Lutz: Better cars not enough
Turnaround also requires reining in retiree costs
By Daniel Howes / 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.
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http://www.detnews.com/2005/insiders...C01-324771.htm