Autoweek Interviews Lutz

[Northstar]

http://www.autoweek.com/apps/pbcs.dll/arti...024/PROMOBLOG01

Bob Lutz Speaks

By BOB GRITZINGER AND NATALIE NEFF

AutoWeek | Published 10/02/06

While GM Chairman Rick Wagoner was pow-wowing with Nissan-Renault head Carlos Ghosn, GM Vice Chairman Bob Lutz held court at the Paris motor show. Here’s what he shared with AutoWeek:

AW: What’s in your future product portfolio these days?

Lutz: Obviously, a lot of really good stuff, much of which will be displayed at the upcoming season of auto shows. In fact, we have so much stuff coming we have to split it up over four auto shows because the stuff’s that coming would overwhelm any one show. For example, the Saturn Vue, aka the Opel Antara, will be at Los Angeles. That’ll be a big surprise.

(Antara/Vue) is a really good example of global coordination. The original architecture is Vue. The Koreans did all of the new engineering, except the styling which was done in Germany by the Opel guys. Then because ride and handling tuning and steering is a German specialty and not yet a Korean one, GM Daewoo asked GM Europe to do the ride, handling, steering and braking tuning. Meanwhile Saturn was always watching from the sidelines, and at the same time all the U.S. requirements were incorporated. So now, basically, the finished product, having gone around the world comes back to us from Germany as the Vue.

(Similarly) we thought Corsa we thought—with fuel prices and the obvious success of the Honda Fit and Toyota Yaris—would be a good fit for the U.S. It turns out this is the exact reason why we’re running all this globally now. GM Europe said, ‘Well, we never thought it would go to the States.’ So it’s not designed for federal crash regulations, and it would take three years to re-engineer the whole thing to make it U.S. compatible. It would take so much money, it would take so long that the remaining life of the Corsa would be too short to justify. But the next-gen Corsa will be fully U.S. compatible.

We’re not going to make the mistake anymore of designing small cars for specific markets. From now on, thanks to the global architecture strategy, a global design organization and a global engineering organization that cuts right across regional lines (cars will be designed for all markets).

In the future, every architecture will be internationally compatible, so that we have the flexibility—because you never know where fuel prices are going to go or what’s going to be a hit. For instance, three years ago we asked the Chevrolet organization in Europe if they would be interested in the HHR? And they said ‘no, absolutely no interest.’ Meanwhile they’ve changed their mind. Too late, folks. No European requirements were designed in.

AW: How important is it to you that GM stay number one? Is that a big deal?

Lutz: No, it’s really not. To be honest, I think it’s more of a big deal for the GM lifers than it is for me. I’ve been with BMW and I realize there’s a great deal of delight in being with a smaller company that’s attacking a large rival, because at BMW we were always saying, ‘Kill Mercedes! Kill Mercedes!’ It was like Avis, we’re number two. There is a certain advantage at having a larger competitor who you observe and strategically attack. And I will tell you it is much easier trying to knock the top guy off the peak than defending the peak against all of the people that are trying to get you. And I think a period—and I wouldn’t like to see it last too long—a period of some years where GM is number two, I think it might be a very good thing for the culture. And since everybody always hates the big guy, GM could take the noble underdog position for a while. ‘Gosh, can they regain the crown?’ I think it would trigger a lot of sympathy that we’re not now enjoying.

AW: Is GM still overbranded?

Lutz: I don’t think we are because we can take care of these different brands. I don’t think we’ll be adding any new ones. But in practical terms, it’s always very easy to say Ford should get rid of Lincoln and maybe Mercury. But there’s not enough money in the world to pay off all those dealers who have money invested (in those brands). You’re talking billions and billions and billions of dollars to settle all the lawsuits for breach of contract. And the analysts never get it. And you guys—it’s pathetic—can’t seem to publish an article without quoting half a dozen of these weenies, with arcane titles from business schools nobody’s ever heard of, and I don’t think you guys go out and check their credentials.

In a perfect world, you might have fewer or you might have more (brands). You say Toyota only has Lexus, Scion and Toyota. Go to Japan and you’ll see all these Toyotas you’ve never seen before in your life, only they don’t say Toyota on them. They’ve got different grilles, different taillights, different ornamentation, and they’ve got names like Soaring Blue Bird, and you say, ‘Where the hell did this come from? Oh, that’s one of the Toyota channels.’

AW: What is a healthy GM market share?

Lutz: We are healthy. Remember you are restricting your comments to GM North America and you’re ignoring the 50 percent rapidly growing, monster double-digit growth outside the United States. China is just one country, but also Korea, we’re on a tear in Eastern Europe and Russia and India and everything, so I would bet you within 10 years that GM North America will be vastly smaller than the rest of the GM empire put together. We’re already seeing that in profitability, which is now greater in the other three regions than it is in the United States. My point is that you have to train yourselves that General Motors is not GM U.S. plus a few other unimportant foreign affiliates. The U.S. is now an ever smaller block of the whole thing.

I would rather be tremendously financially healthy at 22 or 23 percent than be struggling to hang on to 25 or 26. Market share, per se, gets you nothing. Market share only gets you something if you’re responding to natural demand. If you’re desperately trying to carve out market share through incentives or low pricing, it’s an ephemeral victory, because the minute you relax it immediately bounces back to where it was. A lot of people don’t understand that. They think it’s like a war where you occupy territory, and once you’ve conquered the territory you put in the occupation troops and you can relax. No, it’s not like that. It’s like a rubber band. If you stretch the rubber band with your market share, the minute you let go it goes, ‘Twang!’ and it goes back to what it was. That rubber band has to grow organically. In fact, I would make the following point. There is no car company in the world—except Toyota in Japan which, to put it kindly, is a different kind of market—not Volkswagen in Germany or Holden in Australia or anybody anywhere, where the dominant manufacturer held on to much more than 20 percent when the dozens and dozens and dozens of foreign brands came in…Like the old German saying, no tree has ever grown all the way up to heaven.

AW: Shouldn’t you be part of the (GM-Renault-Nissan) talks going on now?

Lutz: No, because at the most senior level it really is finance and financial oriented people, and that’s why it’s right for (CEO) Rick (Wagoner) and for (CFO) Fritz Henderson to do that. The guy that’s running the product team is my vice president of product planning, John Smith. And you know, I know what’s going on. I’m involved in it as much as I want to be. But to tell you the truth, I would probably not be the smoothest person to have in the formal negotiations. I could almost be relied on to say something unnecessarily provocative.

AW: A super-luxury car—are you ever going to get that?

Lutz: It’s still a wonderful dream, like the Cadillac Sixteen, but frankly, given the reality of fuel prices, I would say that the priorities have shifted somewhat.

[DBeaSSt]

Nice read. I particularly like this line....

................

And the analysts never get it. And you guys—it’s pathetic—can’t seem to publish an article without quoting half a dozen of these weenies, with arcane titles from business schools nobody’s ever heard of, and I don’t think you guys go out and check their credentials.

................

[Dsuupr]

I love his frankness. He might not be perfect but atleast he doesn't hold back.

[PurdueGuy]

I like Bob.

[sciguy_0504]

Good interview.

[zete]

I'm sick and tired of executives that use kid gloves with the media. The media are like the old adage: those that can't do, teach. Well, the media writes about stuff they barely understand. I work in high tech and the number of times media try to explain what we're doing is awe inspiring, only exceeded by their complete inability to comprehend what we're doing. And sometimes it's not possible to "dumb down" the explanation so "regular folk" can comprehend it, yet the media constantly tries.

So I applaud Mr. Lutz's constant attempts to educate the morons that are the media.

[Camino LS6]

Gotta love Uncle Bob.

[Drew Dowdell]

Love it! Love it! Love it!

And you guys—it’s pathetic—can’t seem to publish an article without quoting half a dozen of these weenies, with arcane titles from business schools nobody’s ever heard of, and I don’t think you guys go out and check their credentials.

[RMC_SS_LDO]

Lutz- But to tell you the truth, I would probably not be the smoothest person to have in the formal negotiations. I could almost be relied on to say something unnecessarily provocative.

I lurk here (more than I care to admit), reading and learning but I had to comment. That's why GM is gaining steam..... someone who pulls no punches and focuses on what's important!

Edited October 3, 2006 by RMC_SS_LDO

[Drew Dowdell]

I want to get Lutz really drunk to see what he'd *really* say.

[Paolino]

Lutz is so awesome it's incredible. He just knows what he wants, and what he wants and does are proving SO beneficial for GM. He's confident and well-spoken.

[nightwave]

I want to get Lutz really drunk to see what he'd *really* say.

200854[/snapback]

+1

That would be quite amusing. I'd pay to see it.

[carstar]

http://www.autoweek.com/apps/pbcs.dll/arti...024/PROMOBLOG01

AW: A super-luxury car—are you ever going to get that?

Lutz: It’s still a wonderful dream, like the Cadillac Sixteen, but frankly, given the reality of fuel prices, I would say that the priorities have shifted somewhat.

200659[/snapback]

Or gm dosent have enough money for that?

[ocnblu]

Did I ever tell you this guy is my hero?

[Satty]

Did I ever tell you this guy is my hero?

201144[/snapback]

He's everything you wish you could be?

You could fly higher than an eagle?

He is the wind beneath your wings?

[ocnblu]

Satty, you got it.

[Guest buickman]

Lutz hasn't fulfilled his promise and is a weak excuse for a leader when he proclaims falling into second place as acceptable. Time to pack it in Robert.

Buickman

[ocnblu]

"On October 4, 2006 at 5 a.m., buickman, still groggy from dreaming God-knows-what, pours grapefruit juice on his Wheaties by mistake. The rest of his day went downhill from there."

[Guest buickman]

I was drinking grapefruit juice, but no spillage today. As for this fine looking Wednesday, it promises to be improving from reading silly comments.

Buickman

[ocnblu]

Well good. I'm glad you've resolved not to make any more silly comments today. Enjoy your day!

[Guest buickman]

Touche'. Good natured humor is what makes this site fun as well as interesting. Good day to you as well.

Buickman

[GEESIXER]

I tend to agree with Buickman on the good natured humor. however i do not agree with the packing up for bobby,

A good leader does not disclose unneccessary information the and ignorant public that will just blow it out of proportion.

ITS ALL GOOD, JUST SIT BACK AND RELAX!!!!!

Edited October 4, 2006 by GEESIXER

[Guest buickman]

They couldn't get to 30% even losing money. So now the goal is 22-23? What next? 20? 18? Each year these nitwits simply lower the bar when they fail to produce. Return to Greatness is the answer. The plan would have them back over 30% within 6 months and making money!

Buickman

the voice...

[Drew Dowdell]

They couldn't get to 30% even losing money. So now the goal is 22-23? What next? 20? 18? Each year these nitwits simply lower the bar when they fail to produce. Return to Greatness is the answer. The plan would have them back over 30% within 6 months and making money!

Buickman

the voice...

201317[/snapback]

GM could get to 50% market share by giving away all the cars for free.... yeah... that's the ticket!

[Guest buickman]

You misunderstand my friend, effective marketing is the key. When I started at Suski two years ago we were #40 out of 50 in our area. Last month we finished #6 and climbing. Before long we'll be #1. Listen and learn. Return to Greatness is the answer.

the voice...

[Mr. MacPhisto]

You misunderstand my friend, effective marketing is the key. When I started at Suski two years ago we were #40 out of 50 in our area. Last month we finished #6 and climbing. Before long we'll be #1. Listen and learn. Return to Greatness is the answer.

the voice...

201321[/snapback]

What works for a local dealership versus what works on a national scale are two completely things.

The problem is that GM has a serious preception problem and it is largely their fault for mishandling their design work and mishandling the automotive press. Some of it is unavoidable because the motor media is in the hands of the imports, but GM didn't help there either.

Product is key to the turnaround. It does need strong marketing to go with it but marketing alone is FAR from the answer. You can market a big turd and in the end it is still a big turd.

If you think that GM can turn around their NATIONAL sales slump in a brief period then you are living outside of reality.

I love the fact that you can turn around a domestic branded dealership in MICHIGAN. That's really hard.

Do it in California and we can talk. That's a much, much tougher job.

Try it down here in Florida.

The people in Michigan are far more likely to buy domestic. Your example is completely invalid because it is not representative of the nation.

[carstar]

They couldn't get to 30% even losing money. So now the goal is 22-23? What next? 20? 18? Each year these nitwits simply lower the bar when they fail to produce. Return to Greatness is the answer. The plan would have them back over 30% within 6 months and making money!

Buickman

the voice...

201317[/snapback]

that was the best thing i heard from you.

[FUTURE_OF_GM]

Lutz: I don’t think we are because we can take care of these different brands. I don’t think we’ll be adding any new ones. But in practical terms, it’s always very easy to say Ford should get rid of Lincoln and maybe Mercury. But there’s not enough money in the world to pay off all those dealers who have money invested (in those brands). You’re talking billions and billions and billions of dollars to settle all the lawsuits for breach of contract. And the analysts never get it. And you guys—it’s pathetic—can’t seem to publish an article without quoting half a dozen of these weenies, with arcane titles from business schools nobody’s ever heard of, and I don’t think you guys go out and check their credentials.

In a perfect world, you might have fewer or you might have more (brands). You say Toyota only has Lexus, Scion and Toyota. Go to Japan and you’ll see all these Toyotas you’ve never seen before in your life, only they don’t say Toyota on them. They’ve got different grilles, different taillights, different ornamentation, and they’ve got names like Soaring Blue Bird, and you say, ‘Where the hell did this come from? Oh, that’s one of the Toyota channels.’

Bingo....

Couldn't have said it better myself.

[Mr.Krinkle]

You misunderstand my friend, effective marketing is the key. When I started at Suski two years ago we were #40 out of 50 in our area. Last month we finished #6 and climbing. Before long we'll be #1. Listen and learn. Return to Greatness is the answer.

the voice...

201321[/snapback]

two years? that seems like an awfully long time to bring a car dealership into the top ten. i wouldve have cracked the top 5 in 3 weeks.

two years?

and you dont even have to think about things like exchange rates and international exportation logistics, taxes, or fees.

they should have fired you a long time ago. thats an eternity.