Lutz Again on GM’s Payroll: Bringing Back Value?

September 5th, 2011

Bob Lutz has always claimed the bean counters ruined GM, and he has written a new book, Car Guys vs. the Bean Counters, to back this up. I haven’t read it yet; maybe you have.

Now, the company’s former head of product development has returned as a paid special advisor (salary not revealed) and, as before, he’ll advise on “anything and everything,” said GM spokesman Jay Cooney.

According to Lutz, this new arrangement now has the Feds’ blessing and doesn’t diminish present management, which he thinks is doing a very good job. “It’s just making my broad experience and, arguably, my skills in leadership and general automobile business available to the company.”

“Arguably” is what Lutz is all about, including an outsized ego and an outstanding and contentious career in the auto industry. There is no question, however, that his passion and insight have helped immeasurably in GM’s revival.

An interview he gave in August gives real insight into the Lutzian worldview.

When asked about what took down Detroit, he maintains that, among other things like the horrific corporate culture and the UAW, one factor was the introduction of CAFE standards in the 1970s.

The Japanese back then were specialist purveyors of four-cylinder small cars. The US industry was geared to body-on-frame, rear-wheel-drive behemoths with V8 engines and the American public loved them. When Congress passed the CAFE legislation, the Japanese rubbed their hands with glee because they were already on the good side of average. In fact, they were able to introduce bigger vehicles and trucks and move into the space that we [Detroit automakers] were being forced to vacate!

It was the kind of engineering transformation—“from RWD to FWD, longitudinal transmission to transverse, V8 engines to V6 engines and so on”—that U.S. automakers couldn’t achieve in the short timeframe required. Plus, the exchange rate for the yen gave the Japanese a “$4,000-per-unit cost advantage.”

Along lines we have proposed here, Lutz is a strong proponent of an immediate and hefty rise in the gasoline tax. Even though this is politically impossible now, it is the right way to influence driver behavior. “If you insist on having the US motor fuel price at one third what people in Europe pay, then the American public will buy large cars.”

What do they want when they buy a car? “Value,” says Lutz. “They have to have the feeling of ‘this is amazing, I am getting this beautiful car for only this much money.’”

I don’t see how you can argue with that. GM is lucky to have this guy, with all his bluster.

Have you read Lutz’s new book? If so, what did you think?

—jgoods

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  1. Randy
    September 7th, 2011 at 09:02 | #1

    I can’t think of any single person more responsible for the bankruptcy of GM than Bob Lutz. Remember, he’s GM’s product guy and he’s responsible for the product mix that killed GM. The reason he’s back is because GM’s executives are clueless brand managers who really have no idea how to excel and innovate in the car business. Bob’s one big reason why you see so many expensive, overpowered niche vehicles like Hummer (thankfully dead), Corvette and V-series Cadillacs.
    If GM wants to survive much longer, it needs to leapfrog the competition and become a technology leader, as Toyota did with the development of hybrid technology. The most likely source for this new technology will be the fuel cell, but GM dumped their fuel cell research with Delphi, which subsequently dumped it’s own research facility and is limping along trying to survive another year.
    Bob Lutz will be right back in the saddle spending billions on developing low-sales overpowered niche vehicles, fleets of insipid brand-managed cookie cutter vehicles like Malibu, and oversized, inefficient body on frame trucks.

  1. September 27th, 2011 at 13:33 | #1
  2. November 3rd, 2011 at 10:43 | #2