), then his September hiring will have been a huge waste of money. So said Lutz when he was hired back in August as vice-chairman for product development and chairman of GM North America. Now, he and his right-hand man, GM North America President Gary L. Cowger, are gearing up to change how GM develops new cars and trucks for the auto maker's all-important North American market.
They're looking at everything. In the past couple months, Lutz and Cowger have been scrutinizing nearly every new-vehicle program at GM. Some have been delayed, some canceled, and some cars have been moved ahead of schedule, Lutz says. They've also been looking for ways to streamline product development to get cool concept cars to market faster.
And they're trying to solve GM's most stubborn problem: How to replicate the company's success in the truck business to make cool passenger cars that sell at a profit. The two newly promoted executives sat down on Dec. 12 with automotive journalists, including BusinessWeek Detroit Correspondent David Welch. Here are edited excerpts of their discussion:
Q: The auto industry is supposed to get very tough next year in terms of sales and pricing. How will you make market-share gains and still cut costs?
Cowger: We have a very intense focus on costs this year and will next year. We've been driving out waste. It's overtime, excess people, warranty costs.
Q: Will you lay off more salaried workers?
Lutz: It will be through attrition. Things will have to get worse for us to initiate some new program.
Q: GM has had success in the truck business, what do you do next year to gain market share on the car side?
Lutz: There's no question that the passenger-car business will be challenging until we roll out new products. Until then, we're going to have to intelligently find the right balance between meeting our profit goals and, at the same time, demonstrating momentum in [market] share. It's not a year devoid of product introductions.
Cowger: We're going to stay competitive in the marketplace. The good news is, orders look strong going into the end of the year. Production is up quarter to quarter.
Q: Ford seems to have lost its momentum in the past few years -- and GM has gained momentum. How do you build momentum quickly in the auto industry?
Lutz: A lot of hard work has been done invisibly behind the scenes at GM. [Chairman] Jack Smith, [CEO] Rick Wagoner, and [former GM North America head] Ron Zarrella had to wrestle with this enormously complicated thing that we all used to know as GM. It had several engineering organizations, several manufacturing organizations, and many sales organizations. The thing was close to unmanageable.
All that had to be cleaned up before we could start working on product and market momentum. Now, General Motors is one organization. The problem of having this diffuse organization that you can't mobilize is behind us.
Q: The Cadillac CTS is supposed to be the best GM can do, but there has been criticism of the interior. What can you do to fix it?
Lutz: The car is a sheer pleasure to drive, and it's going to be enormously successful. The interior, perhaps, is very polarizing. Some people love it, some people don't like it. We may have gone too far in the direction of modern materials and design. We can very quickly double back and put in a more European-oriented instrument panel.... The interior is not a disaster. It's elegant, well-executed. It may just be a little too architectural for buyers of sporty luxury cars.
Q: Is there something wrong with the system that produced that?
Lutz: We have an internal cross-functional team that's assessing the way we do development and how we narrow design proposals and how we do absolute winning vehicles. This is one of the things Gary and I are very focused on.
Q: Is that because the brand-management system failed?
Lutz: The brand system has not failed. Gary and I believe that brand management is, in its truest sense, a necessity. Design will not go anywhere unless we have a keen understanding of what every brand stands for, how we're going to position that brand, and how we will develop cars that are visually and emotionally in sync with what that brand stands for. Product drives brands.
Q: What do you have to do to bring marketing and product development together?
Lutz: You can't do that with structure. What we both want to do is close the loop between the ad agencies and the people who develop products.
Q: GM has been behind on some of the hot trends in the industry, such as rear-wheel-drive performance-luxury cars, all-wheel-drive cars, and crossover utility vehicles. Do you have the car platforms you need to make those kinds of cars?
Lutz: It's closer than you think. The Cadillac CTS platform and the [European] Opelectra platform can easily be configured with all-wheel drive with normal ride height or increased ride height for crossover sport-utility vehicles.