By Al Gordon
While denying that Chrysler Corp. had broken any laws, Chrysler Chairman Lee Iacocca admitted yesterday the automaker had been “dumb” and “stupid” in tampering with the odometers of vehicles later sold to consumers as new cars and said the company would make amends.
The 40 cars that were sold despite suffering $91 to $950 worth of damage while driven by Chrysler executives will be replaced, “no questions asked,” Iacocca said, and additional warranty protection will be extended to the 60,000 vehicles whose odometers had been disconnected or replaced during testing. “This is not a product recall,” Iacocca said, “the only thing we are recalling here is our integrity.”
In a 16-count indictment returned last week, a federal grand jury in St. Louis charged Chrysler Motors, the company's car-building subsidiary, and two of its senior executives with conspiracy to commit mail fraud, wire fraud and odometer tampering between July 1985 and the end of 1986.
The government charged that the vehicles' odometers were disconnected or replaced and that consumers were never told that the test cars had been driven by company executives for as many as 400 miles and - in a few instances - had been in accidents.
At a press conference in Detroit, Iacocca, who denied any knowledge of the tampering, said, “We didn't break any law . . . naively or not, we considered . . . [the drives] part of the manufacturing process.”
Although not denying that some cars might have been used by executives for personal trips, Iacocca said that by and large the vehicles had been used for quality assurance testing, in an accepted industry practice dating back to 1949. He called the $120-million fine the company faces if convicted “outrageous” and complained that in some press reports the matter had been “blown out of proportion.”
But the charges had caused some consumers to lose confidence in Chrysler, Iacocca said. To have sold test-driven cars “without telling people” was “just dumb,” he said, and to have sold the damaged vehicles went “beyond dumb and all the way to stupid.”
The company also had identified 32 other test cars that had been damaged, but these were either junked or sold as used, he said.
U.S. Attorney Thomas Dittmeier in St. Louis, whose office is prosecuting the case, said, “It sounds like he is following the advice of one of the PR firms” retained by Chrysler. Dittmeier said he would have no comment on the case.
Lewis Goldfarb, assistant general counsel of Chrysler Motors, said no settlement talks are under way, “but we're always open to resolving things without litigation.”
For the cars with disconnected or replaced odometers, Chrysler will extend the warranty on the power train from five years, 50,000 miles, to seven years and 70,000 miles. Also, the coverage will be broadened to include other major components such as brakes, steering, electrical systems and air conditioning, and owners will be offered free inspections.
The company's records for the test drive program go back only two years in most cases, or three years in a few instances, Iacocca said, and those would be the ones covered by the offer. Iacocca said he didn't know how much the offer would cost. “Money is no object” in this situation, he said, but he added, “We are not going to throw it away out of windows.”
Local Chrysler dealers said an extended warranty similar to what the company is offering typically retails for $600 to $700. Hal Marks, general manager of Airport Motors in Jackson Heights, Queens, said, “I think the offer is tremendous.” He said customer concern about the issue had been minimal.
Copyright 1987, Newsday Inc.