Lee A. Iacocca, who is given much of the credit for the comeback of Chrysler Corp., spent 32 years with Ford Motor Co., rising from management trainee to president and chief operating officer until he was fired by Henry Ford II on July 13, 1978.

"Let's just say I don't like you," Ford reportedly told Iacocca at the dismissmal.

"It was unceremonious," Iacocca later recalled.

The following year he took over at Chrysler, a company that was on the brink of failure.

With the help of federal loan guarantees, Chrysler has resumed its position as a major domestic automaker. On July 13 of this year, Iacocca announced that the company was paying off the last note, $800 million, on its federally backed loan--seven years ahead of schedule.

Last week, in an interview here with Washington Post staff writer Warren Brown, Iacocca said that the U.S. industry can regain its position if the government moves aggressively to restrict Japanese imports and to close the dollar-yen gap. He also said that the automobile business is becoming global, a development which will force Chrysler to find a joint venture partner by 1990.

QUESTION: If you had complete authority to revamp the domestic auto industry, to make it No. 1 again, how would you go about doing it?

ANSWER: Well, we still are number one in technology. We always have been.

The Japanese are great people. They're great imitators. They're not innovators, essentially. But they have dedicated themselves over a period of time to really concentrating on the quality of the product. And there was a period in the United States when I guess everybody got pretty lax, because the relative quality of the product today against our own doing of it five years ago is up 70-80 percent.

We have to continue to work on that. And I think we're just about there. On power trains, for example, and on rust warranties, Japan can't match Chrysler's rust warranties because their cars rust quicker than our cars.

On power trains, there's no contest. We just are better than they are because they do not have a big country and their cars were never designed for 100,000 miles durability.

We've got a lot on our side. But what we've got to do every day--and that's production--is get the seams straight in our cars. No leaks, no rattles. We have to produce as many cars with zero defects as we can bring off. We're working on that.

Once we're there, then we're back to No. 1 position, except for one miserable problem: we are not number one in costs and never will be.

We always talk about labor rates, but we can't turn back the clock and assume that we can pay Americans--destroy the middle class, let's say--and suddenly pay them $10 an hour instead of $20. The world doesn't operate that way. So we can't do that.

But what we can do--government-to-government--is decide what's in it for both of us. And we can address this terrible, terrible advantage they've (Japanese) had on the yen-dollar relationship over such a long period of time and the tax systems that, together, give them a $2,000 advantage per car.

Until those problems are licked, we can never be No. 1 in the world. Never. And never's a long time.

Q: What about being No. 1 in terms of the numbers of cars sold worldwide?

A: Our exports of cars will probably never get back to where they were at the end of the war, World War II. It's dwindled to almost nothing. We do not export built-up cars to many nations in the world.

You see, Ford and General Motors and Chrysler over the years . . . went over to those markets and invested money. They used German management and German workers in order to participate in a German market, for example. And that's a matter of history.

But the Japanese don't do that. They want Japanese workers building cars and shipping them on their boats. They want to rape the market.

There's a basic difference . . . The Americans always sold cars abroad by going into those markets. But the Japanese don't want to do that. They have to be brought kicking and screaming in order to get a little bit of domestic content in their products.

To answer your question directly, we can never be No. 1 in world exports. But we should get back to getting more of our own market here. We shouldn't willingly concede--although the yen-dollar difference and the tax differentials almost make it a foregone conclusion--we shouldn't yield 30 percent of this huge market to little old Japan without a helluva fight.

Q: You want a 15 percent import restriction on Japanese cars?

A: Yeah. I want to use the Common Market approach, the European market approach . . . We've decided that about 15 percent, or a million and a half cars a year--whichever is greater--is their place in the sun (in the U.S. market).

We'll raise that if the total imbalance, about $20 billion, in U.S.-Japanese trade is corrected. That imbalance should be brought down to about $5 billion. And the way for Japan to get the total imbalance down . . . is by taking down its barriers to our potato chips, citrus fruits, beef. And that helps everybody (in the U.S.), because now our exports will go into there more freely.

Japan's got to open up its markets, not just to auto exports, but to all exports, because a trade imbalance of $20 billion a year is going to kill us all off.

Q. But how will import quotas help American consumers?

A: Well, the first way it helps him is that every time we build a car here--and it's bought by an American consumer--his tax bill drops $1,750 because of taxes paid by the American auto industry, its workers and suppliers . Every time you build a car in Japan, rather than here, somebody has to make up the difference in reduced tax revenues . And the difference on a car is $1,750 in taxes at the federal, state and local level.

Q: Are we moving towards a global auto industry, as the proposed joint venture between General Motors and Toyota would seem to indicate?

A: Yes. We have been for years.

After the first OPEC oil embargo, the cars became closer together in terms of engineering and styling. They all had to be efficient and mostly front-wheel drive, and they got to be about two basic sizes worldwide.

Once that happened, you had essentially the same cars for all the world markets. You also had raging inflation, and this is a high, fixed-investment business. So, the handwriting was on the wall. Those two things alone said: 'Why are we building the same car . . . and having double the fixed costs. Why don't we get together and get married and start to do some of this?' That started it. That's 10 years ago.

It's just absolutely economically essential to have companies band together on joint ventures.

Q: So, what's your quarrel with GM and Toyota?

A: I'm unalterably opposed to the GM and Toyota venture for one reason: It's too damned big.

If it were GM-Suzuki or Toyota-Chrysler, I could stomach it. But GM and Toyota are in a class by themselves. You could take our whole sales and combine them with another company, and they would fit onto GM and Toyota's thumb.

Q: But isn't that trying to have it both ways, since Chrysler's interested in joint ventures?

A: You know, I can't understand how the press has missed this so completely. The quarrel with General Motors is that it is one of the biggest single companies in the world. But here it is announcing to the world that it is getting out of the small-car business and small-car technology and leaving it to the Japanese . How will that benefit the consumer in the next 20 years?

When GM decides to get out of the small-car business, in effect giving it to Japan, I'm not worried about them just closing their plant in Delaware where they make the Chevette. I'm worried about them laying off thousands of others in the small-car business. The small-car business will be for the poor people of the world in the future. How does that benefit you?

Q: What's GM's motive? A: They own 88 percent of the car market above the small-car market, and that's where all the money is, and that's where they can cater to the affluent American. The small cars, they can have offshore people build those and they can bank them and make their money in the banking system, which is GMAC General Motors Acceptance Corp.--the GM subsidiary that finances auto sales , and that's where they make all their money.

Q: Is GM basically unbeatable?

A: Well, yeah . . . The GM strength is that it's a big financial holding company . . . It owns a hundred other companies, suppliers, and it's tied them together with a holding company approach and it's tough. They've done well. They've lasted.

When the Chevvies weren't selling the Cadillacs were selling. And now the Cadillacs are selling and the Chevies aren't selling right now during this oil glut. So they have more flexibility than us . . . They'll be at least 40 percent of the domestic market for a long time to come.

Q. Can Chrysler exist as a separate entity in a global auto industry?

A: I think we'll have some joint ventures. We had said a few years ago that, through 1985, we could go it alone. But now that we're a little stronger, I would say, loosely, that we could go it alone through 1990.

I don't think that in the high investment areas, say the development of new turbocharged powerplants (engines), that we could go it alone.

Take our new T-115 minivan. That was a $700 million investment. For a company our size to be sinking that much money into one, new revolutionary vehicle is a gamble, a big gamble. I would feel better if we had somebody, a partner, to pay $350 million of it.

Q: Who are some prospective joint-venture partners?

A: I can't identify them for you today. We've been looking for some joint ventures in the power train area. We've been looking for a long time; but that doesn't mean merger, per se. That means that I would love to have a partner with strong German technology, and a strong Japanese partner with a good production cost base, combined with American marketing. That would be a beautiful marriage.

Q: You were fired from Ford in 1978. Do you feel any vindication because of your success at Chrysler?

A: No. It's been such a tough five years at Chrysler, I almost forgot I ever worked at Ford.

I didn't have much time to brood about the firing, or be vindictive or get mad. I didn't like getting fired. It hurt my family more than it hurt me, the way it was done. But that's history, now.

Q: You've beaten up on the Reagan administration a lot. But is it time to give them any credit for bringing down inflation and interest rates?

A: I did give them credit. I can't assign the exact percentage of credit. But if I raised hell with them when the rates were 20 percent, I should compliment them when they're cut in half. I don't want to castigate people for doing the wrong thing all the time. When they see the light and start to do better, you should compliment them.

Q: But?

A: But they should have done it two years ago.

Q: You're an Italian and you're from Allentown, Pa., and you talk like a Democrat. Are you a Democrat?

A: No. And I'm Italian-American. I'm pretty independent. When I was growing up, when we were rich, my father always said we were Republicans. In 1930, he lost everything and switched to the Democrats. That's when we were poor. When I got rich again, I turned back Republican. I don't know why. But, right now, I represent a company where 50 percent of our customers are Republicans and 50 percent are Democrats. So, I'm a little of each.

Q: What was the most annoying thing about being under the Chrysler Loan Guarantee Board?

A: Here I was, a free enterpriser, coming hat in hand and asking for government involvement when I was against government involvement and regulation and so forth.

I thought, you know, this is like Mount Everest. I had to climb it because it's there. Somebody's got to do the damn thing. I couldn't just sit around and be ideological.

But, then, after we got it approval for government-backed loans I guess the most gnawing thing was this feeling that we had leprosy--even as we were succeeding, even to this day. There was a feeling that there was something inherently wrong with our success.

The loan guarantee board generally has been not only aloof, but nonexistent. It was like: 'Don't call me, I'll call you.' It was just a general thing. It wasn't bad. You like to paint the picture that every day they stopped you from doing things. But it wasn't quite the full-court press.

It was fairly loose in terms of monitoring . But it was the attitude that, "This thing had better not work. Because if it does, we got a problem in this country."

Q: You created an 'office of the chairman' several weeks ago, giving your lieutenants some of your old duties and authority. Are you stepping down?

A: Well, I would hope we did a good thing. You don't do an office of the chairman . . . when you decide that you want to get ready for some major upheaval, or for your retirement. Of the top 25 companies, 18 of them have this kind of organization.

Life has gotten big and complex. I felt this was the right time to do it. I've had experience with it before. It works well when you have the right kind of talent and the right expertise. We have good people and they will help me run the company.

If they do well, they'll get experience. If they make too many mistakes, I'll whack them on the ass.

Q. Is there a life after Chrysler for Iacocca?

A: Well, I'll be 59 in October. And I would imagine that, in another year or two, I will continue with the company. My present plans are to stay until I'm 65. I have no definite plans to leave early.

A couple of years ago, I thought I'd certainly be gone by the time I was 60, because it was so tough. But that's when we only had $1 million in the bank account. Now, we got $1.5 billion and it's more fun.