Critics press GM's Lutz for results

By Ed Garsten / The Detroit News


WARREN -- Dave Whittaker could feel his colleagues in the product planning meeting eyeing him, wondering if he had the nerve to challenge automotive legend Bob Lutz, General Motors Corp.'s newly minted product boss.

Lutz wanted to use plastic trim that looked like wood and save $175 a car. Whittaker, a vehicle line executive, believed customers paying big bucks for a Cadillac deserved the real thing -- and he wasn't backing down.

"I had a chance to give my opinion, which was contrary to his," Whittaker said. "We were all worried that he might stymie that."

What he didn't know was that Lutz was spoiling for a fight -- not necessarily to win, but to send a message that he intended to banish GM's culture of assent, where the boss is always right, even if he or she is wrong.

Lutz finally gave in. And he gave Whittaker a new nickname: Woody.

"Everybody laughed and everybody thought, 'Hey, it's OK to argue with the guy.' Nobody gets punished or killed," Lutz said in a recent interview.

There's no doubt that Bob Lutz, who rejoined GM three years and three months ago to defibrillate the automaker's gasping product lineup, is shaking things up.

But the question is quickly turning to whether the 72-year-old has enough magic left to truly fix the automaker.

Some critics have said the first batch of Lutz-influenced GM cars have smacked more of corporate group-think than "gotta-have" appeal.

GM is still losing ground to rivals despite piling on unprecedented incentives.

Lutz is still occasionally frustrated by the massive automaker's dense, risk-averse bureaucracy. GM, he said, still has "too much hierarchic thinking -- much too much respect for authority, and not enough argument with each other and occasionally pissing each other off."

When the iconoclastic ex-Marine ruled at Chrysler Corp. in the 1990s, conflict and risk-taking produced the muscular Dodge Viper, the retro PT Cruiser and the cab-forward Dodge Intrepid and Chrysler Concorde.

Not since the 1960s has GM consistently produced cars with such panache. Lutz, who started his automotive career at GM in 1963, is desperate to return the automaker to those halcyon days.

The clock is ticking. As the 2005 auto show season kicks into gear, Lutz will finally get to reveal the sedans, trucks and roadsters he has influenced from start to finish.

"It's time for him to step from behind the plate and show us what he really has," said Kirk Schmitt, an analyst who follows GM with Victory Capital Management.


Legacy on the line


At the Greater Los Angeles Auto Show, GM unveiled the retro-looking Chevrolet HHR, coupe and convertible versions of the Pontiac G6, the Pontiac Torrent SUV, and refreshed editions of the Chevy Impala and Monte Carlo.

At the 2005 North American International Auto Show, GM will take the wraps off the Saturn Sky, a two-seat roadster, and Saturn Aura, a concept for a new midsize sedan.

Replacements for the Buick LeSabre and Cadillac DeVille debut at February's Chicago Auto Show and a new light truck line is scheduled to appear in 2006.

How these vehicles fare in the marketplace will have a huge influence on GM's future and Lutz's ultimate legacy.

Injecting excitement into GM's vehicle line is the biggest challenge of his storied career. After leaving GM, the Swiss-born Lutz moved to German automaker BMW AG and then Ford Motor Co. before landing at Chrysler in 1986. He left Chrysler in 1998 following the merger with German automaker Daimler-Benz AG.

After a stint as chairman of auto battery maker Exide Corp., he returned to GM on Sept. 1, 2001. At age 69, Lutz had his work cut out for him.

Beginning in the mid-1990s, GM made a disastrous foray into brand management under former marketing chief Ron Zarrella.

Barely a month after Lutz arrived, Zarrella exited the company, and brand management was promptly dumped.

Soon after, Lutz shook up GM's vehicle design process and created competition between designers to spark more inventive ideas and more interaction between the automaker's design, engineering and manufacturing ranks.

Lutz fired off a memo to top GM executives, railing that automotive design "is being corporate-criteria-ed to death."

He distributed little round stickers that asked the impudent question, "Sez who?" when subordinates questioned the permissibility of taking action that conflicted with GM doctrine.

Breaking down the system was not unanimously accepted. GM Chairman and CEO Rick Wagoner showed Lutz e-mails he received from skeptical staffers.

"They said, 'Mr. Wagoner, I don't think you realize what you've got yourself into, but Mr. Lutz is openly hostile to a lot of the process thinking we have adopted,'" recalled Lutz, who carries the formal titles of vice chairman for product development and chairman of GM North America. "He wrote all those people back and said, 'He is doing exactly what I wanted him to do.'"

Lutz encouraged GM's Stepford-like staff to loosen up, speak their minds and even criticize the boss.

With a mischievous grin on a face only now beginning to show a few faint wrinkles, Lutz recounted how a vehicle line executive pulled him aside a few days after a particularly rough meeting. The executive accused Lutz of spending too much time during the meeting fooling with his Blackberry and reading e-mails instead of listening to the presentation.

"Fine," Lutz said. "That's a fair comment."

Another confrontation, another survivor.


'A breath of fresh air'


"He has just been a breath of fresh air," said designer Tom Peters, who most recently worked on the 2005 Chevrolet Corvette and the Cadillac Sixteen and Buick Velite concept cars. "It's common sense and clarity and recognizing and empowering design to work to its full potential to do great products."

Lutz coined the phrase "gotta-have products" to describe the types of vehicles GM would need to excite buyers and regain market share.

When he joined the automaker, Lutz believes GM had no vehicles that fit the "gotta-have" criteria, with the possible exception of its popular full-size pickup trucks and SUVs.

With GM's market share in the United States still slipping, a lively industry debate has developed over whether or not Lutz's yen for emotional design is taking hold at GM.

"At this point, I would say no," said Wes Brown, an analyst with Los Angeles consultants Iceology. "Is Pontiac any better defined? Is Chevrolet? Is Buick in any better position? From the consumer perspective, the brands still are not where they need to be."

But Jim Hall, vice president of market research firm AutoPacific Inc., said it's too early to judge Lutz because of the lead times required to introduce new models.

"The cars he's had a major effect on are only starting to hit the market right now, like the Cadillac STS," said Hall. "It's way too premature to give his performance a grade."


Bumps in the road


Lutz's early efforts have drawn mixed reviews. The upcoming Hummer H3 midsize SUV was roundly praised and the Chevrolet Equinox small SUV has been an unqualified hit.

But the Pontiac GTO, a modified version of the Australian Holden Monaro, was vilified by classic car enthusiasts who complained about its styling and was largely ignored by buyers.

Lutz blames the GTO's woes on a base price that starts above $30,000. "If we were able to do it in the mid-20s, it would have been a bases-loaded home run," Lutz said.

That argument is a swing and a miss, said one analyst.

"It's a little pricier than it should be, but if it were the vehicle it should have been, the price wouldn't have been the problem," said Art Spinella, head of CNW Marketing Research in Bandon, Ore.

The GTO's styling has been upgraded, including hood scoops and split dual exhausts more reminiscent of the original muscle car, and sales have begun to pick up.

The new Chevy HHR crossover and Buick LaCrosse sedan also have touched off debates. Some critics call the HHR a late-arriving knockoff of the Chrysler PT Cruiser.

"I swear to God, (the media) just don't understand this business, which doesn't prevent their busy fingers from moving over the keyboard," Lutz said. "Read my lips: The HHR, marketed through Chevrolet dealers here, and at the price we're going to sell it at, will be sensationally successful."

Critics say the LaCrosse, which Lutz delayed for a year to redesign inside and out, emerged as a pale comparison to the flashier concept version. Lutz invites them to look at the original production design.

"What we had was a front-wheel-drive Regal replacement with straight sides and with some of the cues of the show car," he said. "It was embarrassing."

His hope is that the LaCrosse will become an alternative for entry-level luxury car customers who might otherwise consider a more expensive Lexus or Volvo.


Making changes


Given GM's wide range of vehicles, Lutz acknowledges that not every new car and truck can sizzle, saying "some stuff just has to be more or less conventional, but good conventional."

By the time he came on the scene, it was too late for Lutz to order a wholesale revision of the Cadillac STS's design. But he quickly encountered another throwback to the old lockstep culture of the past when he attempted to change the STS's roof line.

As he relates it, the sunroof in the original design was a carryover from the previous model, but its size forced the roof to be too flat and the windshield too straight. When he suggested using a 1-inch narrower sunroof used on the smaller CTS sedan, engineers said the new STS could not have a sunroof smaller than the one on the current model. Lutz didn't bother to argue that one. He ordered the change.

"Guaranteed, 100 percent (of the customers) would have noticed that the car is ugly," he said, "and we've yet to have one person say the sunroof seems to be narrower."

He also ordered a completely new "skin" and interior to the STS, which critics have given mainly positive reviews.

One of Lutz's first creations was the Pontiac Solstice, an affordable, two-seat convertible roadster that debuted as a concept for the 2002 auto show circuit. Built on GM's new Kappa platform, the Solstice was an immediate hit. GM will begin selling it later this year.

Without Lutz as a champion, the Solstice might never have leapt off the drawing board onto the road.

He also personally willed into being the 16-cylinder Cadillac Sixteen concept car, the hit of the 2003 auto show circuit. Lutz has made no secret of his desire to build some sort of six-figure-priced production car based on the Sixteen.


Shifting priorities


For better or worse, the GM cars coming out from now on are Lutz's babies. And he's sure to get the lion's share of the credit or blame for their performance in the marketplace.

Ever-confident, Lutz insists the best is yet to come.

Lutz invited The Detroit News on a rare tour through the automaker's design center, where future products that cannot yet be discussed are in various stages of development.

Flanked by GM North American design chief Ed Welburn, Lutz began pointing out the quality and styling improvements in the upcoming vehicles. The message: Patience in the marketplace and among critics will be rewarded.

While exterior design has always been a focal point, for the first time, a major priority has been placed on interior design and refinement.

"The focus was always on the exterior," Welburn said. "We would have a couple of people dedicated to interior work, but if we had to get something done on the exterior, they'd yank everyone."

As long as the cabins of GM's cars and trucks met technical requirements, they passed muster with management, regardless of quality or appearance, said Lutz.

"That's like a restaurant measuring success by having zero cases of food poisoning," he cracked.

Lutz couldn't help himself as he constantly ran his long fingers along the tight gaps between body panels of the vehicles and stroked the soft leather and the intricate stitching on the seats on the skeletal displays -- called bucks.

Under Lutz, there are now entire interior teams that specialize in finding higher-quality materials and pay more attention to the fashion world for trends and ideas.

The new Pontiac G6, Chevrolet Corvette, Chevrolet Cobalt and upcoming Cadillac DTS all received interior upgrades.

As designers were finishing the STS , Lutz repeatedly urged them to improve the car's interior as well.

"He kept saying, 'Kick it up, kick it up,'" Cadillac General Manager Jim Taylor said.

Iceology's Wes Brown still considers GM interiors "average or slightly above average," but he hasn't seen anything beyond the current and near-future product line and concedes that, in general, "Fit and finish and refinement have moved up significantly."


Philosophy changes hands


Lutz still faces an added challenge, however, of balancing GM's need to watch costs while improving quality -- all while the company continues to lay on generous and costly incentives.

"What is the point in making cost targets that are unrealistically low, then giving away $4,000 in incentives because customers say, 'I don't think so,'" Lutz said. "Aren't you better off putting $500 more into the car where the customer can see it, feel it, touch it, and maybe you can get by with a $2,000 incentive? That $1,500 difference would go a long way to solving our problems."

He hasn't begun to groom a successor, but Lutz says he told Wagoner he really only needed to teach his tenets to one student.

"I said, 'Rick, the most important person to teach is you,'" Lutz said. "'If I can get you fundamentally believing if you get a product right, everything is ancillary, never mind whether your plants are the most efficient in the world or whether your supply organization gets the stuff for half a percent more or less than Toyota. All of that is swamped by product.'"

Cadillac's Jim Taylor says the company is already drinking Lutz's Kool-Aid in liberal doses -- enough to have fully adapted to his philosophies.

"He can take his hand off the wheel now, and nothing would change," Taylor said. "We've got it."

Lutz hopes that's true, but the guy who pilots his own helicopter and rips through race car gear boxes isn't about to give up the wheel.

"Unless something terrible happens to me, I could be around for a long, long time," he said.

He knows public perception of GM as a sort of fast-food automaker churning out boring products with little value and questionable quality still remains but insists it's nothing that introducing improved products can't reverse.

"I believe in the old Sam Goldwyn motto that there ain't nothing wrong with Hollywood that good movies wouldn't fix," he said. "I'm here to do the good movies."

"I could be around for a long, long time."

From: http://www.detnews.com/2005/autosins.../A01-53426.htm