Lee Iacocca, the former chief executive of Chrysler, has lost his company car and a slice of his pension as part of the process of restructuring the ailing US carmaker.

Three decades ago, Iacocca, now 84, saved Chrysler from collapse but his reputation as one of America's most successful business leaders could not prevent the loss of his benefits.

It emerged during a court hearing that Iacocca was one of a group of former executives who invested in a supplemental executive retirement plan. Chrysler's bankruptcy at the end of April means this programme is no longer obliged to pay out, the court was told by the current chief executive, Robert Nardelli.

A programme under which many former executives got a car from Chrysler for life has also been cancelled. They have now been told to return their vehicle or pay for it.

The company said it regretted the action "in light of the many contributions these individuals have made to Chrysler over the years". The programme is not expected to be restarted.

The pensions of most employees are likely to be transferred to the restructured Chrysler, although there are still concerns over future funding for the hundreds of thousands of retired and active auto workers.

In 1979, Iacocca saved Chrysler by convincing the US government to underwrite vital loans. He appeared in many Chrysler adverts and was famous for his slogan "If you can find a better car, buy it."

Nardelli surprised the court hearing by saying that Chrysler could finalise a sale of most of its assets to Fiat later today, even though pension funds and other creditors are opposing its quick-fire bankruptcy rescue.