Lutz: GM’s Image is Changing

January 9, 2007

Images aren’t easy to change, but there’s little doubt that General Motors’ got a real boost from this year’s North American International Auto Show, said the automaker’s outspoken car czar, Bob Lutz. It has received wide praise for its new models, as well as kudos jurors on the North American Car and Truck of the Year jury who picked the Chevrolet Silverado as top truck and the Saturn Aura as best car during the opening session of the Detroit auto show.

“That shows that perceptions about General Motors are changing, especially among the media,” said the septuagenarian executive, adding that positive coverage will help GM improve its image among potential buyers. “You can’t do that with advertising anymore, even with all the money in the world.” There’s an internal payoff, as well, stressed Lutz. With the GM team “energized,” he suggested, “that drives performance.”

 

Even so, the vice chairman admitted there are some speed bumps in GM’s path. Another surge in oil prices could hurt sales of the new Silverado and other full-size trucks. And while the company has trimmed about $9 billion out of its fixed, annual costs, it still has a severe cost penalty compared to competitors like GM. So-called “legacy” costs including retiree health care, puts the Detroit maker several thousand dollars behind the likes of Toyota in terms of what it costs to build a vehicle like the new Aura.

 

The executive said he is optimistic, if cautious, about the potential for the new E-Flex system shown in the Chevrolet Volt concept vehicle during the opening day of the Detroit Auto Show. The so-called plug-in hybrid-electric vehicle, or PHEV, could permit most U.S. commuters to drive to work solely on battery power. There is some serious development work to be done on Lithium Ion battery technology, Lutz cautioned, noting to meet customer needs, “The battery pack must last 4000 charging cycles and ten years.”

 

During a wide-ranging interview, Lutz admitted GM has changed the way it thinks about new technology, such as hybrids and other clean-fuel powertrains. There may be early losses on such systems – it currently costs about $2000 to $3000 more to build a hybrid than the company can charge its customers, he noted – but that doesn’t mean GM should sit on the sidelines. That only hurts the automaker’s reputation and, in the end, costs it even more money. “A major lesson for GM,” Lutz said, is that “you don’t base business decisions solely on financial numbers.”

 


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2008 Chevrolet Malibu Preview by Marty Padgett (12/28/2006)
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2007 Chevrolet Volt Concept by TCC Team (1/7/2007)
GM gets charged up by electric propulsion.

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