Auto veteran leads GM's comeback

DETROIT (AP) -- Before Bob Lutz joined General Motors Corp. as vice chairman of product development in 2001, the left brain, by most accounts, was dominating the right when it came to making cars.

The rational left-brained engineers and planners would develop the chassis, engine and transmission, and marketing would have its say. Only then would the more creative right-brained designers be called in to fit a skin on the outside - so late in the process that the result was usually a mediocre car that turned customers away.

But recently, the right brain has been in from the start, thanks in large part to Lutz, and the results are beginning to show in the marketplace with the latest generation of GM (GM, Fortune 500) cars, trucks and crossovers like the Saturn Aura and redesigned Chevy Malibu. They're getting great reviews and starting to catch on with consumers.

"It was an overly rational approach to the business," Lutz said of the old GM. "The feeling was, if we give them a nice car with lots of features, and we make it very roomy and very reliable and very functional, people will realize what a good, rational purchase this is and we will get great sales. And then it didn't happen," he said in a recent interview with The Associated Press.

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Lutz, a former Marine captain and aviator, has been in the auto business since 1963 and has held executive positions with GM, Ford Motor Co., (F, Fortune 500) Chrysler Corp. and BMW AG. Industry analysts credit his product instincts with much of Chrysler's success in the 1990s when it cranked out creative hits with the right mix of exterior styling, performance and classy interiors.

When GM Chief Executive Rick Wagoner recruited him away from his post as chairman and chief executive of battery maker Exide Technologies, Lutz said he found a company hamstrung by hundreds of rules that limited design.

"The system here was really focused on stuff like that, where they'd ruin a design to get an inch more rear headroom or something," Lutz said. "The rational, functional elements were always emphasized over the aesthetic."

Although a group of executives had started holding meetings to eliminate some of the archaic rules, Lutz pushed the process along and created a huge transformation by giving designers more power early on, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

"He took the handcuffs off ... and really brought them into a totally different position in the game," Cole said.

Shortly after his arrival, Lutz began influencing cars and trucks that were developed under the old system, but because it takes years for a vehicle to go from a drawing to reality, only recently has GM seen the full impact of Lutz's touch.

The Saturn Sky and Pontiac Solstice two-seat roadsters were hit niche products. The Saturn Aura mid-sized sedan won the North American car of the year at the 2007 Detroit auto show.

The Buick Enclave, GMC Acadia and Saturn Outlook crossover vehicles and the Cadillac CTS sedan, praised for their exterior designs and elegant interiors, are selling well. And out of the gate, Chevrolet dealers in November had only a seven-day supply of Malibus.

"Certainly they've strung together back-to-back products that have been very good, and then looking at what they've done on the cost side, I think they're lined up pretty well into the future," said Kevin Tynan, a senior automotive analyst with Argus Research Corp.

The challenge for GM, he said, is to carry that momentum to all of its brands, some of which have been neglected at the expense of new products. GM, he said, still must change the perception that it makes mediocre cars.

"Because of the scale of the company, you're just dealing with so much overlap. You're dealing with inattention. You just can't be all places at all times," Tynan said.

Jim Hall, director of analysis for 2953 Analytics in Birmingham, Mich., said Lutz is the "product conscience" who returned enthusiasm for cars to GM. But he wonders if GM will return to its old ways whenever the 75-year-old Lutz decides to retire.

"Product conscience lives at the top ranks of General Motors. The question is has it been institutionalized?" Hall asked. "And the answer is it has not."

GM has people who can carry on for Lutz, but it may pick the wrong person to lead its global product development, Hall said.

"The decision to institutionalize it must be made at the top of the corporation. It has to be an absolute unanimous decision to do it, because if it isn't, the old GM way will slowly filter back into the corporation. Analysis, paralysis," he said.

Lutz says Wagoner and Chief Financial Officer Fritz Henderson are smart managers who realize that GM has to have the left-right brain symmetry to be at the top of its game, so he doesn't see the company returning to its old ways.

"You need this balance between the people like me who are always pushing the product, the product, the product, and pushing for product excellence," he said. "But it's always got to be tempered by the analytical side of the house."

To Lutz, the recent array of products shows that GM has the most design and engineering capability of any auto company.

"I will say the stuff is pretty sensational," he said. "It's the best I've ever done in my career."

When asked if GM would be performing at the level it has without him, Lutz responded:

"That's like asking a coach 'Do you think the team would have done this well this season without you?' The modest coach is going to say, 'yeah, sure, because it's a great bunch of guys,' but then you say, why did they hire you?"