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Old 01-07-2006, 11:04 AM   #1 (permalink)
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Interview: Lutz talks to BusinessWeek

Pretty good article, thought I'd post it - Nick

Source: http://businessweek.com/magazine/con...3/b3967023.htm

GM's Lutz: In It for the Long Haul
The carmaker's 74-year-old vice-chairman on what it'll take to rebuild the brand: Attractive new models, more focus, and a bit of patience



Perhaps no single personality in the auto industry conjures as much attention, praise, or controversy as General Motors' venerable new-car czar, Robert "Bob" Lutz. When he joined GM (GM ) in September, 2001, after retiring from Chrysler in 1998, he lighted hope among longtime GM watchers and company lifers that he could bring style and spirit to a carmaker derided for building a parade of prosaic models.

During the past year, with GM losing almost $4 billion and market share sinking, Lutz has been under more pressure than ever to build the kind of hot cars that will restore luster to GM's brands and turn around its dismal financial performance. In some ways, he has succeeded, having pushed the stylish Pontiac Solstice through GM's turgid bureaucracy. And he has proven doubters wrong with the retro-styled Chevrolet HHR wagon, which has sold well despite criticism that it was a knock-off of Chrysler's PT Cruiser. But other cars, like the Pontiac G6 and Buick Lacrosse, are stylistically bland and haven't really hit in the marketplace.

Still, at 73, Vice-Chairman Lutz says he's energized and will fight to bring GM back as long as the company will have him. BusinessWeek Detroit Bureau Chief David Welch recently sat down with Lutz in his office at GM headquarters for a far-reaching interview about the car business, design, and whether GM can come back. Here are edited excerpts of their conversation:

We're hearing car companies brag about their horsepower and fuel economy. With gasoline prices rising and falling as they have, what does the market want?
It has gone bipolar on us. There's a race for horsepower and a race for fuel economy. The fuel-economy part is partly justified and partly economically sound. And it's also, in its own way, as irrational and emotional and economically unsound as the horsepower race. What earthly purpose does a 500-hp car have? You can also say at U.S. fuel prices of around $2 a gallon, is there really a rational reason for a 50 mpg car?

With so many choices and so much competition in today's market, how can GM stand out to consumers who have long ignored its offerings?
The differences in cars are more difficult to measure these days. That's where the power of brands comes in. For GM, the negative belief about all of our brands is that our car are powerful, heavy, and heavy fuel users. But we outperform Toyota (TM ) in many comparisons. The public's perception about what a company does is more important than the actual attributes of the vehicle. Whether hybrids make economic sense is irrelevant.

Speaking of brand image, how do you save Pontiac and Buick?
Pontiac and Buick need sharper focus. We have to stop trying to make them Chevys with a different badge. That means fewer models. On Pontiac, the Solstice is a good example, and it will be followed by others. The brand will be sharply focused in a sporting direction.

So you're no longer trying to get big sales volume from Buick and Pontiac?
We want to grow volume with Chevy, Cadillac, Hummer, and Saturn. Saturn is definitely a growth brand because you don't have to overcome preconceived public notions.

What about Buick?
The real challenge with Buick is that people automatically exclude it from consideration. That it's an old person's car is a notion that's constantly reinforced by the media. Breaking though that is very tough. It's easier to grow a brand like Saturn.

With both the Buick and Pontiac brands, you plan to drop the number of models and reduce the dealer network. That's needed, but does it also make it tougher to change the brand image when you literally have fewer dealers, fewer models, and a smaller presence in the marketplace?
Having fewer dealers isn't necessarily a bad thing. One reason Pontiac has a dilution of image is that GM years ago lost its focus. To make dealers as profitable as possible, Pontiac has had everything every other brand had. We destroyed the GM brand hierarchy. That's why we'll do better with fewer vehicles that are focused.

I still see that happening. Pontiac is supposed to be the sporty division, but Chevrolet has the Corvette and seven SS cars. Pontiac only has Solstice and GTO.
It's a different kind of performance. Chevy is more of a traditional American muscle car. You can get a Solstice with some engine upgrades that [will make it similar] to a Corvette.

I see the emerging strategy for these brands. But it seems like it could take more time that you've got.
You can only fix a brand over a long period of time. The other thing that can break though negativism about a brand is design. It's the most important frontier.

You've been closely involved with engineering and design for 40 years. Do you finally have the technology to make cars that look just like the concept cars at auto shows?
A concept car is like taking a digital photo and putting it though PhotoShop. Many concept cars don't have fuel tanks or they have insufficient leg room. You're not constrained by manufacturing requirements or safety standards. It's like the pin-up girls who were drawn with impossibly long legs.

But the industry is getting better at it.
Design is getting better. That's why it's tougher to get leadership.

Vice-Chairman and CFO John Devine decided he has had enough and he will leave GM in a year. Your contract comes up in September. Are you going to stick around long enough to see GM through the crisis?
I hope so. This is the best time to be a product-oriented guy, when a company needs dramatic vehicles. I'll be 74 in February. Who knows how long I'll stay as active and as healthy as I am.

Behind my back, maybe people say, "The poor old guy is slowing down." Or the board may decide I'm not the right guy. Before you got here, I just came out of a meeting with [Chairman and CEO] Rick Wagoner discussing my goals that must be met by December, 2006.

Are you guys going to get out of this mess?
I'm totally confident we'll do it. Remember how there were obituaries written about Chrysler in '88 and '89 and back in '79. The Economist published a picture of a grave with Chrysler on it, saying "Rest in Peace." We have a very solid turnaround plan which is right on schedule.
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Old 01-07-2006, 11:13 AM   #2 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Nice, I'm glad they want to produce fewer Pontiacs and focus on performance.
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Old 01-07-2006, 11:17 AM   #3 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Quote:
Originally Posted by mystikranger
Nice, I'm glad they want to produce fewer Pontiacs and focus on performance.
I agree. Lutz makes a lot of sense to me. I know a lot of folks out there have dismissed him to some degree since some of the products under his tenure havent' been as good as they hoped. But remember he's fighting a battle on all fronts. He has to fight GM's internal bureaucracy, he has to fight the bean-counters, he has to fight against things he can't control (perceptions, market-fluctuations, the UAW, currency-exchange) and then on top of it, he has to fight the media who want him to have gone from A to B overnight. He even takes a little dig at the media in this article by saying, "The real challenge with Buick is that people automatically exclude it from consideration. That it's an old person's car is a notion that's constantly reinforced by the media. Breaking though that is very tough."

I don't agree with him all the time, but he's right on the money with that one.
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Old 01-07-2006, 11:29 AM   #4 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

I've stood behind Lutz ever since he came to GM and unless he does something drastically stupid I'll stand by him tomorrow as well. There are a select few people at GM that really "get it" and Lutz IMO is one of them (99% of the time).
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Old 01-07-2006, 12:56 PM   #5 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Lutz is a good guy for GM because he doesn't take any b*******t from bean counters and he knows how important good product is. He also communicates well with both the automotive and financial press.
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Old 01-07-2006, 01:02 PM   #6 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Lutz was the smartest management move GM had made in the last 6 years.
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Old 01-07-2006, 01:31 PM   #7 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

This passage irks me:
"In some ways, he has succeeded, having pushed the stylish Pontiac Solstice through GM's turgid bureaucracy. And he has proven doubters wrong with the retro-styled Chevrolet HHR wagon, which has sold well despite criticism that it was a knock-off of Chrysler's PT Cruiser. But other cars, like the Pontiac G6 and Buick Lacrosse, are stylistically bland and haven't really hit in the marketplace."

I understand the good words about the low volume Solstice and HHR but how can they say the G6 and Lacrosse haven't really hit in the marketplace when they both sell over 100,000 annually and are the best selling models for Pontiac and Buick?
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Old 01-07-2006, 01:37 PM   #8 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

I believe the HHR is a high volume product.

G6 is not a favorite of mine..

Needs a shot of excitment in my opinion.

Its a nice sedan...and a good choice but needs just something a little extra.

IMO

Hope the Aura hits the target.

I beleive GM will turn it around shortly.
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Old 01-07-2006, 02:01 PM   #9 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

I'm with Lutz.. Just don't Soften the Cadillacs.. Though I love his Sixteen..
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Old 01-07-2006, 02:05 PM   #10 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Quote:
Originally Posted by tripowergto
This passage irks me:
"In some ways, he has succeeded, having pushed the stylish Pontiac Solstice through GM's turgid bureaucracy. And he has proven doubters wrong with the retro-styled Chevrolet HHR wagon, which has sold well despite criticism that it was a knock-off of Chrysler's PT Cruiser. But other cars, like the Pontiac G6 and Buick Lacrosse, are stylistically bland and haven't really hit in the marketplace."

I understand the good words about the low volume Solstice and HHR but how can they say the G6 and Lacrosse haven't really hit in the marketplace when they both sell over 100,000 annually and are the best selling models for Pontiac and Buick?
I have to disagree with the G6 and LaCrosse. They are nice cars but they don't stand out in any way. In comparison in volume the LaCrosse is barely hitting the mark of the two models it replaced. And the G6 is behind about 30,000 in sales YTD compared to the Grand Am it replaced. The G6 just looks like another car, it's dated and the interior is verging on crap. Some small updates were done to the interior on the G6 coupe which makes it not so much an eye sore, I wouldn't mind buying the coupe and putting a body kit on it or something.
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Old 01-07-2006, 02:50 PM   #11 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Nice insight into Lutz. The Pontiac vs Chevy SS Question seems to be partly answered.
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Old 01-07-2006, 05:04 PM   #12 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

SATURN is the brand that will turn GM's luck around, watch!
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Old 01-07-2006, 07:40 PM   #13 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Almost sound like Lutz is laying the ground work for killing off Buick. With all the baby boomer generation now entering their 50's and 60's and as affluent as they are, the demise of Buick is being very short sighted. Chevrolet only has the Impala that would appeal to this age group. GM went too far in dropping the LaSabre and Century. Both of those models had appeal to the aging boomers and sold better than the Lucerne that has replaced it. What GM has overlooked that those customers in that age bracket want familarity. Lucerne means nothing and has no appeal to this customer base and I imagine has caused many of these potential customers to shop for brands they are familar with such as the Camry, Crown Vic and Grand Marquis. But if GM was laying the ground work even back then for the demise of Buick then they have executed that plan perfectly.
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Old 01-07-2006, 09:00 PM   #14 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

They took the lease incentive off Park Ave in April of 01 just as Spring began.
In 02 they offered the Century with $500 extra off only in white, silver, or tan.
They starved the division of product, only serving up warmed over Trailblazer, Venture ,and Aztec.
They closed Buick City even though it produced the highest of quality.
They are now tearing down the magnificent Buick headquarters on Hamilton Ave.
They make the most boring interiors with the most bland of colors.
They make the lease payments significantly higher on Buicks than comparable GM models.
They are combining Buick stores with other GM franchises to soften the legal entanglements when they swing the axe on the foundation stone.
The LeSabre went to the graveyard along with Skyhawk, Skylark, Century, Regal, Park Avenue, Roadmaster, Riviera, and can't remember last time we had a coupe or wagon. What happened to Grand Nationals and TTypes?
They constantly shift marketing slogans from "Spirit of American Style" to "One Better" to "It's All Good" to "Dream Up" to "Beyond Precision".
They show a nut driving a Riviera on season ending ER episode shooting at main characters.
They have Eva Longoria bored to tears at a Buick LaCrosse display during Desparate Houswives.
They promise $3 Biilion investment in Buick. It never happens.
We receive the goofiest brochures in the business.
The LaCrosse and Lucerne both intro well past Christmas and aren't available for the big year end spree.
The rebates are announced even before the brochures or vehicles arrive.
And you believe Wagoner and Company aren't on a mission? They are simply marching to orders, the real question is from WHO? As suppliers and eventually manufacturers belly up, watch for Wilbur Ross and his band of Rothschild banker friends to pony up cents on the dollar and recreate from the carcass, then devoid of pensions and health care, as well as union contracts.

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Old 01-07-2006, 09:01 PM   #15 (permalink)
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Re: Interview: Lutz talks to BusinessWeek

Buick will be fine if it lives to see two things:

#1. LaCrosse on Epsilon II w/ 6 Speed
#2. Lucerne going onto a RWD Platform (probably Zeta, but Sigma I would work is Caddy has Sigma II) w/ 6 Speed

My Dad would buy a FWD Lucerne if it had a 6 Speed.
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