Iacocca's Tightrope Act

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blatant knock-off of the $40,000 two-seat Mercedes-Benz 380 SL that Chrysler has code-named the SL and will sell for about half the price. He is wagering an enormous amount, $700 million, that he can rekindle buyer interest in vans (see box). Chrysler claims the hybrid minivan will be as revolutionary as the Mustang.

While he has been restructuring the corporation, lacocca has never stopped scrutinizing new model designs. A little while ago, he took one look at a mock-up of a 1986 subcompact, then curtly told the stylists that the front grille and bumper made them look like "Dodg'em cars." The lights burned late in the styling studios for weeks thereafter. lacocca is unrepentant. Says he: "The guys who have it tough in this company are the product guy and the marketing guy because I grew up in those areas and think that I know more than they'll ever know."

Even with the skillful scavenging of existing models, the cars Chrysler brings to market between 1982 and 1986 will cost $6.6 billion before they roll off the production line. For a company still struggling to stay out of the red, the sum is staggering. But almost anyone in Chrysler's finance department can tick off where the money will come from. Part of the total, some $823 million, was spent last year, and another $2.5 billion or so is in annual budgets through 1986. A large chunk is in hand in lacocca's $900 million cash kitty. And he is counting on generating the rest from profits and cash flow over the next four years. It is not a scenario that can withstand unpleasant surprises. Says Alan Webber, a former transportation-department aide who is now a senior research associate at Harvard: "One false step and they are off the tightrope."

To sell the new models, lacocca has greatly strengthened another weak link: Chrysler's dealer base. After losing about 1,000 outlets out of 4,800 during 1979 and 1980, he succeeded in signing up roughly 300 new showrooms last year alone. Equally important, more of the dealers are making a profit: 80% in 1982, in contrast to only 52% in 1980.

Over the long run, and in that big battle for the international market, Chrysler will need help from other automakers to survive. lacocca talks of plans for a new corporate entity he calls Global Motors. Rather than a megacorporation formed from actual mergers between car companies in different parts of the world, he envisions a setup in which Chrysler would undertake joint ventures with foreign manufacturers to get economies of scale or low-cost labor or design or technological expertise. The combines he talks about do not sound so different from the one GM and Toyota announced last month, a collaboration in California on the manufacture of a subcompact car. However, lacocca rails against that one because GM and Toyota are so enormous and powerful already.

Back in the 1970s, Chrysler was moving in that new direction. It acquired 15% of Mitsubishi in 1971 and 15% of France's Peugeot in 1978. The ideal combination, says lacocca, would be a top Japanese producer at the low end, a high-tech European company for the luxury segment and an American company for the middle of the market. As lacocca sees it, "That would be Mitsubishi, Peugeot and Chrysler or maybe Nissan, Volkswagen and Chrysler."

If lacocca worries much about Chrysler's survival these