When Bob Lutz and Lee Iaccoca First Met: “Those Ford Potato Cars (Taurus and Sable) Are Going To Bomb!”

Iaccoca  snip-horz

(An excerpt from an excerpt at Business Insider of Icons and Idiots: Straight Talk on Leadership by Bob Lutz)

Lee Iacocca had been trying to get me to join him at Chrys­ler for several years when, in 1986, disappointed with what appeared to be a bleak career future at Ford, I became in­terested, and we began talking in earnest.

A deal was soon struck, and I politely exited Ford, con­scious as always in my career of the value of a gracious departure with no hard feelings.

I arrived at Chrysler eager to set about my tasks as executive vice president, Trucks (which at that point were almost nonexistent at Chrysler), International Operations (likewise), and Diversified Prod­ucts (typical of the era, the company’s own in-house suppli­ers and component plants).

In my inaugural meeting in Lee’s office, his perfor­mance was, in many ways, typical. He was effusive, enthusiastic, expressing his opinions with a firmness that left no doubt in the listener’s mind that these were facts that could not be questioned.

Ford 1985 Taurus

“You picked a good time to leave Ford, lemme tell ya! Those potato cars (Taurus and Sable) they’re coming out with are gonna bomb.

chrysler 1988 new-yorker-9

We put a couple in a product clinic against our own upcoming Dodge Dynasty and Chrysler Fifth Avenue (elongated versions of the K-car, equally boxy, with “Greek temple” grilles, stand-up hood ornaments, pad­ded vinyl roofs, and every dated styling cliche that was driving American buyers to imports), and we killed ’em. Our average score was 7.5 on a 10-point scale. Theirs was a 5.0. It’s gonna be the flop of the century. I hope you didn’t have anything to do with it.”

I knew the story behind the averages. The new Chrysler products were scored around 7.5 by the vast majority of respondents. In words, that means, “Okay, not awful, but not my first choice, most likely.” That kind of score, in the modern world, is the kiss of death, because nobody settles for the second choice unless it is made into a deal you can’t refuse through costly rebates.

Average incentives of $3,000/ car is what it took to move the ugly monsters off the lots. The Taurus, on the other hand, was sharply polarizing. Like the first new Dodge Ram pickup in 1994, it triggered a love/hate dichotomy: half the respondents hated it with a passion and assigned it a score of 1 or 2. The other half was stunned in a positive sense and couldn’t believe that a U.S. company was launching a car of such modern, import-like appearance.

They overwhelmingly voted 9 and 10. The mis­leading average, of course, was 5. But in today’s highly com­petitive market, “blending in” with 7.5 doesn’t work. It doesn’t matter how many 1s and 2s you have: the success of the product comes from the enthusiasts who can’t wait to buy it. Thus, Taurus/Sable went on to become America’s best-selling car, free of incentives, selling for years at a ca­dence of over 400,000 annually. Chrysler’s Dynasty, Fifth Avenue, and, later, Imperial, despite massive rebates (one of lacocca’s earlier marketing inventions: “Buy a car. Get a check!”), never really broached the 200,000 level.

But in my inaugural meeting, Lee was expounding upon Ford’s colossal error.

He was, figuratively, rubbing his hands with glee. I wondered: Should I burst his bubble? Should I tell him the bad news the research portended? Would I alienate my new CEO by giving him a market re­search education he didn’t ask for? Wouldn’t it just be wiser to shut up and move on?

My failure to do just that was typi­cal of the almost teacher/pupil, father/son, love/hate cli­mate that was to mark our rocky relationship. He clearly didn’t like the news, didn’t like my smart-ass attitude, and, not having had much practice, didn’t like an underling tell­ing him he was wrong. There would be many instances in our relationship when the same situation was repeated, sometimes very unwisely on my part, in meetings.