War with Washington
As chairman and CEO of Chrysler, Riccardo waged public battles with Washington regulators over safety and environmental laws, insisting the company, one of Detroit's smallest automakers, could not pass the costs of new rules along to U.S. consumers already reeling from inflation.
To raise cash, he sold Chrysler’s international operations in pieces: an Australian unit to Mitsubishi Motors; Venezuela operations to GM; and Brazilian and Argentinean units to Volkswagen AG.
In the biggest automotive divestiture under Riccardo, Chrysler in 1978 unloaded its European operations -- one of Townsend’s great successes -- for $230 million and a 15 percent stake in Peugeot to the French automaker. The sale made Peugeot the largest auto company in Europe at the time.
But with Chrysler still failing, Riccardo called on President Jimmy Carter in early 1979 to create an independent watchdog to assess the impact of government regulations on the auto industry.
When that idea failed, he pitched a tax credit designed to allow Chrysler to recover money spent meeting government safety and pollution standards.
In July 1979, at a dramatic press conference, Riccardo publicly detailed how deep Chrysler’s financial woes went in proposing immediate federal assistance: The company was bleeding red ink. Second-quarter losses totaled $207 million, and Chrysler owed creditors some $4 billion, or nearly 10 percent of all U.S. corporate debt. About 80,000 unsold vehicles, valued at over $700 million, sat on dealer lots.
Riccardo requested an immediate $1 billion U.S. tax holiday, a two-year delay in federal emissions standards -- at a savings of $600 million for Chrysler -- and UAW concessions.
But it would be months before Chrysler received any form of a lifeline.
Wendell Larsen, Chrysler’s head of public affairs, advised Riccardo that Congress would be more receptive to a new-look Chrysler as part of any bailout.
“I told John that Congress and the country weren’t going to act until we’d staged a morality play,” Larsen recalled later in New Deals: The Chrysler Revival and the American System, a 1985 book by Robert B. Reich and John D. Donahue. “And I told him how he’d been cast: John Riccardo takes on himself all the sins of commission and omission, we drive him into the woods, and the company is pure again.”
A month after Riccardo's resignation, when the House Banking Committee conducted a hearing on proposed loan guarantees, it was Iacocca who presented the faltering automaker’s case.
Courting Iacocca
Several Chrysler directors and Riccardo first reached out to Iacocca in 1978 after Iacocca had been fired as president of Ford Motor Co. by the company’s chairman and CEO, Henry Ford II.
Riccardo, Iacocca and other Chrysler directors held several secret meetings, including an initial gathering at the Pontchartrain Hotel in downtown Detroit, as part of the company’s courtship of Iacocca.
“It was sad in a way, because he hadn’t even been pushed by Chrysler’s board of directors to approach me. He did it on his own,” Iacocca wrote in his autobiography. “He obviously realized that the company was in deep trouble and that he wasn’t going to be able to nurse it back to health.”
Iacocca was named president and COO of Chrysler on Nov. 2, 1978, with the intention of succeeding Riccardo by the end of 1979, though it was unclear at the time whether Riccardo would stay on as board chairman or nonexecutive chairman.
In one of his last moves to help secure government aid, Riccardo, like Iacocca, agreed in August 1979 to a voluntary pay cut to $1 a year through Sept. 1981.
But several weeks later, pale and drawn and severely fatigued over the negotiations to save Chrysler, Riccardo decided to step down early.
Riccardo is survived by his wife, Thelma, five children, 11 grandchildren, and 15 great-grandchildren, according to his official obituary.
Philip Nussel contributed to this report.
