Citing the need to add more 'fire power' to its top management, Chrysler Corp. yesterday announced that it hired Lee lacocca as its predident and chief operating officer.
The lacocca announcement came as Chrysler reported a record $248.8 million loss for the first mine months of the year.
Chrysler Chairman John Riccardo said he had personally made the over tures to Iacocca, who was fired last July as president of the Ford Motor Co. in a dispute with Chairman Henry Ford II. During his years at Ford, Iacocca was credited with rejuvenating that company.
"We just needed more fire power," Riccardo said yesterday in announcing the appointment. He said he expected the 54-year-old Iacocca would become chief executive officer in about a year.
Riccardo said Chrysler's former president, Engene Cafiero, will become vice chairman of the company in charge of planning. He will have no direct operating responsibilites, Riccardo said.
Riccardo said that a primary reason for the move was that "obviously nobody is happy with (Chrysler's profit) results. Obviously we have to do better."
"Johnny called me up a couple of weeks ago and said, 'Why don't you come help me'" Iacocca said.
Industry analysts claim the hiring of Iacocca was triggered by the realization that the company's third quarter losses were even worse than expected. Chrysler reported a $158.5 million loss for the three-month period ending in September. Since the start of the year, Chrysler losses have amounted to $4.15 a share.
As recently as the third quarter of last year, Chrysler was still reporting a slim $33.7 million profit.
The current quarterly loss picture reflects sales of $3.1 billion, a drop from the $3.4 billion sales during the third quarter last year. The results do not include figures from Chrysler's European subsidiaries, which Chrysler is selling to Peageot in an attempt to raise cash.
The third quarter is traditionally the worst quarter for the auto industry because of the need to shut down production for model changeovers.
Although Iacocca has been hired to help turn the company's fortunes around he indicated yesterday that his arrival may not have an immediate impact.
Iacocca was asked at a news conference if his knowledge of Ford's coming product plans might be advantageous to Chrysler. He said he doubted it.
Iacocca said he's seen Chrysler's '79 and '80 model products but couldn't do much about them. "If I don't move in the next week I can't do much about the 1981 products . . . I've only been on the job six hours, boys," he joked.
Iacocca's negotiated settlement with Ford yielded him a lump sum of $400,000 plus his normal $30,000 a month salary through October 1979. Ford refused to discuss his retirement benefits, but they are thought to be in the range of $200,000 a year.
Both Iacocca and Riccardo refused several times to talk about the financial agreement between Iacocca and Chrysler.
Chrysler's share of the new car market has slipped steadily from 16.6 percent in calendar 1974 to 13.6 percent for the first nine months of 1978. Ford's share of the new car market including imports has hung between 22.6 percent in calendar 1975 and 23.7 percent for the first nine months of calendar 1978.
Riccardo said yesterday he had received a check from Peugeot for most of Chrysler's European operations "this morning" and indicated be preferred that to the $61,000-a-day interest the American auto maker had been receiving. He said the company is still considering selling or merging other operations outside of the United States.
Asked somewhat sardomically whether Henry Ford II had called to congratulate him about the job, Iacocca said no one had done so yet, and, "in fact, nobody at Ford has talked to me in the last 90 days."
Questioned how he plans to "turn around" Chrysler's massive losses, Iacocca likened Chrysler's problem to that of the "U.S. government." He said if you just stop spending more than you're taking in, you can turn around any operation.
The change at Chrysler comes as the entire auto industry is reducting the size of all its cars to meet federal fuel standards that require average fleet fuel economy of 27.5 miles per gallon in 1985.