Detroit Auto Industry: Reckoning to Revival

The Potholes Stay Where They Are

Chrysler Jefferson North

On a brisk January day in 1992, Chrysler's then-President Bob Lutz slid into the driver's seat of the first Jeep Grand Cherokee to roll off the assembly line at the new Jefferson North factory. Riding shotgun was Detroit's colorful and cantankerous mayor, Coleman A. Young. They were on their way to make a showstopping introduction at the Detroit auto show, but it would not be a smooth ride. As they turned onto potholed Jefferson Avenue, Lutz said: "You know, some of these streets really need attention, your honor." Young laughed and said, "What, you don't like them potholes?" As Lutz struck another road divot, he responded, "Who would?" Young laughed again, Lutz recalled, and said, "Well, you better learn to love 'em, because they're staying right where they are."

Chrysler had hit a few potholes itself on the way to this triumphant moment. After a controversial government bailout in 1980, Chrysler was the feel-good corporate turnaround of the decade. Lee Iacocca, now 89, became a folk hero by paying off those U.S.-backed loans early and for his brash TV commercials pitching Chrysler's K-cars and minivans. "If you can find a better car," Iacocca would bark, "buy it." Then its $1.52 billion acquisition of American Motors in 1987 almost bankrupted the company because that big purchase came before the stock market crashed. By 1991, the U.S. economy had tumbled into recession, Chrysler's operating losses reached almost $2 billion and the company ran so low on cash it had to sell a special issue of stock at the meager price of $10 a share to keep the lights on.

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