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Gm's Aurora


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GM'S AURORA

The atmosphere was tense as senior Oldsmobile managers gathered at the division's Lansing (Mich.) headquarters for an unusual meeting in December, 1992. The topic of discussion: whether to strip the celebrated Olds "rocket" logo off a soon-to-be-unveiled luxury sedan. Longtime Olds loyalists were horrified. To them, the rocket was a proud symbol that harkened back to the mighty Rocket V-8 engine, which propelled Olds to new heights after World War II. But the team in charge of Oldsmobile's so-called G-car project argued tha` the logo had become less an emblem of excellence than a red flag to consumers.

The debate raged during the morning meeting. "People who've been here for a while have rockets tatooed on their foreheads," says Byron Kearney, the business team leader on the project, recalling the contentious session. Kearney and his team played a videotape of consumers who had been shown the car a few months earlier. Almost to a person, they marveled at the new sedan--but recoiled when they discovered that it was an Oldsmobile. Says Olds General Manager John D. Rock: "After a lot of heartache, we took the rockets off."

Jettisoning old styles--and old ideas--is a central if wrenching element of Olds's big gamble for survival. The weakest of General Motors Corp.'s seven car and truck divisions, Olds is struggling to reverse a slide that has knocked its sales from a mid-1980s peak of 1 million-plus cars to 381,000 last year. And the G-car, now christened Aurora, is at the forefront of a sweeping campaign led by Rock to reinvent Olds's faded image and attract the younger, well-heeled buyers Olds needs to survive. As the top-of-the-line model, Aurora is the first of the division's totally revamped product lineup, and it will set the tone for the rest of the decade. "It's a halo car for the whole division," says GM Chief Executive John F. Smith Jr.

Aurora is certainly a far cry from your father's Oldsmobile. Sporting a silver script A instead of the Olds rocket, the car is the latest U.S. entry in the luxury-sedan market now dominated by imports. Aurora's sleek, sculptured steel, leather, and burled-walnut interior evoke the styling of German and Japanese luxury cars. Its 32-valve V-8 is a close cousin of Cadillac's popular Northstar engine. Priced at $32,000, Aurora also offers the amenities found in foreign competitors--with a milder jolt of sticker shock (table, page 94). GM told industry analysts it has sunk a total of $823 million into developing Aurora and the Buick built on the same platform, the new Riviera.

Analysts figure GM will break even on Aurora by 1997, even though it expects to make only 40,000 of the cars a year. That qualifies Aurora as a niche car--but its meaning for Oldsmobile is much more profound than mere unit sales totals. Aurora is the test of the division's ability to attract the affluent, quality-conscious baby boomers who have never considered an Olds. Says Rock: "This is the symbol of the Oldsmobile to come."

It's not just Oldsmobile's fate that's tied to Aurora. The car's success or failure will also have a profound impact on GM. Part of GM's rationale for its $5 billion Saturn investment was to create a laboratory for innovations that were meant to be shared companywide. Four years after Saturn's debut, Olds is the first to follow its lead. To help sell Aurora, the division has borrowed Saturn's no-haggling, one-price policy. And it's retraining dealers in the art of customer satisfaction. Olds executives are already pushing Aurora as a step-up model for Saturn owners.

In addition, Aurora's "architecture"--the body structure, its mechanical and electrical components, and a series of power train and suspension systems--will be the basis for a future generation of Oldsmobiles, Cadillacs, Pontiacs, and Buicks, starting with the 1997 Buick Park Avenue. By the end of the decade, spin-offs from Aurora could account for 750,000 cars annually, about 25% of GM's total car production.

Even more important, Aurora illustrates GM's progress toward fixing its product-development efforts, which have long been fragmented by bickering fiefdoms. Aurora is the first graduate of GM's new Four-Phase Vehicle Development Process, so it offers an unusual window into the approach the carmaker is counting on to help it churn out a steady stream of appealing new cars and trucks. In inimitable GM fashion, the Four-Phase process actually has five phases: determining what customers want, using that knowledge to develop the vehicle's concept, two stages of converting the concept into vehicles and processes, and manufacturing.

FUTURE ROAD. Using this approach, all departments from engineering to marketing worked simultaneously on Aurora, cooperating in the early stages to reduce costly glitches later on. "Aurora is exactly what we're going to do on all our future products," says J. Michael Losh, head of GM's North American marketing and sales.

GM's process is quite different from the one pioneered by Honda Motor Co. and Chrysler Corp. While those companies place nearly all decisions about a vehicle's development in the hands of a single, autonomous product team, GM prefers to preserve the power of its functional departments, such as engineering and purchasing. GM is convinced that nurturing its technical expertise this way will result in the best new products. So responsibility for each project is spread among an overlapping network of smaller teams, each with its own mandate and bosses. Still, the current system is far more unified than in the past. "What's important now is that everyone is tied together," says CEO Smith.

For Aurora, that meant GM design engineers in Flint joined efforts with Oldsmobile's marketing group in Lansing and GM factory managers at the Lake Orion (Mich.) plant. In cases where the various teams have a sense of common purpose, the results can be impressive. But GM hasn't yet demonstrated that it can consistently and repeatedly inspire such teamwork. "I'm waiting for them to convince me," says one GM supplier. "There's still too much bickering and infighting going on."

At the very least, Aurora is a sign that GM is finally listening to its customers. The No.1 carmaker had long made a habit of ignoring customer input or delaying market research until the final stages of car development, when it was too late to make changes. By contrast, Aurora's development team consulted extensively with consumer focus groups even before the first designs were drawn. In all, it held 20 so-called clinics nationwide, interviewing more than 4,200 consumers--the biggest such sampling in GM history.

Now, the "Voice of the Customer" has become GM's new rallying cry. Already, the team working on the 1997 Cutlass Supreme has been relying heavily on clinics. GM is reworking, and sometimes even delaying, new products that don't please consumers in research groups. Final work on Chevrolet's 1995 Blazer, a sport-utility vehicle, was delayed six months after research showed customers wanted air bags and preferred the spare tire stowed somewhere besides on the rear door. Just recently, Cadillac decided to redesign the back end of its 1997 LSE sedan because of consumer criticism.

In many ways, Aurora's birth is a remarkable product-development tale. As the team raced to produce a competitive luxury car, it seemed to face adversity at almost every turn. During Aurora's incubation, GM went through three chief executives, numerous restructurings, and two board coups. Add to this the project's suspension--not once, but twice--amid rumors of Oldsmobile's demise, and it's a wonder the car was finished.

"INTO THE GRAVE." Even when they started work on Aurora back in 1988, GM's engineers knew they needed something out of the ordinary. At the time, GM was eager to replace the aging Toronado coupe at the top of Oldsmobile's lineup. The 1966 Toronado had been a classic, with aerodynamic styling and the country's first post-war, front-wheel-drive V-8. But after two decades, it had become another bland GM-lookalike with badly slipping sales.

In fact, all of Olds was hurting. A rash of defects in engines, transmissions, and steering in the late 1980s was battering the division's image and sales. Olds executives watched with alarm as the average age of its customer climbed steadily. "It didn't take a rocket scientist to see that if the trend continued, we would follow the customer right into the grave," says Dennis Burke, Aurora's chief exterior designer. GM's engineers knew that they, too, had a troublesome legacy to overcome. "We were not proud of our quality and our ability to build cars that people were excited about," recalls Roger Masch, chief engineer of GM's luxury-car engineering and manufacturing division.

In early 1988, Olds gathered owners of European luxury cars, including Mercedes-Benz and BMW, in Boston for a clinic. It held similar sessions on the West Coast to find out what trendy and import-loving Californians were thinking. Olds engineer Douglas L. Stott says drivers talked about cars that were sporty, with features such as leather seats and wood trim. Performance and quality were a must. They wanted a sophisticated multivalve engine for smooth acceleration, and four-wheel disk brakes.

Highest on the list, though, was a nameless characteristic that nearly all the luxury-car owners had attempted to describe: something about the solid German cars that inspired confidence and security, gave the vehicles an opulent hush, and isolated drivers from bumps and jolts. Masch and his design team concluded that this sense came from a rock-solid body structure.

GOOD VIBRATIONS. Working at their facilities in Flint, the engineers went to work testing the rigidity of European imports. In cars, a stiff body produces a high frequency that screens out lower-level vibrations, such as shakes and rattles. When GM's engineers found the Mercedes-Benz 300 had the highest frequency, at 25 hertz, that became the benchmark. So they began working with design computers and experimenting on plastic scale models and a "mule"--a cobbled-together version based on a Sedan de Ville--to find out what it would take to give Aurora the necessary rigid frame.

While the engineers labored on frequency, 60 miles south in the auto maker's styling studios in Warren, Mich., designers started sketching. Bud Chandler, a 30-year GM veteran, played with a few ideas, finally drawing a cylindrical shape with prominent wheels and no grille. "We jokingly called it the tube car," says Burke. But when Olds showed a fiberglass model to consumers in Los Angeles in March, 1989, the design "was a home run," he says. The final version was toned down to look a little bit less futuristic, but it still bears a strong resemblance to the original.

The pressure on the Aurora team grew in the autumn of 1989, when the latest Japanese competition hit the market. Oldsmobile quickly bought the new Lexus LS 400s and Infiniti Q45s to drive, tear apart, and study. Aurora engineers swear they changed little as a result. But the quality and dealer service of the new imports established a tough standard. In subsequent research, Olds found that when consumers thought Aurora was a Lexus instead of an Oldsmobile, 50% more of them said they would consider buying it.

Meanwhile, woes were mounting at GM headquarters. The deepening recession and GM's slumping sales forced former Chairman Roger B. Smith and then-President Robert C. Stempel to suspend several new-car projects, including the G-car, for all of 1990. Masch stuck to the letter of the order but not the spirit. "We didn't spend any money on it," he says. "But we believed in the vehicle so much there was no way in hell we could completely stop working on it."

SEAMLESS FIT. The manufacturing engineers used the time to devise solutions to some tricky problems. Resolving a dispute about how to attach the Aurora's roof to the rear quarter panel required flexibility and cooperation that have been rare at GM. Burke and his designers wanted a smooth, flowing line where the two parts met. But Masch's engineers didn't want to use conventional welding to join the two pieces--that would require putting a big hole in the frame for the welder to reach through, weakening the rigid structure. Instead, the engineers suggested a new manufacturing process they had already been tinkering with. They devised a way for robots to spray molten silicon bronze smoothly into the roof seam. To make sure the tricky technique was worked out by Aurora's launch, the Orion plant pioneered it in 1992 on other Olds and Buick cars.

Funding for Aurora was restored in early 1991, but life hardly returned to normal. GM was just about to enter its rockiest stretch in 70 years. Stempel had succeeded Roger Smith as chairman and CEO, and the new boss was under pressure from GM's board to solve a deepening financial crisis. In December, 1991, Stempel and President Lloyd E. Reuss announced their plan to shut 21 plants and eliminate 74,000 jobs.

In April, the board stunned GM by replacing Reuss with Jack Smith, then head of GM's international operations. By November, Stempel was out, too. Masch scrambled to keep new bosses in the know about his brainchild "so that something bad didn't happen to the program," he says. But no amount of lobbying could protect Aurora from GM's cash crunch. In early 1992, GM put Aurora on hold for six more months.

Then another potential catastrophe loomed. After losing $552 million in 1992, Olds seemed close to death. Despite denials by Rock and GM executives, rumors swirled that Olds would close. Customers fled, dealers panicked, and sales sank. Rock fired back with a plan to "Saturnize" Olds, with Aurora as the centerpiece. Olds would offer an all-new, drastically pruned line of upscale vehicles with an import feel and slick new engine technology. Dealers would adopt friendly, no-dicker sales tactics. Says Rock: "Aurora became the star we hitched all that to."

Once again, though, that star looked as if it might be extinguished. New CEO Jack Smith began reviewing GM's entire portfolio of future products, deciding where to spend the company's scarce cash. Some GM planners were dubious about investing big bucks on a car for floundering Oldsmobile. "There was still a school of thought that we ought to kill Aurora," Rock acknowledges. The car's backers stood their ground, emphasizing its long-term strategic role for GM. The project survived. "We decided that this was an important car for Oldsmobile and for GM, because it is the architecture from which a lot of future cars would be built," says Losh.

BUGGED OUT. Granted a reprieve, the Aurora team focused again on manufacturing. The car is complicated to build, and GM figured that if it tried out a lot of new things as Aurora started rolling down the line, glitches would wreck quality. So plant manager Tim Sprecher started to work the bugs out of several new processes. Because Aurora's engine is too big and complex to lower into the body, Sprecher and his team created "stop stations," where chassis come up to meet the sheet-metal bodies. Teams of five operators work at their own pace to bolt the assemblies together.

Helping Sprecher iron out the details of assembling the new car was a rotating group of 50 hourly workers and Aurora's engineers. In a three-year collaboration, they made 80% of the major changes in how Aurora is put together before it left the engineering center, avoiding costly changes in the plant. "In the past, the engineers would drop off the designs at the front door and say, 'O.K., now you build it,'" Sprecher says. "And sometimes, we couldn't."

To shepherd Aurora through its final stages, Olds formed its first "launch team," headed by Bob Romero, then the unit's head of strategic marketing. This Saturnesque group coordinates the efforts of marketing, public relations, engineering, manufacturing, and dealers. Its efforts include a $20 million dealer training program and a $30 million ad campaign.

The Aurora was finally unveiled in January, 1993, at auto shows in Los Angeles and Detroit. Although Olds hasn't set an official launch date, production started on Jan. 31. Will it sell? Some competitors are clearly worried. "It will definitely take sales away from the Japanese and, who knows, maybe even from us," says Michael J. Jackson, senior vice-president for marketing and sales for Mercedes-Benz of North America Inc. "It's a whole new ball game."

Well, Olds's image remains a daunting problem. "Luxury-car buyers buy for prestige, they buy for product quality, they buy for the way they're treated at the dealership," says George E. Borst, general manager of Toyota Motor Corp.'s Lexus Div. "It's going to be difficult for Olds to catch up" while it still sells mostly its older models.

Even if it is a hit, Aurora alone won't guarantee Oldsmobile's survival. Olds badly needs a revitalized lineup--but many of its new models won't arrive for three years, in time for the division's 100th anniversary in 1997. As it stands now, the revamped Bravada sport-utility vehicle is due in the fall of 1995, with a new minivan expected the following spring. A remodeled midsize Cutlass Supreme--Olds's bread-and-butter car--won't arrive until 1997. A new full-size, near-luxury sedan based on the Aurora is due out the same year. That's also the new target date for the reworked Achieva compact, which Olds delayed after deciding that the planned car missed the mark on styling and

performance.

Still, Aurora may already be a success by another measure: the lessons it could teach GM. To make sure that future new-car projects adhere strictly to the Four-Phase process that produced Aurora, GM has established a Vehicle Launch Center in Warren, Mich. These days, when a car project is begun, everyone involved, from designers to accountants, spends nearly a year at the center under the guidance of a staff of engineers and purchasing agents. The teams working on the 1997 Chevrolet Corvette and the 1997 Park Avenue were among the first through the center.

The center will coordinate the flow of new products and coach each program through its critical early stages. It will urge teams to use common GM parts and share engineering expertise. "We stay on the learning curve," says Masch. "We take all the knowledge we gain and apply it on the next vehicle, so we never make the same mistakes twice." If Aurora teaches GM nothing more than that, its shining "A" symbol may someday come to mean as much to Oldsmobile and its parent as the vintage rocket ever did.

AURORA'S BUMPY ROAD

February, 1988

GM AND OLDSMOBILE START

CONSIDERING A SUCCESSOR TO FADING TORONADO COUPE. THEY DETERMINE THAT CUSTOMERS WANT A SPORTY, FOUR-DOOR LUXURY SEDAN WITH HIGH

PERFORMANCE AND QUALITY.

Autumn, 1988

VETERAN GM DESIGNER BUD CHANDLER SKETCHES FIRST

DRAWING OF "TUBE CAR," WHICH BECOMES THE STARTING POINT FOR AURORA STYLING.

ENGINEERS BEGIN EXPERIMEN-TING WITH AN EXTREMELY RIGID FRAMEWORK TO GIVE AURORA STABILITY AND QUIETNESS, YET NIMBLE HANDLING.

July, 1989

THE AURORA GETS ITS FIRST

CORPORATE GREEN LIGHT WITH GM APPROVAL TO BEGIN DEVELOPMENT OF CAR AND ITS BUICK SISTER, RIVIERA.

January, 1990

GM STARTS ONE-YEAR SUSPENSION OF ENGINEERING WORK ON AURORA TO SAVE MONEY.

Early 1992

SECOND HALT OF SPENDING ON AURORA, THIS TIME FOR SIX MONTHS, DELAYS TOOL-AND-

DIE WORK.

September, 1992

OLDS CHIEF JOHN ROCK MEETS WITH GM'S NORTH AMERICAN STRATEGY BOARD AND WINS APPROVAL TO CONTINUE PROJECT.

October, 1992

RUMORS CIRCULATE THAT GM'S BOARD PLANS TO KILL OLDSMOBILE DIVISION.

August, 1993

GM'S LAKE ORION (MICH.) PLANT STARTS PILOT PRODUCTION. PROCESSES DEVELOPED FOR AURORA HAVE ALREADY BEEN APPLIED TO ASSEMBLY-LINE PRODUCTION MF CARS SUCH AS THE OLDS NINETY EIGHT.

April-May, 1994

FIRST AURORAS BEGIN APPEARING IN DEALER SHOWROOMS. THEY WILL BE SUPPORTED BY A $20 MILLION DEALER-TRAINING PROGRAM AND A $30 MILLION ADVERTISING BUDGET.

DATA: BUSINESS WEEKKathleen Kerwin in Flint, Mich.


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