The oil crisis of the 1970s resulted in a high demand for fuel-efficient cars. American customers started preferring small, fuel-efficient Japanese cars as compared to the U.S.-made bigger cars. Moreover, as the performance of the Japanese cars was superior to the cars made in the United States and their prices were competitive compared to the American cars, there was an increase in their sales.
In the 1970s, Chrysler’s sales started declining. In 1978 the company hired Iacocca as the chief Operating Officer (COO) of Chrysler corporation. In September 1979, Iacocca was promoted to chairman and CEO. Soon after, he carried out a revamping exercise in the company and set up a new management team.