IT was a bumper-to-bumper year in Detroit. The big increase in auto sales this fall contributed more than anything else to keeping the U.S. prosperous; and one of the big contributors to the increase in auto sales was the long-ailing Chrysler Corp., which in the space of one year did a surprising turnaround. Thanks to the energetic leadership of its new president, Lynn Alfred Townsend, 43, Chrysler in 1962 was the comeback story of U.S. business.
Congenital Flaw. Chrysler still has a long way to come back, but at least it seems headed in the right direction. It took an aggressive and impatient young man to do it. Some of Chrysler's difficulties, as well as its success, stem back to the character of its founder, the late Walter P. Chrysler. A cocky, self-educated industrial genius, Walter Chrysler so constructed the corporation that he constituted the only real link between its major divisions. This was all right so long as he was around. His successor was K. T. Keller, like Chrysler an ex-master mechanic, who cared about well-built cars but lacked a gift for administration. Gradually Chrysler's prestigious engineering division seized dominance over the financial and manufacturing divisions and committed the company to years of solid but stodgy cars. Nobody knew that the cars cost too much to make because Chrysler had no cost control.
Difficulties came to a head under Lester Lum ("Tex'') Colbert, 57, former Chrysler attorney who took over command of the company in 1950. Colbert began a feverish drive to modernize Chrysler's plants, and was responsible for the rakish "Forward Look" that made Chrysler's 1957 cars a runaway success. But in the process, he let the company's quality standards slip scandalously. By 1959, Chrysler sales had slipped from a solid 25% of the U.S. auto market under Walter P. down to 11.3%. From a $120 million profit in 1957, the company staggered into a $34 million loss in 1958.
After a conflict-of-interest scandal involving William C. Newberg, Colbert's personal choice to run Chrysler's day-today operations, there was an outburst of stockholder suits and public recriminations. Chrysler Director George Love, 62, the big, amiable chairman of Pittsburgh's Consolidation Coal Co., stepped in to fill the leadership breach. With the support of a committee of outside directors, he ousted Colbert. But the task of finding a new president and operating boss for Chrysler proved difficult. Unable to persuade anyone outside the company to risk the job, the directors in July 1961 turned to Administrative Vice President Lynn Townsend, who had, in fact, been running Chrysler for seven months. To keep a close watch over operations, Love himself became chairman and demonstrated his faith in Chrysler's future by making Consolidation Coal the largest Chrysler stockholder.