Chrysler Corp. Chairman Lee A. Iacocca, who rescued the No. 3 U.S. auto maker from the brink of bankruptcy, is launching an all-out battle to turn the public and government against attempts by the industry's largest company, General Motors Corp., to change federal trade, energy and antitrust policies.
If GM's efforts are successful, Chrysler officials said, a custom-designed domestic market could be created for GM products, wiping out most small-car production based in the United States. That development would ensure Japan's dominance of the world small-car market, according to Iacocca's aides.
"What we want is a national debate on the corporate strategy that GM is carrying forward," said Robert A. Perkins, vice president in charge of Chrysler's office here.
"We want to know if the country will allow one company to shape industrial policy by moving the manufacture of small cars offshore," he said.
Perkins said Iacocca, the industry's most visible public spokesman through his appearances in Chrysler's television advertising, and his army of lobbyists are ready to fight GM in Congress, the White House, the media and the Department of Transportation and Federal Trade Commission. GM has laid the groundwork there for executing its "Japan strategy."
Chrysler's lobbying campaign will attempt to counter GM efforts to raise the current "voluntary" annual quotas on imported Japanese cars from 1.68 million to 2 million vehicles and limit an extension of the quotas to one year. Chrysler is arguing for a reduction in the 1.68 million limit and wants quotas extended for at least two years.
GM officials said Chrysler is marching into a fool's battle begun only because Chrysler is incapable of competing against GM's total product line.
"We are what Chrysler is not. We're a full-line manufacturer providing a full line of products for the American public. We're trying to give the public what it wants, which is something the narrower manufacturers can't do as well," said John Hartnett, a spokesman in GM's office here.
GM's controversial plan to continue giving the American public "what it wants" would work this way:
* By the 1985 model year, GM would import nearly 100,000 small cars from Suzuki and 200,000 annually from Isuzu for sale under GM logos. For that plan to work, Japan must abandon or increase voluntary export quotas it instituted in April, 1981, under pressure from the U.S. government. GM has been lobbying the Japanese government to raise the quota ceiling by allowing Isuzus and Suzukis to be shipped under separate quotas.
* GM and Toyota Motor Corp. would jointly produce 200,000 small cars a year in the United States for domestic sale by GM's Chevrolet Division.
GM and Toyota have agreed tentatively to make the cars at a former GM plant in Fremont, Calif., but implementation of the plan depends on approval by the FTC, which is examining the proposal for possible antitrust violations.
The import and joint-production plans would give GM nearly 500,000 subcompacts annually at a very low production cost, vastly improving its weak position in that product category, which accounts for 40 percent of the U.S. market.
Chrysler and American Motors Corp., both of which rely on U.S.-made small cars for most of their sales, could be forced to follow the same "Japan strategy" in order to remain cost-competitive with GM.
Ford Motor Co., the nation's second largest auto maker, also could find itself at a competitive disadvantage with GM in the small-car battle. Ford is trying to recoup more than $1 billion it invested to introduce its subcompact Escort and Lynx lines in 1981 and additional millions spent to upgrade those models.
GM, by comparison, has amortized tooling and other costs involved in producing its aging, subcompact Chevettes and Pontiac T1000s, now called 1000s. Most industry analysts said GM would replace those with its imported Isuzus, Suzukis and "Toyochevies."
* GM would concentrate production on mid-size and large cars that it makes and sells best. But big cars use more fuel, making it difficult for GM to comply with federal standards for average fleet mileage of new cars sold in the United States.
Under those "corporate average fuel economy" (CAFE) standards, manufacturers selling cars in the United States must have an average, new-car fleet fuel consumption of 27.5 mpg by the 1985 model year.
Chrysler and AMC meet the current standard of 26 mpg and are well within range of the 1985 figure. But GM's average is 23.5 mpg for 1983 and Ford, which also relies heavily on big cars, expects to finish the year at 23.8 mpg. Neither company expects to reach 27.5 mpg by 1985.
By increasing the number of high-mileage Japanese imports to average against its lower-mileage mid-size and large cars, GM could meet the higher 1985 standard.
But if Chrysler can block GM's efforts to change the rules, Ford and GM might have to pay millions of dollars in fines, computed at $50 per car for every mile per gallon by which the total fleet's average fails to meet the standard.
The companies have been lobbying for reduced levels. Their allies include a group of House Republicans, led by Rep. Jerry Lewis (R-Calif.), who have published a report calling for an end to the standards.
"CAFE standards make little sense in today's energy and automobile markets" in which consumers are buying bigger cars because gasoline prices are lower, Lewis said. He said fines for failing to meet the standards would be passed to consumers, and that could hurt all auto makers selling in the United States.
Chrysler's Perkins disagreed, saying, "You have to look at the total package." If the government agrees with GM on CAFE and the GM-Toyota joint venture and if Japan sets up a special export category for made-for-GM cars, GM will have singlehandedly reshaped the domestic auto market, he said.
The U.S. market would become one in which nearly all small cars, or their major components, are made elsewhere. The accompanying jobs would move overseas, and the government would have helped establish a domestic auto cartel, presided over by GM and the Japanese auto makers, Perkins said.
"This is a very deliberate strategy on GM's part, and it's got to raise some serious questions," he said.