Lutz: "The Pieces Are In Place"

[Perian]

Link: http://fleetowner.com/news/gm_global..._event_051705/
---------------------------------------------------------------------------
From: Fleetowner / By Sean Kilcarr, senior editor

May 17, 2005 3:35 PM

SALT LAKE CITY. With crippling quarterly losses grabbing the headlines, what’s going on in terms of product development and organizational changes at General Motors has gone largely unnoticed. But Bob Lutz, GM’s vice chairman of product development, says globalization is focused on turning out low-cost yet high-quality vehicles.

“Needless to say, 2005 has been and continues to be a challenge,” said Lutz speaking here at a GM Fleet & Commercial media event. “Yes, our [overall] market share is down, and yes, our stock price is down. On top of that, we’re facing tough global competition and escalating health-care costs, which puts us at a huge competitive disadvantage.”

On a net basis, GM lost $1.1 billion in the first quarter this year including restructuring and severance charges for job cuts in Europe and the U.S. Its North American operations actually lost $2 billion in the first quarter, but profits at the company’s GMAC financing arm helped offset that red ink. The net loss was the worst since GM lost $21 billion in the first quarter of 1992, largely due to accounting changes.

But now Lutz says “the pieces are in place” to create a more globally focused GM, instead of a collection of four regional operational companies (GM North America, GM Europe, GM South America, GM Asia). That global structure should drive greater efficiencies in manufacturing, design, engineering, and product planning, he said.

“With a global focus, we can build great cars and trucks that can be tailored to regional needs and tastes,” Lutz explained. “It also puts us on a better footing to compete globally with Toyota, Honda, and Nissan.”

To that end, he said GM is ramping up capital expenditures this year from $7 billion to $8 billion, with the vast majority of those funds devoted to product development.

“Full-size SUVs, in particular, represent a huge percentage of our profit,” said Lutz. “That’s why we are pulling ahead with new designs [for SUVs and light trucks] but without compromising quality.”

In particular, Lutz pointed to the upcoming introduction of the Hummer H3, powered by a 220 hp five-cylinder engine that gets 20 mpg on the highway, and the Chevy HHR, a medium-sized SUV that’s planned to be priced below $20,000.

“You can’t choose between low cost or high quality anymore – you must be both,” he explained in regards to the vehicle pricing structure GM foresees for the future. ‘You have to be best in class for everything – the chassis, frame, suspension, engines, and interior – yet still be priced for value.”

He also highlighted GM’s development work on a hybrid propulsion system for full-sized SUVs. It combines two electric motors integrated into the transmission with a 5.3-liter V8 Vortec engine equipped with “displacement on demand,” allowing the engine to “turn off” cylinders in slow driving conditions to improve fuel economy.

This hybrid system, which boasts a fuel economy improvement of 25% compared to gasoline-only powered vehicles, should be commercially introduced on GM’s Yukon and Tahoe SUVs in 2007.

“Having a great big SUV with great fuel economy is a no-brainer,” Lutz told Fleet Owner. “At highway speed, a hybrid doesn’t help much in terms of fuel economy, but in urban driving it’s a big advantage. However, right now, since we need to charge more for a hybrid propulsion system, fuel savings have to be calculated against that. But if fuel prices go up to $3 a gallon, hybrids really become a no-brainer. It really gives us options when it comes to addressing the fuel economy of large vehicles.”

That’s one reason Lutz believes GM’s current fiscal struggles are obscuring some of the real vehicle advancements the company plans to introduce over the next few years.

“We are on the road to a bright future, though we are hitting some serious speed bumps now,” he said. “But I believe we are going to handle these bumps just fine without losing too much traction on the strength of the products we have on the way.”

[drew770]

“Full-size SUVs, in particular, represent a huge percentage of our profit,” said Lutz.
That's a big problem!!!
Gas prices will never go back below $40 a barrel and GM can't hang it's profits on SUV's . I am not a Toyota fan but follow Toyota's lead on making profitable passenger cars. I know it is hard with $1,500 tapped on each vehicle because of legacy costs but work hard and get it done.

[nailhead425]

Originally Posted by Perian

In particular, Lutz pointed to the upcoming introduction of the Hummer H3, powered by a 220 hp five-cylinder engine that gets 20 mpg on the highway...

Hey Bob, my wife's six-cylinder Grand Cherokee gets 18mpg city and over 21mpg highway. She drives 100% city to work and on short shopping trips. I reset the trip computer and figure the mileage when I fill it up. 17.8-18.1mpg every time. When we go on vacation, it gets 21-22mpg every time. Oh yeah, it's a 4x4 too.

GM can do BETTER!

[redimpss5]

Even sadder, they claimed pickups and suv's were all the public wanted, now the lots are full of them. People are crying for rear drive and other nameplates are making them. That jeep srt is looking pretty good!

[oilleak]

"You can’t choose between low cost or high quality anymore – you must be both,”

There you go - I guess GM finally paid attention to Consumer Reports and noticed that it's ****************ty quality is really killing it's market share.

Interestingly, Honda, Toyota and Nissan are in a much better shape nowadays. May be that's because they earned a reputation of Quality brands - and that definitely helps them sell without much cash back! Just look at Accord, Camry, Corolla, or better yet - Element! These are hardly hot looking cars, however they don't plummet in value like Chevy's and do not create oil leaks in your driveway at 70K...

Unfortunately, GM doesn't have reliability on it's side as a selling point. So, if the car looks boring ( think Grand Prix ) or ugly ( think Aztek or Bonnie ) there is little incentive to buy... ( unless Lutz offers a nice cash back )

So, until Chevy Trailblazer can compete with Honda Pilot, or Malibu can compete with Toyota Camry/Accord, or CTS can compete with G35/TL... I'll keep buying Japanese...

[New_Mexico_Sunset_on_Rt66]

What we're gonna find is that as the dollar increases in value, as the economy strengthens, that the price for gas should decrease. That's because the price of oil is pegged to the dollar. When the dollar is down, oil is more expensive, but when the dollar is worth more, oil is less expensive. A stronger dollar means your loaf of bread is cheaper.

Americans have families and need SUV's to farm kids around, and contactors need 'em to do their job, so I think paying attention to hybrid technolog for trucks and SUV's make sense. For us, the common Joe, sure it sounds kinda boring, but for a construction company with a fleet of trucks, it makes perfect sense.

Sure, we are seeing stonger cars coming out, I predict and hope, the Solstice and G6 is just the tip of the iceberg.

In the Annual Report I just got, they do talk about work being done amongst the various worldwide arms of GM, such as GMAP (GM Asia/Pacific) now doing somework on the Zeta's. Although, I hope and pray the next Camaro is NOT based off the Torrano. I hope the next Camaro inspires like the Solstice and Sky inspire.

I agree with Bob, who I give kudo's to for being a real "car guy". Let's get ALL THE BAD NEWS over and done with in one shot and move on and produce some kick-@ss products. After the Solstice, G6, SSR, Equinox, Cobalt, LaCrosse, Lucerne, Sky, Cadillac, C6 ... I don't see any going back to the days when Detroit was on their heels. Detroit is on their toes and poised for attack.

[nailhead425]

Originally Posted by New_Mexico_Sunset_on_Rt66

I agree with Bob, who I give kudo's to for being a real "car guy". Let's get ALL THE BAD NEWS over and done with in one shot and move on and produce some kick-@ss products. After the Solstice, G6, SSR, Equinox, Cobalt, LaCrosse, Lucerne, Sky, Cadillac, C6 ... I don't see any going back to the days when Detroit was on their heels. Detroit is on their toes and poised for attack.

I think Bob is more aptly labeled a "car enthusiast". No where have I heard, read about, or seen him wrenching, getting dirty, building, and ultimately respecting the machine he drives. Jay Leno is a "car guy".

While I think there are lots of good products coming forth, many of the above products are Halo products that have little impact on the bottom line. Halos are nice, but the drum is beating for RWD and GM can only give vague hints.

[New_Mexico_Sunset_on_Rt66]

Originally Posted by nailhead425

I think Bob is more aptly labeled a "car enthusiast". No where have I heard, read about, or seen him wrenching, getting dirty, building, and ultimately respecting the machine he drives. Jay Leno is a "car guy".

While I think there are lots of good products coming forth, many of the above products are Halo products that have little impact on the bottom line. Halos are nice, but the drum is beating for RWD and GM can only give vague hints.

Hmm, you consider the Cobalt, Equinox, LaCrosse and Lucerne "halo" cars? The SSR and Sostice, yes, but not the Cobalt and the others I list.

[ethayes]

Can someone explain this to me? If GM increases the product development budget from $7 billion to $8 billion why do we keep hearing of products being delayed or cancelled due to cost cuts?

A delay of the more powerful Northstar V8 and the cancellation or delay of the V12. The delay or cancellation of the face lift planned for the Hummer H2 SUV which was supposed to sport a longer and redesigned snout. And of course everybody's favorite...the delay or cancellation of the Zeta platform which I understand may only be in search of a cheaper platform.

And now the great streamlining of the Buick/GMC/Pontiac brands that they will no longer have a full lineup. Now this is a smart move but I fear that if this is used as a cost cutting move rather than a broad range of a clearly focused product line for each, then it will simply fail.

So where then is all the money going?

[geronimo66]

exec bonuses...

[TiburonJT]

Originally Posted by oilleak

"You can’t choose between low cost or high quality anymore – you must be both,”

There you go - I guess GM finally paid attention to Consumer Reports and noticed that it's ****************ty quality is really killing it's market share.

Interestingly, Honda, Toyota and Nissan are in a much better shape nowadays. May be that's because they earned a reputation of Quality brands - and that definitely helps them sell without much cash back! Just look at Accord, Camry, Corolla, or better yet - Element! These are hardly hot looking cars, however they don't plummet in value like Chevy's and do not create oil leaks in your driveway at 70K...

Unfortunately, GM doesn't have reliability on it's side as a selling point. So, if the car looks boring ( think Grand Prix ) or ugly ( think Aztek or Bonnie ) there is little incentive to buy... ( unless Lutz offers a nice cash back )

So, until Chevy Trailblazer can compete with Honda Pilot, or Malibu can compete with Toyota Camry/Accord, or CTS can compete with G35/TL... I'll keep buying Japanese...

1. Nissan is not known for making quality vehicles, particularly their newer vehicles.

2. JD Power paints a different picture regarding GM's reliability (initial and long-term (although I believe CR has a longer long-term).

[TiburonJT]

Originally Posted by New_Mexico_Sunset_on_Rt66

Hmm, you consider the Cobalt, Equinox, LaCrosse and Lucerne "halo" cars? The SSR and Sostice, yes, but not the Cobalt and the others I list.

He said MANY of cars listed, not all.

[69nova]

How many people will be choosing a Hummer anyway? Concentrating on the niche vehicles will lead GM astray. It's the sedans and the minivans that now push sales. His hybrid comment is correct though. GM must concentrate on what will sell and not what is selling now.

[TCBNJ]

Thank you Bob Lutz. I just passed the one month threshold of owning a 2005 6 speed GTO. Great car! My assessment comes after living with a BMW 3 series for 8 years. To all readers who haven’t driven the GTO, you won’t understand my thanks unless you drive it


Appeal to Rick Wagoner.

Develop Pontiac into your affordable performance brand.

Directionally this means having (1) BMW driving characteristics, (2) American engine characteristics (i.e. torque), (3) higher quality but minimalist interiors and (4) pricing between BMW and Chevrolet. If you live with the 2005 GTO for a week, you will understand what I am requesting.

Furthermore, it means rear wheel or all wheel drive only. If you can’t afford to develop the Zeta platform, and the Sigma is too expensive, continue with the Monaro platform, it works.

Product strategy:
• “BMW 1 Series competitor” (coupe and sedan) based on the Solstice chassis
• “BMW 3 Series competitor” (coupe – Firebird and sedan – Tempest/Ventura) based on the Solstice chassis or shortened Zeta. This would replace the G6 which being front wheel drive does not belong with a ‘performance’ focused brand. Despite comments to the contrary, the Firebird label has solid name recognition, similar to the Charger. This model must have a V8 option.
• “BMW 5 Series competitor” (coupe - GTO and sedan Grand Prix/Le Mans)
• Use a solid, quality 6 cylinder engine – V6 version of LS2? Whatever, the power has to be smooth like the LS2 and installed with a power-to-weight ratio no higher than 1:14
• All other current products should be moved over to the Buick and GMC brands.

These observations are from long time BMW owner who also owns a mid 90s V8 Firebird convertible.

Originally Posted by Perian

Link: http://fleetowner.com/news/gm_global..._event_051705/
---------------------------------------------------------------------------
From: Fleetowner / By Sean Kilcarr, senior editor

May 17, 2005 3:35 PM

SALT LAKE CITY. With crippling quarterly losses grabbing the headlines, what’s going on in terms of product development and organizational changes at General Motors has gone largely unnoticed. But Bob Lutz, GM’s vice chairman of product development, says globalization is focused on turning out low-cost yet high-quality vehicles.

“Needless to say, 2005 has been and continues to be a challenge,” said Lutz speaking here at a GM Fleet & Commercial media event. “Yes, our [overall] market share is down, and yes, our stock price is down. On top of that, we’re facing tough global competition and escalating health-care costs, which puts us at a huge competitive disadvantage.”

On a net basis, GM lost $1.1 billion in the first quarter this year including restructuring and severance charges for job cuts in Europe and the U.S. Its North American operations actually lost $2 billion in the first quarter, but profits at the company’s GMAC financing arm helped offset that red ink. The net loss was the worst since GM lost $21 billion in the first quarter of 1992, largely due to accounting changes.

But now Lutz says “the pieces are in place” to create a more globally focused GM, instead of a collection of four regional operational companies (GM North America, GM Europe, GM South America, GM Asia). That global structure should drive greater efficiencies in manufacturing, design, engineering, and product planning, he said.

“With a global focus, we can build great cars and trucks that can be tailored to regional needs and tastes,” Lutz explained. “It also puts us on a better footing to compete globally with Toyota, Honda, and Nissan.”

To that end, he said GM is ramping up capital expenditures this year from $7 billion to $8 billion, with the vast majority of those funds devoted to product development.

“Full-size SUVs, in particular, represent a huge percentage of our profit,” said Lutz. “That’s why we are pulling ahead with new designs [for SUVs and light trucks] but without compromising quality.”

In particular, Lutz pointed to the upcoming introduction of the Hummer H3, powered by a 220 hp five-cylinder engine that gets 20 mpg on the highway, and the Chevy HHR, a medium-sized SUV that’s planned to be priced below $20,000.

“You can’t choose between low cost or high quality anymore – you must be both,” he explained in regards to the vehicle pricing structure GM foresees for the future. ‘You have to be best in class for everything – the chassis, frame, suspension, engines, and interior – yet still be priced for value.”

He also highlighted GM’s development work on a hybrid propulsion system for full-sized SUVs. It combines two electric motors integrated into the transmission with a 5.3-liter V8 Vortec engine equipped with “displacement on demand,” allowing the engine to “turn off” cylinders in slow driving conditions to improve fuel economy.

This hybrid system, which boasts a fuel economy improvement of 25% compared to gasoline-only powered vehicles, should be commercially introduced on GM’s Yukon and Tahoe SUVs in 2007.

“Having a great big SUV with great fuel economy is a no-brainer,” Lutz told Fleet Owner. “At highway speed, a hybrid doesn’t help much in terms of fuel economy, but in urban driving it’s a big advantage. However, right now, since we need to charge more for a hybrid propulsion system, fuel savings have to be calculated against that. But if fuel prices go up to $3 a gallon, hybrids really become a no-brainer. It really gives us options when it comes to addressing the fuel economy of large vehicles.”

That’s one reason Lutz believes GM’s current fiscal struggles are obscuring some of the real vehicle advancements the company plans to introduce over the next few years.

“We are on the road to a bright future, though we are hitting some serious speed bumps now,” he said. “But I believe we are going to handle these bumps just fine without losing too much traction on the strength of the products we have on the way.”

[espo19047]

Originally Posted by oilleak

"You can’t choose between low cost or high quality anymore – you must be both,”

There you go - I guess GM finally paid attention to Consumer Reports and noticed that it's ****************ty quality is really killing it's market share.

Interestingly, Honda, Toyota and Nissan are in a much better shape nowadays. May be that's because they earned a reputation of Quality brands - and that definitely helps them sell without much cash back! Just look at Accord, Camry, Corolla, or better yet - Element! These are hardly hot looking cars, however they don't plummet in value like Chevy's and do not create oil leaks in your driveway at 70K...

Unfortunately, GM doesn't have reliability on it's side as a selling point. So, if the car looks boring ( think Grand Prix ) or ugly ( think Aztek or Bonnie ) there is little incentive to buy... ( unless Lutz offers a nice cash back )

So, until Chevy Trailblazer can compete with Honda Pilot, or Malibu can compete with Toyota Camry/Accord, or CTS can compete with G35/TL... I'll keep buying Japanese...

GOOD FOR YOU. YOU NOW HAVE NO REASON TO COME TO A GM WEBSITE AND POST YOUR GARBAGE. GOODBYE.