Parts sometimes fell off on the drive home from the dealership.
I think that's a bit of hyperbole.
I was a young guy with enough money to buy a new car in 1980 and there simply wasn't anything decent to chose from. There was nothing on the market that wasn't crap - it was all a question of degrees of crapiness. However parts weren't falling off new cars even Chryslers.
Virtually everything on the market in the early to mid 1980's in Canada was poorly made and unreliable by today's standards. The Japanese cars were better, but far from the standard expected today.
Ask yourself how many people are collecting cars from that era, or what cars you remember and wished you'd owned. The first gen Mustang 302 with the farm tractor 4 speed? How about the TR7 with the leaking top and disappearing paint? Or a Scirocco with 70 horse power?
The emission control regulations couldn't be met with the technology of the day without huge losses in power and efficiency. A 1984 VW GTI was considered a hot rod because it had ninety something horsepower. The tide didn't begin to turn until electronic controls became powerful and robust enough to restore horsepower.
The switch to water based paints and different interior materials started in the same time frame. All of the first attempts were simply awful.
Iaccoca knew the Imperial was the wrong design, but he inherited it from his predecessors. Design cycles were quite a bit longer then without access to computer modelling. His influence on Chrysler didn't come until later.