Over 80 years, turbulence Chrysler's one constant

DETROIT (Reuters) - Chrysler, once an icon of American automotive might that has moved from market dominance to federal bailout to foreign control over the past eight decades, faces a defining fork in the road.

Now, with Chrysler facing a potential break-up as part of a deal with General Motors Corp GM.N or another automaker, its fans fear an end for a brand once synonymous with American craftsmanship.

Sources say Chrysler is talking to GM and French automaker Renault SA (RENA.PA) on a series of potential deals that could mean the break-up of the No. 3 U.S. automaker. N16426497

"If Chrysler disappears, this would mark the passing of one of the great old names in automotive history," said automotive historian Bill Vance. "It would be a tragedy."

Walter P. Chrysler, a onetime GM vice president, formed the corporation in 1925, but its origins date to the early 20th century with the consolidation of other automakers.

To some historians, the possibility that the monolith Chrysler cobbled together may be swallowed up by his former employer is an almost amusing twist of fate.

"Chrysler itself is the product of other people's inability to survive," said automotive historian Michael Bromley. "It is ironic that they find themselves in a similar position."

Chrysler quickly became a major power on the U.S. automotive scene, purchasing car and truck maker Dodge Brothers in 1928. That deal made Chrysler a major U.S. power.

It was after the Dodge acquisition that the term "The Big Three," was first coined in an editorial in The Automotive Daily News because GM, Ford Motor Co (F.N) and Chrysler controlled 75 percent of U.S. auto sales between them.

In 1928 Walter Chrysler also laid the cornerstone of the Chrysler Building in New York, briefly the world's tallest building and an enduring member of the city's skyline.

Chrysler survived the Great Depression by making well-made but low-cost vehicles, with brand names like Plymouth, DeSoto and Dodge that later became household names and symbols of the primacy of American automotive engineering.

"Chrysler took that company, put it on its feet and kept it there," Vance said. "That brand meant a great deal to many people throughout the 20th century."

Like the other automakers, Chrysler turned to military production during the Second World War, further cementing its status among the American public.

RISE AND FALL

Chrysler's trajectory was mostly upward until the oil crisis of the 1970s shook the U.S. automotive industry. Despite being the first of the Big Three to launch a cash rebate program in 1975 with the slogan "buy a car--get a check" to boost sales, Chrysler ended up in trouble.

Chrysler's turnaround made Chairman Lee Iacocca one of the first celebrity executives in the United States, his fame such that he apparently considered running for president in 1988.

The carmaker benefited from $1.5 billion in federal loan guarantees made available in 1980 but paid back the money three years later -- seven years ahead of schedule.

Daimler AG (DAIGn.DE) bought Chrysler in 1998, but the companies failed to gel and after losing billions, Daimler sold a controlling interest in Chrysler to private equity group Cerberus Capital Management CBS.UL in 2007.

Bold pledges from Cerberus in August 2007 that it would restore Chrysler to its former glory have run square into a slowing economy and the worst U.S. auto sales in 15 years.

Bromley said the possible break-up of Chrysler shows the deep challenges the U.S. auto industry faces with a new generation of consumers.

"What made the Big Three great was that they offered consumers choice, they offered consumers value and they offered consumers good products," he said. "People no longer associate them with that kind of value."

"Without that, what have the Big Three left to offer?"

Some visitors at the Walter P. Chrysler Museum, which sits adjacent to the company headquarters in Detroit suburb Auburn Hills, were sad at the prospect of a world without Chrysler.

"I hope they (Chrysler) survive," said Chrysler pensioner David Kengerski. "They built military vehicles during the Second World War, and they built America."

"We lost so much already to foreign automakers," he added.

Gary Fisher, 71, visiting from Montana, said his first car was a 1958 Plymouth Convertible. He said he missed what Chrysler had once been.

"Back then, Chrysler cars had feeling, personality, great styling. we had something to look forward to each year," he said. "Today, cars are more or less the same."

(Additional reporting by Soyoung Kim; Editing by Bernard Orr)