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The Inside Story
By Michelle Krebs
GM's Bob Lutz: Is He Making the Grade?
By Michelle Krebs
GM's Bob Lutz: Is He Making the Grade?
Despite 350 hp and rear-wheel drive, the 2004 GTO wasn't the hit Bob Lutz thought it might be.
The appointment of former Chrysler vice chairman Bob Lutz to the top of General Motors' ranks was initially hailed by everyone — from automotive critics to Wall Street to GM insiders. But now the question is being asked if Lutz, who is GM's vice chairman of product development and chairman of GM North America, is living up to the early promise of turning GM products around.
Around the industry — and even within the halls of General Motors — some people are whispering, "Is Bob Lutz making the grade?"
And they are only whispers at this point because nobody, including other GM brass, the press and Wall Street analysts, dares to ask the question too loudly. Why? For fear of being denied access to or possibly incurring the wrath of the highly quotable Lutz. Lutz was appointed to the product development position, one created by GM just for him, in 2001 by GM chairman Rick Wagoner. Wagoner, who came up through the finance ranks and not the product ranks, was essentially praised for knowing what he didn't know — that being product — and finding someone who did. That someone was Lutz, who had a long string of product successes, such as the Dodge Viper at Chrysler.
Bringing in Lutz further sent the signal throughout GM's troops as well as to the outside world that product, not marketing, would now be king at the world's largest auto company. In the years before Lutz's arrival, marketing reigned supreme. Ron Zarrella, who came from and returned to Bausch and Lomb, had a background not in the auto industry but in the consumer goods business. Zarrella, in turn, brought in so-called experts of the marketing world who had no understanding of the auto industry — or of cars and trucks, for that matter. Zarrella left shortly after Lutz's arrival but the damage done to GM's brands has been long lasting.
Under the Zarrella reign, designers, engineers and product development people were relegated to second-class citizens behind those selling the goods. Their status immediately rose with Lutz coming onboard. In fact, GM's hiring of Lutz triggered a rise in GM's stock price.
But now, it is harvest season for the fruits of Lutz's labor and consumers and analysts alike are unimpressed with GM's latest new models, which by his own admission bear Lutz's stamp. GM's market share in 2004, a year heavy in new product launches, continued to slide.
The first model with Lutz's imprint was the Pontiac G6, the replacement for Pontiac's highest volume car, the Grand Am. At an early press launch of the G6, Lutz said this was the first car to be his.
The reviews of the G6 have been mixed and, in some cases, highly critical for both its drab styling as well as some of its driving characteristics, particularly its steering. Worse, sales of the G6 have been less than stellar. Television commercials, at least in Detroit, a traditionally strong market for Pontiac, are touting incentives of $3,000-plus on a car that was introduced as recently as the second half of 2004.
Even before the G6, Lutz had said the new Grand Prix was Pontiac's BMW 3 Series fighter. That prompted reviewers to put the Grand Prix head-to-head against the 3 Series and they found it came up short. The negative reviews ticked off Lutz, who made some chastising phone calls to some writers.
Also at Pontiac, the 2004 GTO was Lutz's baby. On a trip to GM's Holden operations in Australia, Lutz decided to bring a Holden rear-drive V8 coupe to the U.S. and put the legendary GTO name on it. The GTO took some darts — GTO aficionados criticized its styling as not being as flashy as the original and its price of roughly $33,000 as being too stiff. The GTO has not lived up to sales expectations.
On the heels of the G6 launch, GM introduced the Buick LaCrosse, which it billed as a premium midsize car to replace the Regal and Century sedans. Again, Lutz claimed the LaCrosse as his own. And again the reviews of the LaCrosse, albeit significantly better than the aged models it replaces and one of the better handling Buicks ever built, have been lukewarm.
So now comes the Chevrolet HHR, which has been criticized as a wanna-be Chrysler PT Cruiser, which itself is looking aged and experiencing falling sales. Lutz vehemently defends the HHR and predicts its success.
A few insiders question whether Lutz's age of 73 and the automotive age in which he flourished have put him out of touch with the current times and contemporary tastes of consumers.
Even some GM insiders cringe at Lutz's bravado about the product, such as the Grand Prix billed as a Bimmer fighter, and his often politically incorrect though highly entertaining comments. One top-level GM executive asked unsolicited if Lutz is too much of a rock star among product gurus for his own good — or, more importantly, GM's good.
Nevertheless, Lutz has a long list of defenders and fans — a longer list than the one of his critics. And most importantly, it looks like Lutz's boss — Rick Wagoner — is satisfied with the job he's doing.
Lutz advocates point to his successes: he brought performance back to Cadillac with the introduction of the V-Series models; the latest-generation Chevrolet Corvette has been a rousing success; the Chevrolet Cobalt promises to be GM's first small car to have a shot at stacking up well against its competitors from Honda and Toyota; and the upcoming models from Saturn — the midsize Aura sedan and the sexy Sky roadster — show there could still be life and a sense of design in that GM division.
Lutz fans further argue he is being unduly criticized in the media, in particular, and they insist the full fruits of his labors have yet to be seen by outsiders, a crop that we will be anxious to see — and then judge Lutz's legacy by.