GM Turns to a Top Guru in Industry
General Motors Corp., an auto maker run largely by finance and management specialists, Thursday hired former Chrysler Corp. executive Robert Lutz--one of the industry’s preeminent “car guys”--as vice chairman for product development.
It is a major admission by the world’s biggest car company that it needs help revitalizing a product line that has been leaving consumers cold for decades. GM, which sold more than half of all cars and light trucks in the U.S. in the 1960s, has seen its market share plunge to 28%.
Under Lutz and Chairman Bob Eaton, Chrysler in the 1990s clawed its way back from one of its many near-collapses with a series of vehicles that included the Dodge Ram truck, PT Cruiser, Dodge Viper sports car and the Chrysler Concorde and Dodge Intrepid with their daring “cab forward” design.
A cigar-chomping former Marine pilot who used to fly a converted military jet fighter for fun and keeps a number of custom hot rods and muscle cars in his garage, Lutz was president of Chrysler from 1991 to 1996.
GM waived its mandatory retirement rules to lure Lutz, 69, into its executive suite. Lutz’s contract is for three years and reportedly gives him unprecedented control over GM design, engineering and research and development.
His mission to reignite GM is of huge economic importance to the auto industry and the scores of communities across the country that are home to GM plants and employees as well as companies that supply the giant auto maker.
Lutz declined in an interview Thursday to list priorities, saying to do so now would be like a military commander deciding where to attack before doing fundamental reconnaissance. But he provided a broad clue by criticizing domestic auto makers’ passenger cars.
“The area where all American producers need to do a lot better is in making beautiful, interesting and fun-to-drive passenger cars,” Lutz said.
Lutz joined Chrysler in 1986 after 12 years at Ford Motor Co. and took over Chrysler’s then-struggling truck line, developing the Dodge Ram pickup and Durango mid-size sport-utility vehicle. He later headed all product development.
An inveterate showman, he introduced the 1993 Jeep Grand Cherokee for Chrysler at the 1992 Detroit Auto Show by driving it through a huge sheet of plate glass and onto the stage. The next year, he dropped the new Ram pickup truck from the ceiling of Detroit’s Cobo Hall to illustrate how tough it was.
But Lutz also understands the financial side of the industry.
It was under his direction that Chrysler went the furthest of the domestic auto makers in the 1990s to slash costs and speed up product development and production by implementing Japanese-style engineering and manufacturing techniques.
He retired from Chrysler in 1998 in the wake of Daimler-Benz’s acquisition of Chrysler and the formation of DaimlerChrysler. In 1999 became chairman and chief executive of struggling Exide Technologies, the New Jersey battery maker. Although still a major shareholder and nonexecutive chairman of Exide, Lutz is resigning as president and chief executive, effective Sept. 1, when he assumes his GM role.
Rick Wagoner, the former GM financial chief who became president and chief executive last year, recruited Lutz as part of what he said is an ongoing effort to bolster management and products.
“We have been showing recently pretty consistently we’re going to fill our key jobs with the best people we can locate around the globe,” Wagoner said.
The decision to bring in Lutz underscores Wagoner’s strength as a team builder, said Bret Smith, senior analyst with the Center for Automotive Research in Ann Arbor, Mich. He is “willing to share the power and glory, and this is a great example of it,” Smith said. “He is comfortable with an ego and persona as big as Bob Lutz and that shows a lot of courage and pride in his own leadership abilities.”
Noting that it often takes several years to get a new product from drawing board to showroom, many industry analysts are cheering Lutz’s appointment but reserving judgment on how successful he will be.
“There’s a huge middle-management bureaucracy there that is very conservative,” said Michael Flynn, director of the University of Michigan’s Office for the Study of Automotive Transportation. Lutz “is probably the best guy to get through all the committees and past all the financial hurdles, but it remains to be seen if he can do at GM what he did at Chrysler.”
Getting GM to change is the big issue, said UBS Warburg analyst Joseph Phillippi.
“But there is a significant cadre of passionate car people in the mid-echelons of GM, and [Lutz] now is the first truly passionate car guy in the upper echelons” since Robert Stemple was forced out as chairman in a boardroom coup in 1991, Phillippi said. “So this could be the start of a significant renaissance.”
Frank Saucedo, head of GM’s design studio in North Hollywood, said Lutz “is just a great product guy and the kind of guy who tells it like it is, and we can’t wait to start interacting with him.”
Lutz said that he wouldn’t have taken the job if he had doubts and that he doesn’t believe it will take years to effect a change. GM can produce some new products in as short a time as 18 months, he said, and can alter existing products faster than that.
He lauded GM’s new pickup trucks and full-size sport-utilities, which have begun outselling Ford’s light trucks in recent months after years of also-ran status, and said he believes that GM already “in many cases is heading in the right direction.”
Although his contract is for only three years, “it is the initial contract,” Lutz said. “It recognizes the fact that I’m almost 70 and, as I told Rick [Wagoner], have no desire to work until I’m 80. But, as Rick says, it’s three years and then we’ll see.”
Lutz’s vice chairmanship is a new position--previously, GM had only one vice chairman--Chief Financial Officer John Devine, a recent recruit from Ford. The man Lutz will replace, Tom Davis, was GM’s group president for product development.
Davis, 56, is retiring early next year after 37 years with the company. Davis led the team that developed the new generation of GM light trucks, currently the company’s only bright spot. He told Wagoner earlier this year of his decision to take early retirement--opening the door for Lutz’s recruitment.
Lutz will report to Wagoner and serve on GM’s Automotive Strategy Board and North American Strategy Board. He will coordinate with Ron Zarrella, president of GM North America, and will oversee development of GM’s global product portfolio.
GM design chief Wayne Cherry, who has reorganized the company’s design department to create a specific style or look for each brand, will report to Lutz. Under Cherry, who is expected to retire next year when he turns 65, GM has hired 100 designers, including 30 from overseas.
One of the newest hires is Bryan Nesbitt, who used to call Lutz his boss at Chrysler. Nesbitt is the chief designer of the phenomenally successful PT Cruiser.
