Better Cars Not Enough

[HarleyEarl]

Lutz: Better cars not enough

Turnaround also requires reining in retiree costs

By Daniel Howes / The Detroit News


Charles V. Tines / The Detroit News

Lutz says, "I don't think it's going to take 20 years to turn around, but it's not going to happen in 20 months."


If it's possible to be positive and negative about General Motors Corp.'s fortunes, Bob Lutz is both.

"I don't for a minute believe that what we're doing is not going to work," Lutz, GM's vice chairman for global product development, told me Thursday. "The image turnaround of General Motors is under way. But there is a lag effect."

Yes, there certainly is.

That turnaround depends on what Lutz & Co. can deliver to GM showrooms. But their effort is hampered by a record of safety recalls, a 25-year reputation for big talk and passionless products, formidable competitors with deep pockets and the punishing $6 billion-a-year pension and health care obligations -- so-called "legacy costs" -- that GM has to its employees and retirees.

"Nothing is going to do any good if we can't do something about our legacy costs," Lutz said. "With the magnitude of our legacy cost burden, it would be difficult to concoct a scenario of sufficient shareholder return."

Translation: Building better cars and trucks is necessary to making GM's car business profitable again, but it's not sufficient. The old adage that "product, product, product" cures all is being turned on its cylinder head at GM.

Good product isn't enough to offset the scary reality facing Detroit's automakers and the United Auto Workers. Not if revenue can't cover mammoth costs, shareholders don't make money and would-be buyers aren't willing to take another look at GM.

Could GM's long-overdue bid to regain its car and truck cred be coming too late to make a difference to American consumers?

"Needless to say, I worry about the same thing," Lutz said. "But the other strategy of staying at about the level we were at is sure defeat. I don't think it's going to take 20 years to turn around, but it's not going to happen in 20 months."

The cars and trucks coming from Detroit's largest automaker, which GM will showcase next week to the news media, are better than ever. There are all-new full-size SUVs, the Pontiac Solstice sports car, the Chevy HHR crossover and the Chevy Impala. More are coming -- an all-new Cadillac CTS sedan, midsize crossovers from Saturn and Buick, gasoline-electric hybrid-powered Tahoe and Yukon SUVs by early 2007.

GM's union-built portfolio for North America is better looking, offers higher initial quality, garners more enthusiastic reviews from critics, dealers and customers, and showcases the kind of design, interior sophistication and emotional pull that the General hasn't delivered in a long time.

The simple response would be to give the 73-year-old Lutz -- yes, the top product guy for the world's largest automaker was born during the Hoover administration -- all the credit or, if you're in the vocal anti-Lutz camp, all the blame.

Both would be wrong.

He unleashed the talents of GM designers and engineers. He made it cool to push back, to say "Who says?" in response to "They don't want ..." He legitimized passion in design, pushed for world-class interiors -- glosses, grains, touch and feel -- and leveraged GM's expertise in engines and transmissions into smoother, more powerful and more responsive products.

You can feel the attention in the new cars and trucks. It is still, however, not sufficient, as GM's abysmal financial results attest.

Four years is roughly one product-creation cycle in the car business, but it's a long time in American business today. That's why critics say Lutz, who joined GM on Sept. 1, 2001, is past it, that he's more flash than cash, that his vision for where GM should go is clouded by his age, experience, biases and not insignificant ego.

I'd say "perhaps" to the denunciations of Lutz if I didn't see real improvement in GM products, or if others didn't, too. Such as:

Cadillac's "STS is, in short, one of the best-engineered, most well-rounded sedans ever to come out of Detroit," James G. Cobb wrote in The New York Times. "This ambitious new Cadillac stacks up well against the Audi A6, the BMW 5 Series and the Mercedes-Benz E-Class, and it should put up a fight against the new wave of luxury sedans from Japan."

Or, Automobile Magazine's "Solstice Rocks" cover story for its October issue. Or the generally positive, if private, reactions from journalists and analysts to the dozens of coming cars and trucks GM has shown over the past few months at its design dome in Warren.

That said, if there's a year to begin assessing whether the Lutz era will make a difference in GM's financials and product lineup -- from Detroit and Germany to Shanghai and Brazil -- this is the year to start looking. Hard.

Don't focus on the global restructuring of GM's product development organization, which collapses the North American, European, Asia-Pacific and Latin American regions into areas of expertise -- trucks, SUVs and specialty vehicles in Detroit, midsize and compact cars in Europe, small cars in South Korea and rear-wheel drive vehicles in Australia.

Focus on what's hitting the road.

Lutz says he wants GM products to represent good value (a base-price Solstice sells for less than $20,000); customer excitement; emotional styling; respectable shareholder return; more expensive looks than the price tag.

The Pontiac Solstice, a two-seater that is more Mazda MX-5 than anything you'd think GM could dream up, is all Lutz. So are the new Chevy Impala and the HHR, a retroish crossover-cum-PT Cruiser; the coming generation of full-size pickups and SUVs; the all-new lineup of German-inspired Saturns, which could make Saturn a truly different kind of car company.

Lutz hears the critics, but chooses to let the new cars and trucks serve as his answer. But is it too late for GM to get its mojo back?

If revenues don't cover expenses, the best products GM can muster won't solve what ails its business. For GM, those ailments are so painful and their alleged cures even more so, that the sickness threatens to be terminal.

Not next month, and almost certainly not next year. But at the highest levels of the company there is a clear recognition that "business as usual" is as outdated as the driver of a '57 Chevy looking into the rearview mirror, remembering the good ol' days, and then remembering they're long gone.

GM's market share, which drives revenue, isn't really moving. Ever since the September 11 terrorist attacks, GM has needed fire-sale programs to move its metal. Its credit is rated "junk," which makes running the business more expensive and signals a lack of confidence among investors.

A Las Vegas billionaire, Kirk Kerkorian, now owns nearly 10 percent of GM and wants a board seat. And the UAW isn't eager to help GM because its options for doing so are different versions of political suicide -- bad, worse and horrible.

Given that litany of woes, it's a wonder Lutz is as positive as he is.

Daniel Howes' column appears Sundays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or at [email protected]. Catch him Fridays with Paul W. Smith on NewsTalk 760-WJR Edited September 24, 2005 by HarleyEarl

[knightfan26917]

Lutz: Better cars not enough

The cars and trucks coming from Detroit's largest automaker, which GM will showcase next week to the news media, are better than ever. There are all-new full-size SUVs, the Pontiac Solstice sports car, the Chevy HHR crossover and the Chevy Impala. More are coming -- an all-new Cadillac CTS sedan, midsize crossovers from Saturn and Buick, gasoline-electric hybrid-powered Tahoe and Yukon SUVs by early 2007.

GM's union-built portfolio for North America is better looking, offers higher initial quality, garners more enthusiastic reviews from critics, dealers and customers, and showcases the kind of design, interior sophistication and emotional pull that the General hasn't delivered in a long time.

*raises eyebrow*

Wowa...the PRESS is writing this?

Dangumit ... now GM has to make sure the general car-buying public sees this.....


Cort, "Mr MC" / "Mr Road Trip", 32swm/pig valve/pacemaker
MC:family.IL.guide.future = http://www.chevyasylum.com/cort/
Models.HO = http://www.chevyasylum.com/cort/trainroom.html
"Get the word out" ... Collective Soul ... 'Feeling Better Now'

[Sixty8panther]

Sad but true. P.S. Don't hold your breath KnightFan.

[knightfan26917]

P.S. Don't hold your breath KnightFan.

*nods*

Yeah, I know.....

[HarleyEarl]

This was a facinating read. It encapsulates GM's situation pretty well.

[Flybrian]

I bet the next CTS will be hot as all get-out.

[Dsuupr]

The press can't hide GMs great quality rankings, and it will be impossible to convince people that vehicles like the new GMT-900s, HHR (though they tried), Solstice, etc. are bad, so now it's time for them to start conceeding. Lutz has and is doing a great job. Finally we are seeing his changes.

[Newbiewar]

long read, kinda blunt at the end about how gloomy GM looks... but yea, If the GMT900's get kick started off right, things should be doing well in the next years, and get a few of the desired Opels over as Saturns and I think we'll have some kick ass sales, without stupid incetives... Chrysler really ruined the buisness with that one...

[frogger]

Off topic, but damn the interior looks good in that photo.

[sciguy_0504]

I was thinking that too, frog. I hope the materials are there but even if they're not it still looks amazing.

[pow]

Off topic, but damn the interior looks good in that photo.

[post="19565"]<{POST_SNAPBACK}>[/post]

That passenger footwell area looks ragged... why doesn't the center console plastic cover extend further?

[VenSeattle]

Off topic, but damn the interior looks good in that photo.

[post="19565"]<{POST_SNAPBACK}>[/post]

That is exactly what I thought when I saw the pic. The Tahoe interior looks FANTASTIC in that pic. It's hard to believe Lutz is sitting in a Chevrolet SUV instead of a luxury sedan.

The article was about as fair as fair can be. I also see that the media is slowly conceding to GM's efforts. It's about damn time.

In the past 5 years, GM has set Cadillac on fire, literally created a division that has stolen most of JEEP's off-road prestige, and increased initial & long-term reliability across the board while at the same time suffered through completely restructuring its entire organization WORLD WIDE.

Now, if the distractions of restructuring will disappear, GM might be able to build up the steam to press ahead "harder & faster" than ever before.

Chevrolet will be completely reborn once the next generation Malibu arrives… along with Saturn.

And who would have thought 5 years ago that Buick's 2006 line-up would be equal to or better than much of Cadillac's then-current 2000MY line-up??? :

Compare:

2000 Cadillac Catera
MSRP $31,010
200 hp V6

Or

2006 Buick LaCrosse CXS
MSRP: $28,435
240 hp V6

And:

2000 Cadillac Seville SLS
MSRP: $44,475
275 hp V8

Or

2006 Buick Lucerne CXS
MSRP: $35,990
275 hp V8


GM is turning around…

[HarleyEarl]

I so agree regarding that photo of Lutz in the new Tahoe. That interior looks fantastic from that angle...very luxurious looking...much more so than the initial intro photos. It highlights a beef I have had with GM and it's media photos, website photos and marketing in general. They never seem to be the right photo angles, car colors etc that really show the particular GM models at their best. GM has good cars....they don't market them effectively...drives me crazy.

[KillFort]

Ok, I too agree that the upper portion of the interior looks fantastic. BUT, GM did it once again. Why is the center console not integrated with the dash? GM integrates it with their concept vehicles, the Solstice, and other automakers do it, but GM never integrates their center consoles well, They leave large gaps or break it into two pieces. Why the hell do they do this idiotic thing? The STS has the same damn problem. It is even more pronounced here in the Tahoe. 3 separate ill-fitting pieces.

[pow]

Ok, I too agree that the upper portion of the interior looks fantastic.

BUT, GM did it once again.  Why is the center console not integrated with the dash?

GM integrates it with their concept vehicles, the Solstice, and other automakers do it, but GM never integrates their center consoles well,  They leave large gaps or break it into two pieces.  Why the hell do they do this idiotic thing?

The STS has the same damn problem.  It is even more pronounced here in the Tahoe.  3 separate ill-fitting pieces.

[post="19590"][/post]

Ironically, that's one of my favorite parts of the interior. I don't know if it was intentionally done in the name of styling, but if it wasn't, GM is lucky. I love how the console shoots forward, teasing with the idea it goes on forever. It reminds me of the lower consoles of the Touareg, Phaeton, 5-series, R-class, and A6, if you know what I mean.

[Northstar]

If the console and stack were integrated, it'd make it a lot harder to put a front bench seat in for 9-passenger seating. The same thing is done in the Impala, Lucerne, and DTS.

[pow]

If the console and stack were integrated, it'd make it a lot harder to put a front bench seat in for 9-passenger seating. The same thing is done in the Impala, Lucerne, and DTS.

[post="19616"]<{POST_SNAPBACK}>[/post]

Yeah, but those all look fugly, cheap, or dated. Oh, and while the LaCrosse has different pieces for the bench and buckets, but both look horrible. Buick shouldn't have bothered.

[knightfan26917]

GM has good cars....they don't market them effectively...drives me crazy.

Seems to be a recurring theme, don't it?

*shakes head*

I agree....that interior looks awesome ... certainly does not look like a truck of any type.... Lookin' forward to seeing these in person....

[FUTURE_OF_GM]

Yes, there certainly is.

Nice kick in the groin.

Could GM's long-overdue bid to regain its car and truck cred be coming too late to make a difference to American consumers?

"Needless to say, I worry about the same thing," Lutz said. "But the other strategy of staying at about the level we were at is sure defeat. I don't think it's going to take 20 years to turn around, but it's not going to happen in 20 months

We all worry.

BUT, 1) You're at your best when you're determined and picking yourself up off the pavement (Like GM is) 2) Americans LOVE a comeback story 3) GM still has A LOT of equity in people's minds

What GM needs now is consistency. They're beginning to introduce the hot products they've needed for years, NOW they need to follow through with that by continuing to introduce that same caliber of product as well as maintaining and gaining in efficiency and quality.

If GM is consitent through about 1 product cycle and follows that up with another impressive lot of cars then I think we'll start to see Americans being less cautious and giving them a second chance.

not insignificant ego.

LOL, I share that same curse and I don't think it's a bad thing in a world of P.C. "yes" men.

[Robert Hall]

If the console and stack were integrated, it'd make it a lot harder to put a front bench seat in for 9-passenger seating. The same thing is done in the Impala, Lucerne, and DTS.

Does GM even offer a front bench in any of their SUVs?? I've never seen one equipped with one.

I suspect the reason the dash and console aren't integrated is that the same dash structure will probably be used on the pickups (I can imagine base models of the Silverado having a bench)... Edited September 26, 2005 by moltar

[HarleyEarl]

I believe it's about the pickups....the dash has to do double-duty...with consol and without.

[Robert Hall]

I believe it's about the pickups....the dash has to do double-duty...with consol and without.

That's what I was thinking...I wonder if the trucks will have a shorter center stack, though..the way it extends down would cut into knee room with a bench..