The Italian head of Chrysler is riding high in a record U.S. market, but he also knows his company is headed for disaster.
Compliance with new federal fuel economy standards will require far more resources than Chrysler possesses. Over the next five years, this numbers-savvy CEO understands that the company will have to double its investment in product development compared with the previous five years.
When the market inevitably turns downward the situation will become desperate.
A merger may be the only answer. Automotive News will soon report that one is in the works -- with Volkswagen.
Of course, the year is 1977 and the executive in question is John Riccardo, the Italian-American who led Chrysler from 1975-79 and died Feb. 13 at age 91.
Riccardo usually has a supporting role in accounts of automotive history. He's the guy who preceded Lee Iacocca at Chrysler and bowed out so that Lido could save the company. And he's been tagged with everything that was wrong with old Detroit -- irascible bean counter instead of irrepressible car guy, a man who raged against government interference and built more cars than dealers could handle.
Some of which was true, though not all of it.
In the fall of 1977, Chrysler reported its eighth consecutive quarterly profit. It was the richest period in the company's history. But Riccardo was a realist -- and a worrier. And sure enough, Chrysler was losing millions by 1978, largely due to recalls of the shoddily built Dodge Aspen and Plymouth Volare.
Then the U.S. economy tanked after the Shah of Iran was overthrown in January 1979. Chrysler faced ruin.
Riccardo was known as a fierce corporate infighter, yet he sacrificed his own career by pursuing Iacocca. He turned operations over to the new man and set out on a grueling, desperate mission to mollify the banks and persuade the U.S. government to rescue his company.
In the spring of 1979 an indefatigable Riccardo called on some 80 banks that had lent Chrysler money. Each meeting meant a withering barrage of questions about the company's viability. Riccardo wore himself out. He nearly killed himself. In May, he was hospitalized with a cardiac ailment and his doctors ordered him to retire.
He did so, but not before setting the stage for Iacocca and making the momentous decision to invest, massively, in front-wheel-drive cars, a resolute move that begat K-cars and minivans and Chrysler's recovery.
Iacocca obtained the federal loan guarantees in 1979, and rightfully got the credit. But it was John Riccardo who ran interference.