Car guys take charge at GM

Leaders scale back role of marketers in product development

Lutz's ins, outs
GM's Robert Lutz wants to purge standard features that don't attract buyers - and add those that do.


In

  • Sharp, Volkswagen-Audi-like interiors with fine worksmanship and appealing materials

  • "Jewel-like precision on instruments"

  • "Wonderful tactile feel on knobs and switches"

  • Better craftsmanship on exterior sheet metal

  • Onstar, which Lutz says will continue to grow


    Out

  • Luxury features such as lighted vanity mirrors on non-luxury models
  • Multisection sun visors
  • Multiple rear-seat electrical outlets
  • High-intensity rear-seat reading lights
  • Pollen filters
  • 18-oz. carpet
  • "Less cubbyholes, less coin holders, less CD holders, less cargo nets, less map pockets, less lids on everything"

  • DETROIT - General Motors North America will streamline its product development process to give more power to vehicle line executives and designers, and less to brand managers.

    In a press briefing last week, Vice Chairman Robert Lutz and President of GM North America Gary Cowger said a team has been comparing GM's creative process to those used by competitors.

    GM's goal is something like the fast-moving product machine Lutz helped build at Chrysler Corp. in the 1990s, where empowered designers and engineers cut costs and built a string of popular cars. Brand management will take a back seat, functioning more as a traditional marketing department.

    Lutz spoke glowingly of GM's efforts to merge divisions into a unified company, saying it already "resembles what I remember from Chrysler, a very simple, easy-to-understand organization." But he said GM's product-development process has lagged, adding that he and Cowger expect to announce changes "fairly soon."

    Their comments indicate the changes will include:

  • Vehicle line executives - the product development chiefs who are responsible for a specific vehicle or vehicle family - will get final say over vehicle content.

  • The basic brand management structure created by Ron Zarrella, former president of GM North America, will stay in place, but its role will be subordinated in product development.

  • Input from engineering, manufacturing, suppliers and other disciplines such as marketing will be upfront, before a product is designed.

  • GM will seek to drive out features that add cost - such as the lighted vanity mirrors and cargo bags that give marketers more selling points - but fail to excite consumers.

  • At the same time, GM will spend more to improve perceived quality, especially in interiors. Lutz said GM's interiors lag behind top European brands in materials, fit and finish, and the feel of control knobs and materials.

    Fighting 'content creep'

    Vehicle line executives who report to Lutz will gain power over product content decisions as GM seeks to fight "content creep" that adds nonessential standard equipment - a longstanding Lutz target.

    Lutz said the problem occurs at all automakers as marketers seek to add selling points to vehicles.

    "You have a lot of so-called brand-marketing people who are helping to specify the next great new vehicle and they realize that at some point they're going to be responsible for selling the thing, so they want as high a feature count as they possibly can," Lutz said.

    "It's just natural for one side of the organization to drive all of these features in, and the side of the organization that's in charge of making sure we have margins has to fight that."

    Vehicle line executives will make the calls, Lutz said, because they will be responsible for the "contribution margin" - the difference between the cost of making the vehicle and the wholesale price.

    "They'll be responsible for a percentage and an absolute amount, so that they have the power to say no," Lutz said. "They must have the power to say no."

    Vehicle line executives now work in partnership with vehicle brand managers.

    Divisions, not models

    Brand marketing will continue at GM, Cowger said.

    "You'll tend to see us err on the side of product, but completely embracing and suppporting the brand structure," Cowger said. "The brand focus is key in this marketplace."

    But Lutz and Cowger described a role of marketers that centers more on assessing competition and developing marketing plans than on product creation.

    Lutz praised Zarrella, now CEO of Bausch & Lomb Inc., who brought the brand-management gospel to GM. But Lutz said, "We will be proposing some changes to make the whole system more effective," adding that brands will be defined as divisions, rather than models "that live under the umbrella of the brand."

    Vehicle level brand managers will stay in place, he added. But the Zarrella-era title may be dropped. Said Lutz: "It might in the future be called a vehicle line marketing manager rather than a brand manager, but a lot of the function is still required."

  • You can reach Dave Guilford at dguilford@crain.com

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