Ford's Young One
(See Cover) The trim white car rolled restlessly through the winding roads of Bloomfield Hills, like a high-strung pony dancing to get started on its morning run.
In that auto-conscious Detroit suburb, where people can spend whole evenings talking about the virtues of a taillight, it did not go long unnoticed despite its lack of identifying insignia. Groups of children on their way to school turned to stare at it and point. The driver of a Volkswagen raised his fingers in a V-for-victory sign. As the car picked up speed and headed south ward toward Detroit, a flickering trace of satisfaction crossed its driver's impassive, hawklike face.
He carefully knocked the ash from his Ignacio Haya Gold Label cigar into the shiny new dashboard tray. At each traffic light, his dark eyes surveyed the car's interior and his fingers roamed over every piece of metal and fabric within reach. At one light, the driver of a Chevrolet Impala pulled along side and mouthed through his closed window: "Is that it?" He was left behind in the exhaust. As the white car approached a school bus and slowed again, the win dows flew up and the children in side chanted: "Mustang! Mustang! Mustang!" This week Ford's new Mustang sports car, one of the most her alded and attention-drawing cars in autodom's history, drives into showrooms all over the U.S. In it rides both a big bundle of Ford's future and the reputation of the man who daily test-drives a different Mustang between Bloomfield Hills and Dearborn. The man is Lido Anthony Iacocca, general manager of Ford's Ford Division, which accounts for roughly 80% of the company's sales.
He already has quite a reputation. At 39, after 17 years in the auto business, this tall, rugged son of Italian immigrant parents is the hottest young man in Detroit and probably the most ingenious automotive merchandising expert since General Motors' hard-selling' Harlow Curtice.
From the fertile brains of "Lee" Iacocca (rhymes with try-a-coke-ah) and his staff at Ford have sprung most of the major themes that dominate the U.S. auto industry today: the return to car racing, the intensified appeal to the youth market, the trend to the low-priced sports car. Sold by Iacocca to the top executives of Ford, often over their initial disapproval, these themes have first become Ford policy, then gone on to set the pace of the industry.
But so elephantine is the gestation period of Detroit's new models that, in Iacocca's three years as head of the Ford Division, the Mustang is the first car that he can call completely his own, from blueprint through mock-up to production line (see adjoining color pages).
Ferrari Flare. As his firstborn, Iacocca has produced far more than just another new car. With its long hood and short rear deck, its Ferrari flare and openmouthed air scoop, the Mustang resembles the European racing cars that American sports-car buffs find so appealing. Yet Iacocca has made the Mustang's design so flexible, its price so reasonable and its options so numerous that its potential appeal reaches toward two-thirds of all U.S. car buyers. Priced as low as $2,368 and able to accommodate a small family in its four seats, the Mustang seems destined to be a sort of Model A of sports cars --for the masses as well as for the buffs.
As such, it is only one of the new generation of sports cars coming out of Detroit. The new breed traces its heritage to such European products as the Austin-Healey, the Triumph and the MG, which first whetted the appetites of many Americans for the sports car --though they were out of reach for most Americans. Out of this appetite came the inspiration for such American cars as the Thunderbird and the Corvette, whose price still hovers between $4,000 and $5,000, and for the sporty extras--bucket seats, stick shifts, wire wheels--best embodied in General Motors' jazzy Corvair Monza.
With the Mustang, Ford clearly has a big lead among the new breed. But the market for an inexpensive sports car is potentially so enormous--particularly since nearly one in every five households now shops for a second car --that Ford's competitors have no intention of leaving it to Lee Iacocca. Chrysler has already introduced a Valiant with a convex rear roofline--called a fastback in Detroit--and named it the Barracuda. American Motors is making a fastback version of its Rambler Classic, will bring it out next spring. When word of the Mustang first leaked out, General Motors began to work on a fastback Corvair for introduction this month, later decided against the crash approach, and now maintains a monolithic silence. Its Chevrolet Corvette is too expensive to compete with the Mustang, and its rear-engined, lightly powered Monza might be thrown off balance by the weight of a bigger motor out back; this also applies to the experimental Monza GT. Result: G.M.'s competitor for the Mustang, Detroit believes, may be built around the front-engined Chevy II. Ready to take full advantage of his lead, Lee Iacocca at first projected 200,000 sales for the Mustang, but now is talking in the vicinity of 400,000--a feat that could increase Ford's total sales by $400 million.
Talk of 10 Million. The climate for the new sports cars could hardly be better. After two 7,000,000-plus auto years in a row, the industry in 1964 is not only moving irresistibly toward a new record, but is almost certain to break through a plateau that seemed practically unattainable only a few years ago. Even before the tax cut, Detroit was headed for at least an 8,000,000-car year. With the cut--and the continued health of the U.S. economy-- it is now debating whether it will be held to 8,200,000 sales (including 400,000 imports) or go on to 8,500,000. Auto sales in the first quarter were the highest in history, rising 7% over last year and 4% over record 1955. Automen no longer consider what is happening in the industry a boom; taking into account a steadily growing population, the growth of multicar families and the steady spread of suburbia, they feel that the industry has reached an era in which 8,000,000 sales will be a normal year. Some automen are already talking about 10 million a year.
Among the automakers, General Motors is still the undisputed leader, with more than half the market and a sales increase in the first quarter of 6%.
Whipped on by the dynamic leadership of President Lynn Townsend, Chrysler's sales are up 16.6%. Studebaker is out of the picture, and American Motors, caught short by the public's swing away from its compact cars, is off 12%. But it is Ford that is making the biggest splash of all in the area that counts most: share of the auto market. Ford's first-quarter sales are up an impressive 12%, and its market penetration, as Detroit terms it, is gaining in a rapidly expanding market after several years of decline. So far this year, it is up a percentage point--to 26.2%--at the expense of G.M. and Rambler. This gain took place long before the first Mustang hit the showrooms, and Ford is counting on its 1964 1/2 offering to accelerate the trend. If Ford sells those 400,000 Mustangs, it could raise its market penetration to 29%.
On to the Basics. Though the sports cars are all the talk now, the big news will come in October, when the standard 1965 models are introduced. These cars, which account for 75% of all sales, will have the most extensive changes in Detroit's history. Nearly a billion dollars has been spent on new styling and mechanical developments.
Cadillac will lose its tail fins after 16 years, adopt the sleek, slablike sides that have become so popular in the industry. G.M.'s Corvair will retain its rear engine but adopt more conventional styling and have a larger body. Plymouth will grow from a 116-in. to a 119-in. wheelbase and become more interchangeable with the 119-in. Dodge. In addition to fielding a sports car, American Motors will introduce a new, longer (by 10 in.) Ambassador and a restyled Classic. Mercury will have a handsome new slab-sided car completely different in appearance from the Ford. The standard Ford will come out in its own version of slab-styling, first introduced by the 1960 Lincoln Continental, will also add vertical dual headlights `a la Pontiac. For the first time in recent years, Ford's styling, which has generally lagged behind General
Motors', is expected to give Chevrolet, Buick, Oldsmobile and Pontiac a hard run for their money.
For the People Side. As with the Mustang, much of the credit for whatever gains Ford can make with its new models belongs to Lee Iacocca. "I see this as the start of a new golden age for Ford that will make the peaks of the past look like anthills," he says. Iacocca has had a Ford in his future almost literally since birth.
His father, Nicola, came to the U.S. from southern Italy when he was only twelve, soon bought his first Model T, and within eight years had parlayed it into a thriving rent-a-car business that grew to a fleet of 33 cars, mostly Fords. He returned to Italy at 31 to select his bride, found her in his home town of Benevento and honeymooned at Venice's sultry Lido Beach. Back in the U.S., they called their only son Lido out of sentiment for that spot. Iacocca's father branched into real estate around Allentown, Pa., so increased his holdings that he became a pre-Depression millionaire.
Lee Iacocca never wavered from early youth in his desire to go into the auto business--with Ford. For him, it was something like wanting to join the priesthood. "I suppose it was partly because my father had always been greatly interested in automobiles," he says, "and because I was influenced by family friends who were Ford dealers." Always a top student, he was felled by a seven-month bout with rheumatic fever as he entered high school, began to study even harder when he was forced to give up sports. To let off some of his competitive energy, he turned to the debating team, later perfected that talent with Dale Carnegie, is today an articulate public speaker.
With his eye still on Ford, he got a degree in industrial engineering from Lehigh University, won a fellowship to Princeton, where he got a master's in mechanical engineering, eventually breezed through Ford's 18-month training course in nine months. Assigned to a job as an automatic-transmission engineer, he shocked his superiors by turning it down, asked for a job in sales. "I learned at Princeton," says Iacocca, "that pure research did not fascinate me. I wanted to get into the people side of the business."
The Black Notebook. When no one at Ford headquarters in Dearborn would take him on as a salesman, he quit the company, went out on his own and got a job in the sales office of the Ford assembly plant in Chester, Pa. Impressed by the way the aggressive Iacocca whipped lagging Ford dealerships to higher sales, his boss (Charles Beacham, now Ford's marketing vice president) took him along when he progressed to sales manager of a region stretching from Pennsylvania to Florida.
Iacocca was assistant district manager in Philadelphia by 1956, when car sales began to slump after the 1955 boom. To stimulate business, he dressed up some cars with extra chrome and advertised "$56 a month for the '56 Ford." Sales jumped in Philadelphia, and a fellow by the name of Robert McNamara, then Ford Division general manager, picked up the "lacocca Plan" for the entire U.S. The plan got credit for selling 72,000 extra 1956 Fords, and before the year was out McNamara had brought lacocca into Detroit to become manager of Ford truck marketing.
Predictably, truck sales climbed to records under Iacocca's accelerator, and he soon moved on to become the car marketing manager for the Ford Division. One promotion followed another--until the telephone rang one November morning in 1960. It was Henry Ford II, and he wanted Iacocca to drop over. Less than an hour later,Iacocca drove back to division headquarters as its new boss.
Iacocca quickly saw that, at 36, he would have to expect some resentment from older men who had been bypassed, and he reacted typically. Says he: "I told a few people, 'Get with it, you're being observed. Guys who don't get with it don't play on the club after a while.' It worked, because all of a sudden a guy is face to face with the reality of his mortgage payments." He quickly brought the sprawling division under his fingertip control by setting up a "black notebook" system in which he had each department head list his objectives for the next quarter, then graded each man on his performance. Says one associate: "He really knows how to whipsaw his men with that notebook."
Off to the Races. It did not take long for Iacocca and the bright young men he gathered about him to realize that their company had some troubles. Right up until the Mustang, Iacocca and his crew had to work basically with models originally laid out under Robert McNamara, who stayed only five weeks after being promoted to the presidency before moving on to the Pentagon. A financial genius, McNamara left Ford a strong company, with the kind of financial controls and organization that it so badly needed. He also was responsible for the highly successful four-passenger Thunderbird and the Falcon.
What McNamara failed to realize was that the consumer is an emotional being who buys his car more for its vague appeal than for any logical reason. In the late '50s the U.S. underwent a strong reaction to the bulges, fins and chrome of most postwar cars, turned instead to a cleaner, simpler and less flamboyant approach to styling. This trend gave birth to the unadorned compact or economy car--low-cost transportation in a plain wrapper. McNamara saw this, and ordered up cars that were neat, in good taste and somehow seemed, like McNamara himself, to have rimless glasses and hair parted in the middle. But the trend to plainness did not last long, and people soon began moving into bigger, more luxurious cars with more power and more decoration.
Ford kept on making its Plain Macs long after the public tired of them--and soon began to pay dearly. With the introduction of the 1962 models, just about at the time that the current auto boom was beginning, Ford began to lose ground steadily in the marketplace. General Motors, which early saw the way the trend was going, had no trouble biting huge chunks out of Ford's sales with its flashy Corvair Monza, its sleek, fast Pontiacs and its wide choice of convertibles and hardtops.
Iacocca realized that he could do little to change the 1962 models, but he got to work on other matters. He got a restyled roof line put on the standard Fords and Falcons by mid-1963. At the same time he installed V-8 engines in the Falcon to meet the growing demand for better performance in the so-called "economy class" car. The moves were credited with being a major factor in reversing Ford's sales drop.
Most of all, Iacocca got busy improving the public image of Ford cars. Deciding that every automaker was producing race-ready autos, and that the three-year-old industry agreement not to race was hypocritical, Iacocca got the green light to put Ford full-speed onto the tracks. "More people watch automobile racing than baseball and football put together," says Iacocca. "When they watch and we win, it can't help but improve our reputation."
Souped-up Fords won ten consecutive major stock car races before an aroused Chrysler fielded Plymouths with hot new engines to beat Ford at last month's Daytona 500; Ford quickly modified its entries, two weeks ago regained supremacy at the Atlanta 500, and last month won the grand touring class at Sebring with a Ford-powered Cobra sports car. A Lotus racing car with a Ford engine nearly won the Indianapolis 500 last year in a demonstration of endurance and speed so impressive that this Memorial Day eight Indy racers will use Ford power. At Le Mans in June a 200-m.p.h. Ford GT, introduced in New York two weeks ago, will become the first American car to challenge the reign of the Ferraris in the grand touring class.
Rebuffing the Buffs. Ford's participation in racing not only has generated a new esprit de corps within the division, but has caused great stirrings among the potential customers who most fascinate Iacocca: the young Iacocca is one of the leading authorities on the youth market, was the first man in the auto industry to recognize its importance and capitalize on it. Ford sponsors "hootenanny" folk sings on college campuses (although Henry Ford doesn't think much of "that awful stuff"), advertises widely in hot-rod and teenage magazines, has a panel of airline hostesses who advise on what young women like to see in cars--besides young men.
Detroit once boasted that it geared its styling to the taste dictates of women, but since Iacocca came along, it is the young people who most influence styling--at least at Ford. Iacocca points out that by 1970, the 15-to-24 age group in the U.S. will increase by 40%, calls it "the buyingest age group in history." Moreover, he feels that by designing Fords for youth appeal, he is actually making the broadest mass appeal possible, since the cult of youth in the U.S. is so strong that men and women of all ages will associate with whatever has a youthful connotation.
Thus the most important selling job that Lee Iacocca did at Ford was to get the Mustang going. The project started quietly in January 1961 when Don Frey, a bright young engineer whom Iacocca had made his product planning manager, asked the advance styling department to draw up designs for a little sports car. When it produced a trim clay model of a little two-seater that looked like a rocket, Iacocca invited Grand Prix Driver Dan Gurney and other racing buffs in to give their opinions. Recalls Iacocca: "All the buffs said, 'What a car! It'll be the greatest car ever built.' But when I looked at the guys saying it--the offbeat crowd, the real buffs--I said, 'That's for sure not the car we want to build, because it can't be a volume car. It's too far out.' " Iacocca decided that he did not want a car to compete against foreign sports cars, which sold only about 80,000 a year in the U.S., but against Chevrolet's successful Monza, which was selling about 250,000 a year. After a competition between the Ford, the Lincoln-Mercury, and the corporate styling studios, Iacocca looked at all three together and picked out a Ford Division model that somehow seemed to pop out at him: "It was the only one in the courtyard that seemed to be moving." He won complete agreement on the spot from Henry Ford, who had been skeptical about the new car in its very early stages but came around after several sessions of eloquent argument by Iacocca. Ford appropriated $50 million to tool up the Mustang.
"In the Mustang," Lee Iacocca said at this week's premiere on the World's Fair grounds in New York, "Ford has actually created three cars in one." Aside from the basic $2,368 model (which is not so basic; it comes with bucket seats, padded dash, and leatherlike vinyl upholstery), anyone who wants to turn his Mustang into a little Thunderbird can load it with just about every luxury option Detroit has, from automatic transmission to a big V-8 to air conditioning. Finally, the sports-car purist who wants performance and more horsepower can spend up to $3,500 by adding a European-style stiff suspension, disk brakes and a fourspeed manual transmission. Next year Ford will also add a fastback model to the line.
At the Shrine. Having been burned so badly with the ill-fated Edsel, whose styling it unaccountably failed to market research before its introduction, Ford this time conducted 14 studies on the Mustang, ranging from interviews with Monza owners to name and pricing studies. Its staff of 20, the industry's largest, found, among other things, that the car's outside appearance ranks first with the under-25 crowd and that four seaters are preferred 16-to-l among sports-car owners.
Ever since the Edsel, in fact, all Detroit is more conscious than ever of market research. The industry now spends about $10 million a year on the task, four times what it spent ten years ago, and interviews about 200,000 people a year. Some researchers now dress themselves as laborers and mix with workers in taverns near a competitor's plant. One-way mirrors and electronic bugs in showrooms and at auto shows have become standard tools. At last week's International Auto Show in Manhattan, Chevrolet conducted a sneak test of the styling that will mark its 1965 Corvair; it displayed a Chevy II Nova Special that it presented as a "dream car," but whose lower half is almost identical in design to the proposed Corvair.
But auto executives still rely principally on their own intuition, using market research only to back it up--as Iacocca finally did in the case of the Mustang. "There are a lot of markets out there," says Iacocca, sweeping his hand at the panorama of flat Michigan countryside that he can see through the glass wall of his fifth-floor office. "My most important role here is to tell my top management how I view these markets, and how we want to respond to them. When I am finally convinced that there is a market for a new kind of car, I go over to the twelfth floor and say: 'The market's there.' "
One Boss. The twelfth floor is where Henry Ford, Ford President Arjay Miller and Executive Vice President Charles Patterson have their offices in a modernistic glass headquarters about a mile from Iacocca's building. Generally, Henry Ford watches over long-range planning and personnel development, Miller is in charge of finances, marketing and central staff, and Patterson of manufacturing. Unlike many of the sons of the pioneers of the auto industry, Ford maintains a constant interest in the business, letting his appointees run the company on a day-to-day basis but interceding whenever he deems it necessary. "Make no mistake," says Arjay Miller, a onetime Whiz Kid, "there's one boss, and that's Henry Ford."
"Henry Ford wants you to be blunt," says Iacocca, "and I happen to be blunt. We don't try to Alphonse and Gaston each, other, and we don't try to beat around the bush." Iacocca marshals his arguments so well and pushes his ideas so hard that Ford once stopped him just as he was winding up to make a speech and said: "All right, Lee, now let's get the facts, or you'll sell us without our knowing them."
When it came to selecting a name for the sports car, Iacocca discarded Cougar and Turino, before settling on Mustang. A holdout until the end was Henry Ford, who wanted to call it the Thunderbird II, to borrow from the Thunderbird's prestige. Ford is not always so tractable, of course, sometimes settles arguments in his favor by simply saying: "Don't forget, my name is on the building." One such case was his insistence, after sitting in a mockup of the Mustang, that the rear-seat leg room be increased an inch. Iacocca and his men complained loudly that another inch in length might destroy the car's proportions, but Ford got his way.
The Cold Look. In his own Ford Division, Iacocca makes a studied effort to be boss all the time. A tough-talking and demanding executive, he is aloof with his own underlings, usually remains secluded in his office with his door firmly shut, his ever-present cigar clamped tightly in his mouth. He draws a strict line between office hours and after-hours mingling. "He can look you straight in the eye with that cold look the morning after we've spent an evening together," says an associate, "and you'd never know that we were personal friends."
Iacocca also frequently needles his men with such digs as "How's that scheme going? Remember, you told me it was great." He has been known to plant secret microphones near Ford dealer salesmen to see how aggressively they close a deal; yet dealers admire him because they have learned that doing things the Iacocca way almost inevitably means higher sales. With any subordinate that he considers inadequate, Iacocca can be ruthless; yet with outsiders and customers, he can be as warm and friendly as Italian sunshine.
Iacocca tries to leave work each day by 6:30 p.m. for the drive to his 15room, colonial-style home in Bloomfield Hills, which is headquarters for his wife Mary, whom he met when she was a receptionist at Ford's Chester plant, his daughter Kathy, 4, and a black Schnauzer named Mr. BoBo. A hypochondriac who gulps pills as if they were peanuts, Iacocca also has an appetite for his own cooking, frequently goes to an Italian food store in Detroit to pick up the makings of a feast of pasta, sauce and salami for his family or guests. He keeps the weekends free of business to spend with his family, but by Sunday evening, after Mass at St. Hugo's Church and a restful afternoon, his mind begins churning once more with the problems of the vast Ford Division. Then he retires to his study to do his homework for the next week.
Chrome Rococo. In each grueling week things move faster and change more often than ever before in the auto industry. Only a few years ago, it took three years to develop a new car from the first clay mockup to the production line; now it can be done with a crash program in 17 months, a fact that already gives the auto companies vastly greater latitude in styling changes. Development time promises to get even shorter; Detroit already is using computers that can solve complex engineering problems quickly, test the durability of new cars mathematically, and even help to machine the new dies that must be made for each new model.
This is basically important, for the U.S. car buyer likes frequent model changes. Styles will certainly change again, perhaps the next time toward more streamlining and softer styling, with the roof lines flowing more smoothly into the body. But styling, for all its glamour, is only half of Detroit's job. "Styling sells cars," says Lee Iacocca, "but it is quality that keeps them sold." While Detroit's autos cost roughly the same as they did five years ago, their performance has been vastly increased by dozens of improvements, Iacocca considers the Mustang to be the most fault-free car ever introduced by Ford.
Wrong-Way Runaway. Rarely, in fact, have Ford and its 167,000 employees been so excited about a new model--and the effect it will have on competition. Into Iacocca's office one day recently strolled Don Frey, triumphantly carrying a grainy photographic print of a competitor's 1965 model, obviously made with a telescopic lens under conditions far from ideal. "You've got to see this, Lee," he said, Iacocca took the picture, studied it, then broke out in a broad smile. "So that's what it's going to look like," he said. "It looks as if they are going to go sedanish instead of sporty. That's good news."
Amid this imperturbable optimism, amid the computers, the market studies and all the intuitive executives, it is almost a relief to discover that Detroit has not yet reached perfection in every detail. No one at Ford noticed--until it was too late--that the galloping horse emblazoned on the front grille of the Mustang is running the wrong way. Instead of going in the traditional counterclockwise direction of a U.S. racing horse, Ford's Mustang has bolted off in the wrong direction, like a runaway. That does not seem to bother Iacocca and his men, who know a good deal more about horsepower than about horseflesh. Even in the stable atmosphere of the Ford Division, they know that runaways are hard to catch.
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