CHRYSLER CORPORATION

Chrysler Corporation is the number three auto maker in the United States behind General Motors (GM) and Ford Motor Company, producing nearly 3 million vehicles a year. After its $38 billion merger with German luxury carmaker Daimler-Benz in 1998, Chrysler is now known as DaimlerChrysler Corp., a North American Subsidiary of DaimlerChrysler AG. With joint headquarters in Auburn Hills, Michigan, and Stuttgart, Germany, the newly formed business is Europe's number one industrial company, and the fifth largest car manufacturer in the world. It employs over 200,000 persons worldwide, and sells vehicles in over 140 countries.

Chrysler Corporation was originally founded by Walter Percy Chrysler (1875–1940) in 1925. Chrysler, a former vice president at GM, designed Maxwell Motor Corporation's original Chrysler automobile in 1924. The car was enormously popular in its first year, selling approximately 32,000 units at a profit of $4 million. The next year Walter Chrysler took over Maxwell and renamed the corporation after himself.

In 1926 Chrysler introduced a series of models that could travel between 50 and 80 mph. It called the cars the "Model 50," "Model 60," etc. Until then, most of the fast motor vehicles in North America were expensive luxury cars, but since Chrysler's fast cars were mid-priced, they were more accessible to consumers. In 1928 Chrysler increased the size of its company fivefold by acquiring the Dodge Corporation. That year also marked Chrysler's introduction of the low-priced Plymouth and the more extravagant DeSoto. Chrysler's emphasis on innovation and research helped increase the company's market share during the Great Depression (1929–1939) and surpass Ford in sales in 1933. Since Chrysler bought more components from parts manufacturers than its competitors, it had greater flexibility than its rivals, but it was a flexibility born of necessity. It did not have the financial resources to make everything within the company and had to pay more for them. In 1937 Chrysler followed the lead of General Motors in signing a labor contract with its workers, represented by the United Automobile Workers (UAW).

During World War II (1939–1945), Chrysler's focus turned to military production, manufacturing tanks, trucks, bomber engines, submarine nets, antiaircraft guns, and small-arms ammunition for the Allied forces. Chrysler's efforts during the war earned the company a special Army-Navy award for reliability and prompt delivery.

But, Chrysler began encountering problems almost immediately after the war. Its relationship with its workers was not always smooth because of Chrysler's sometimes sloppy maintenance and unsafe plants. These problems stemmed from Chrysler's lack of resources; its pockets were not as deep as Ford's or GM's. Even when it managed to placate the leadership of the union, the company was often the target of "wildcat strikes" by disaffected rank and file workers. The company also seemed to have lost some of its earlier ambition and design innovation. Other manufacturers started introducing new cars with more features, while Chrysler's line remained largely static. Chrysler was soon out of step with consumer tastes. During the 1950s the company was selling larger, boxier automobiles when most Americans were buying sleeker cars from Ford and GM. In the 1960s Chrysler introduced a line of smaller cars just as Americans wanted power and luxury. When the OPEC oil embargo of the early 1970s tightened America's wallet, Chrysler maintained its line of inefficient large cars. By 1979 Chrysler's share of the U.S. car market was just nine percent, a decline of 12 points from 1952.

Teetering on the brink of bankruptcy, Chrysler turned to Lee Iacocca (1924—) and the federal government for help. Iacocca, a former executive with Ford, had been named president and chief executive officer of Chrysler in 1978. In 1980 Iacocca convinced Congress to guarantee __BODY__.5 billion in loans to Chrysler, stressing his company's historical role in car manufacturing and its importance to the economy.

The billion-dollar bailout was unpopular with many Americans. But that did not prevent the charismatic Iacocca from trying to revitalize Chrysler. He took his case to the American people, starring in 61 television commercials, exhorting consumers to "buy American," staking his reputation on every Chrysler that left the plant, and otherwise personalizing the company. After suffering losses of __BODY__.1 billion in 1979, __BODY__.7 billion in 1980, and $475 million in 1981, Chrysler started turning a profit in 1982. In 1983 Chrysler repaid all of its federal loans, seven years before they were due.

Chrysler's recovery was stimulated by a successful new line of cars. The K-car debuted in 1981, and in 1982 Chrysler downsized the New Yorker, which introduced a six-cylinder Fifth Avenue model. In 1984 Chrysler pioneered one of the first mini-vans, a prototype of the Dodge Caravan. Over the next fifteen years the Caravan was the best-selling vehicle of its type. In 1986 Chrysler entered a joint venture to sell Mitsubishi cars in the United States, and the next year it purchased American Motors Company, maker of Eagle cars and four-wheel drive Jeeps.

But Chrysler's recovery was not one of uninterrupted success. In 1987 Chrysler laid off workers at two plants while reducing inventory. In 1991 the company lost $795 million because of a recession and weak consumer demand. Three years later the company suffered through a series of embarrassing recalls, including 115,000 Jeep Cherokees with flawed steering columns. In 1997 nearly 2000 engine-plant workers went on strike for a month, Chrysler's longest work-stoppage in 30 years.

Regardless of its success or failure in any particular year, Chrysler developed a reputation of investing heavily in the people and communities that surround its corporate plants. When Chrysler returned to South Africa in 1996, it donated __BODY__ million to President Nelson Mandela's Children's Fund. From 1995 to 1997 Chrysler donated $13 million to Detroit area arts and cultural organizations. In 1998 it gave another __BODY__ million to a pre-college engineering program for minority students in Michigan.

At the same time, Chrysler's merger with Daimler-Benz caused some thorny public-relations problems. A substantial number of Jewish shareholders opposed the deal because of the German company's links with Nazis during World War II (1939–1945). After DaimlerChrysler incorporated in Stuttgart, Standard & Poor's 500 announced that it would not allow the company into its elite group of businesses traded on the New York Stock Exchange, since it was no longer technically an American business. By March, 1999, German shareholders owned 60 percent of the company, with the ratio of American-owned shares dropping from 44 to 25 percent in five months.

CHRYSLER CORPORATION

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