Posted by: David Welch on March 3, 2010
It truly is the end of an era. Bob Lutz, the cocksure maverick who led a product renaissance at both General Motors and Chrysler, will retire effective May 1. When Lutz goes, the industry will lose one of its best car guys and a strong personality known as much for his gravelly pronouncements at auto shows as he was for the automobiles he helped create.
GM will surely miss his direction in the company’s new-car works. When Lutz arrived in September 2001, GM was putting out bland cars and cutting corners on all but its most-profitable pickup trucks and SUVs. Designers also took a back seat when the company set up to develop a new model. The company would engineer the underpinnings of a car, putting all considerations from engineering, manufacturing and marketing first. Then designers would wrap a steel body around it. The results were typically rote and boxy. When GM tried to step out with design, it ended up with cars like the famously garish Pontiac Aztek SUV.
Lutz brought design to the forefront. The company started its new cars with the styling concept first and then started to make changes for fuel economy, cabin space or aerodynamics or any other practical attribute. Stylists didn’t win every battle, but clearly design has improved immensely under Lutz’s reign. It took several years for Lutz’s overhaul to take hold. When it did, the results were much better cars that typically sold for thousands of dollars more than the old model they replaced. The current Cadillac CTS and Chevrolet Camaro have been critically praised. The Camaro has consistently outsold the rival Ford Mustang since its launch last year. GM has had to add production for the Chevy Equinox and GMC Terrain SUVs.
Under Lutz, GM spent more cash to spruce up GM’s cabins, where the company’s finance-driven management team had often shaved budgets. Eric Noble, president of California auto consulting firm The CarLab, said the Malibu has nicer materials inside than a Toyota Camry. The Saturn Aura and Malibu won North American Car of the Year awards in 2007 and 2008.
Lutz also spearheaded the Chevrolet Volt program. The fruits of that work will come this fall when GM starts selling the car, which is engineered to run purely on electric power for 40 miles. Lutz had to make three passes at now-fired GM Chairman and CEO Rick Wagoner to get an electric car approved.
Lutz wasn’t Mr. Green. This is a guy who flies his own jet fighter and has a passion for sports cars. He argued against government fuel economy rules and eschewed hybrid-electric cars until he saw the kind of marketing mileage Toyota was getting for its Prius. He famously declared Global Warming “a total crock.”
He also had some misreads when it came to the models he put out. The new GTO in 2004 was a cult favorite among gearheads, but the car was based on Australia’s Holden Monaro coupe and its jellybean styling looked dated. GM sold about 1,000 GTOs a month before ending production after three years. Remember the truck-nosed minivans? Lutz put an SUV face on the Chevy Uplander, Saturn Relay, Pontiac Montana and Buick Terrazza in 2005 and they, too, flopped. Lutz said at the time that it was a low-budget program. It was also bad badge engineering.
More recently, Lutz was overseeing marketing. He played a big role in the “May the Best Car Win” campaign that compared GM’s models to the best from Japan and Germany. It was audacious and showed that the company had confidence in the new cars Lutz and GM’s team had produced. GM still has a long way to go to convince some consumers to give its cars a look, but the campaign boosted showroom traffic.
Things changed in December. Whitacre and the board fired former CEO Fritz Henderson and later made Lutz an advisor. Lutz was dismayed at Henderson’s dismissal. Being an advisor with little authority didn’t suit his style, either. As Henderson told me today, Lutz “wants to be in the game.” At 78, Lutz has had a long run. If he isn’t having a major impact, he may as well kick back.
Someone has to pick up where he leaves off. Without Lutz to bring a product focus to GM, the company may surely be lost right now. Tom Stephens, GM’s vice chairman of global product operations, and GM-North America President Mark Reuss are the two men who will have to keep the car culture burning at GM, says Jim Hall. Lutz says he left a system in place to make sure it happens. And the two executives minding the car works have the sense to keep it going. Stephens is a car nut with an impressive collection of muscle cars and deep engineering knowledge. Reuss recently ran GM’s Holden business, where he had a big hand in developing the Camaro and beloved Pontiac G8 sports sedan. He is an engineer by training and has just the kind of expertise GM needs high up in management.
There may be tremendous pressure to return to old habits. Chairman and CEO Ed Whitacre is driven to boost sales, turn a profit and take GM public as soon as he can. That way the government can sell its 61% stake and GM can ditch the “Government Motors” moniker. But with that drive could come the pressure to shave costs to show potential investors a better bottom line. That isn’t to say Whitacre doesn’t believe in good products, though he has said little on the subject. But the company will have to resist the urge to pinch pennies. And management will do it without Lutz’s force of will. Hopefully for GM’s sake, the team he leaves behind will be able to do it.