beginning with a brilliant entrepreneur named Walter Chrysler, who founded the company in 1925,22 years after Ford, 17 after GM.

For a time in the late '40s, Chrysler (whose product line included Plymouth, Dodge and De Soto) surpassed Ford as the No. 2 U.S. automaker. But then began two decades of losing ground. A costly international expansion program drained resources and diverted executives' attention. Strapped for cash, Chrysler shunned small cars for larger, rather stodgy models that it sold to mostly lower-income buyers. Thus it was ill prepared for the surge in gas prices that began in 1973. Even its reputation for quality began to slide. The company's market share, as high as 26% in 1946, slipped to 12% by 1977.

By 1979, Chrysler Chairman John Riccardo had begun making regular trips to Washington to drum up support for tax credits and relief from regulatory