"The reason is pretty simple," Zarrella said in a conference call with reporters Tuesday, Nov. 13. "I wanted to be a CEO. I wasn't going to be a CEO at GM. I've got a boss (CEO Rick Wagoner) who's younger than me, and he's good."
Zarrella resigned to become chairman and CEO of Bausch & Lomb Inc. in Rochester, N.Y., his former employer. He had been an executive vice president of GM and president of GM North America.
Lutz, 69, who became vice chairman for product development on Sept. 1, takes the additional post of chairman of GM North America. Gary Cowger, 54, group vice president of manufacturing and labor relations, becomes president of GM North America. The changes are effective immediately.
Zarrella was controversial within GM and the auto industry for championing brand management - a practice that seems likely to lose influence to Lutz's insistence that strong design and engineering outweigh market research.
Zarrella admitted that when Wagoner told him he wanted to bring in Lutz to oversee product development, "That was frankly difficult for me to get over." But he insisted that he and Lutz formed "a close relationship" and worked well together. "It's worked much, much better than I ever expected it would."
Zarrella was president and COO of Bausch & Lomb before coming to GM as vice president in charge of the sales, service and marketing group in 1994. He said Bausch & Lomb officials had approached him several times since then about returning, but an offer three weeks ago lured him back.
"I guess I just recognized, being one year older, that there's a limited window to be a CEO, and I'm in that window," said Zarrella, who is 52.
Zarrella said he expected the brand management system will survive him. Brand managers, aided by copious customer research, try to keep vehicles and marketing consistent with essential brand characteristics.
But he said he initially didn't appreciate the importance of getting products right. GM has only regained sales momentum as its products, especially trucks, improved, Zarrella said.
"The auto business is about 90 or 95 percent product," he said. "And everything else you do is frankly on the fringes."
Zarrella said he thinks he is leaving GM with strong products and finances. The company will post a market-share gain this year over last year, he said.
But Zarrella did say he regrets poor relations with GM dealers, many of whom remain bitter after he consolidated GM's field organization and removed control of local advertising funds from dealers.
"If I had anything to do differently, I would have gotten much more dealer involvement in some of the actions we took early in my tenure at GM," he said.