Originally published: Sept. 14, 2008In 2001, with seven years left to go in General Motors' first century, CEO Rick Wagoner knew that his product lineup badly needed upgrading if the company was going to have a second hundred years.
Several rounds of plant closings and job cuts since the 1992 boardroom coup had improved GM's financials by reducing costs. But Wagoner, a strategy wonk who had become CEO in 2000 after two years as president and COO, knew no company could survive on cost cutting alone. Revenue had to be generated by developing cars and trucks that Americans wanted to buy.
GM had lost its product mojo long before. Pickups and large SUVs were comparative bright spots in 2001, but GM's car lineup had the appeal of hospital food. With the possible exception of the Corvette, there wasn't a single Gotta have it! car in the lot.
Worse, GM somehow had decided to offer an ungainly, boxy cross between a minivan and an SUV called the Pontiac Aztek. It was a bold, maybe even brave, attempt by GM planners to come up with a segment buster. Unfortunately, no one at GM seemed to notice that it was ugly.
Wagoner's fingerprints were all over the car. Along with then North American boss Ron Zarrella, he had fast-tracked the Aztek with the expectation that it would be a huge winner. To his credit, the misfire convinced Wagoner that product development was not his primary skill set and that GM had to find someone — fast — to put the house in order.
1963-71: Joined GM's product planning department in New York; held sales positions at Adam Opel in Germany and GM of France
1972-74: Joined BMW in Munich as executive vice president of sales; became member of the board of management
1974: Joined Ford Motor Co. as general manager, Ford of Germany
1976: Elected vice president of Ford Motor; appointed vice president of truck operations for Ford of Europe
1979: Became chairman of Ford of Europe
1982: Elected to Ford Motor board
1986: Joined Chrysler Motors as executive vice president; elected to Chrysler Corp. board
1988-91: President of Chrysler Motors
1991-98: President of Chrysler Corp., responsible for North American auto activities; became COO, responsible for Chrysler global car and truck operations; later vice chairman
1998-2002: Joined Exide as CEO, chairman and president, remaining chairman until May 2002; board member until 2004
2001-05: Rejoined GM as vice chairman of product development; named chairman of GM North America
2005: Named vice chairman, global product development
Looking for a product star"I realized we really needed to get a powerhouse in product development," Wagoner, now 55, recalled in an April interview. "It was pretty clear that was the next thing that we had to move forward on aggressively."
Wagoner decided to ask Bob Lutz, who had retired from Chrysler as vice chairman in 1999, for recommendations. He didn't know Lutz well, Wagoner recalled, but he knew Lutz's reputation as a hotshot product guy who had sparked Chrysler's 1990s resurgence with vehicles such as the PT Cruiser and Jeep Grand Cherokee.
In late August 2001, the two met at Lutz's small office in Ann Arbor, Mich. After some small talk, Wagoner recalls, Lutz began pacing around the small room, eating a grapefruit, talking animatedly about product development, comparing it to moviemaking, "dripping grapefruit on his beautiful suit."
"I kept asking him about people," Wagoner said. "'Yeah, he's pretty good,' he would say, dripping grapefruit, 'and so and so, yeah, he's pretty good too.' So we exhausted the list and I asked him, without expecting an answer, 'You wouldn't be interested in this job, would you?' He stopped in his tracks, turned around, and said, 'Don't assume that!'"
Days later, on Sept. 1, Lutz was named vice chairman of product development. He was 69. In November, he was named chairman of GM North America. A little more than three years later, in April 2005, he assumed responsibility for global product development.
In an interview last March, Lutz recalled that Wagoner's directive to him was to "get in there and fix things," especially on the car side.
"He told me to look at everything in the pipeline and to cancel what I think should be canceled; change what I think we still could change; and put my imprint on the next generation," Lutz, now 76, said.
A new sheriffLutz moved fast. According to a story that has made the rounds among GM engineers, Lutz made it clear on his first visit to the GM Design Center that a new sheriff was in town. Inside the pavilion, several prototypes and models had been lined up for Lutz to inspect.
"He walked past various vehicles, coming down the aisle, looking, asking questions," a now retired chassis engineer says he was told. Lutz, as the story goes, then told one of the designers that he wanted to see the new Corvette.
"Bob," the nonplussed designer is said to have told him, "that's it right there. You're standing next to it." Lutz, according to the story, looked at the car and replied, "No, I'm not."
The story has not been confirmed and may be fanciful. But it illustrates Lutz's reputation for toughness and how others often see him as a swaggering Head Man Walking.
"Around Bob, you know clearly who's in charge," says Jim Queen, GM's group vice president for global engineering.
Lutz undeniably cuts an imposing figure. A former Marine fighter pilot, he is supremely self-confident, decisive and imbued with that intangible known as "command presence." He is tall, lean, erect as a Prussian cadet and movie-star handsome.
He is urbane, elegant and dresses like a layout in GQ magazine. He speaks five languages.
He flies a Czech L-39 jet trainer and a German-French Alpha jet fighter-bomber in his spare time and frequently commutes to work from his home in Ann Arbor in his McDonnell Douglas MD50 jet helicopter.
In other words, he stands out. And many of his bosses along the way haven't liked that.
Connecting threadBy the time Wagoner met with him in 2001, Lutz was woven through the history of the post-1960s auto industry like the narrative thread in a complex tapestry. He connected nearly everybody to everything.
After graduating with distinction with an M.B.A. from the University of California at Berkeley, Lutz began his career at GM in New York in 1963. He moved quickly to Opel in Europe, a natural assignment for the Switzerland-born, multilingual Lutz. After eight years there, he jumped ship to BMW, where he stayed for three years as head of marketing. He then joined Ford for a 12-year stint in Europe and Detroit before moving to Chrysler in 1986.
He had worked directly for industry legends Henry Ford II, Eberhard von Kuenheim at BMW and Lee Iacocca at both Ford and Chrysler. He was buddies with many other leaders, such as Soichiro Honda.
He was credited with breaking the mafialike chokehold that independent distributors had on BMW sales and profits. And his touch was on such breakout cars as BMW's first 3 series and 6-series coupe, Ford's Sierra and Explorer and the Dodge Viper.
Ego issuesBut the book on Lutz was that he had a gigantic ego and disregard for authority, along with his formidable background. He had butted heads with each of his bosses along the way, costing him the CEO job at least once and probably twice.
At Ford, his rival and immediate boss Red Poling had blocked his route to the top by parking him in a job several spaces away from the main entrance. At Chrysler, he was supposed to succeed Iacocca but was passed over in favor of Bob Eaton, who defected from GM Europe to take the top job.
"I couldn't sell Lutz to the board," Iacocca told Automotive News in a 2004 interview. "We had a couple of guys who said, 'He's not right for the job.' I won't get into why."
Wagoner acknowledged in his April interview that he originally "was a little unsure of how somebody like Bob would fit within GM." But he quickly emphasized what a great catch Lutz has been.
"I think he unlocked everyone's imagination," Wagoner said. "He has been a hands-on leader and an inspirational leader."
Lutz himself ruefully admits that he hasn't always shown his bosses the proper respect, but he insists he has changed.
"Yes, I've tempered my rhetoric overall," he says. "In the past, if I was unhappy with what the boss was doing, I would share my feelings with colleagues. Well, that always gets back, so I've quit doing that, too. But I still get exercised about a few things."
Queen says Lutz's instinct for talking back to authority stems from his unshakable confidence in his own judgment. Lutz is fond of saying that he often may be wrong, but never in doubt.
"He has an ego that is just unbelievably huge and that needs to be fed," Queen, a former Marine pilot himself and an unequivocal Lutz admirer, said in a March interview.
"He just gets carried away with himself, and some people just won't take him on because he has been around, he has seen so much, and he pretty much knows what he wants. But he really does listen to opposing viewpoints."
Lutz's saving grace, his franchise, is his unmatched nose for product. When it comes to understanding what customers want in a car, most observers agree, he has the unwavering instinct of a salmon swimming upstream to spawn.
Bill Lovejoy, who retired in 2002 as head of North American sales, service and marketing, says that "nobody at GM thought the way Bob did" prior to his arrival.
'No peer' in design"He has no peer, in my view, when it comes to understanding design and engineering," the now 67-year-old Lovejoy said in an April interview. "He's on top of it; he knows it. He forces the organization to look at where we're weak, and where the competitors are strong, and where we need to improve just by pointing it out. He is absolutely incredible."
Chuck Jordan, who retired in 1992 as vice president of design, says Lutz has always been tireless in trying to correct something he considers a problem. During testing of the compact Opel Kadett in Germany, he remembers, Lutz kept complaining about the car's handling.
"We went to lunch, but he stayed behind and drove around the skid pad until he flipped the damn thing over," Jordan, now 81, recalls. "It takes that kind of attitude to build a good car."
Lutz traces his passion for cars back to his well-off teenage years in Switzerland, where his father was an investment banker. A couple of uncles drove "great, crazy cars," he says, including a 1934 Alfa Romeo Zagato, a 1938 Talbot Lago Pourtout and a 1948 Delahaye. His father's cars included an SS Jaguar and an Aston Martin DB2.
He indulges his passion today with a multimillion-dollar monster-garage collection of 16 modern and classic cars. It includes his father's DB2, two Vipers, a 1934 La Salle convertible, 1941 Chrysler convertible, 1955 Chrysler 300, 1952 Citroen, 1934 Riley and a Steyr-Pinzgauer, a Swiss military vehicle.
Lessons from BMWBut Lutz credits his time at BMW for shaping his views on the attributes of a great automobile — elegant styling, tight metal fits, rich interiors, firm handling and nimble performance. He has tried ever since to flow BMW-level attributes into as many vehicles as he could at Ford, Chrysler and now GM.
As an enthusiast, he especially prizes great handling and performance. As head of development, he puts a heavy premium on interiors.
"People want a beautiful car. ... They need to fall in love with it the first time they see it," Lutz says. "The exterior sheet metal has to be absolutely perfect. And they want gorgeous interiors, where everything fits and the materials feel rich."
Queen says Lutz fights relentlessly in the face of ever tighter cost constraints to raise the quality content of GM vehicles.
"He almost single-handedly convinced everyone of the importance of the right content in our vehicles, even though it may aggravate our material cost and look like it is going to aggravate the business case," Queen says.
Proven record"But vehicle after vehicle now proves him correct in the marketplace, like the (Chevrolet) Malibu and the (Cadillac) CTS, where we added more in the interior where it was important to the consumer."
Soon after taking over, Lutz killed several projects under development, including a seven-seat Saturn Vue he called "grotesque." He sent others back to the drawing board, including what he calls an "awful" flat-roofed, slab-sided Cadillac STS nearing completion.
The blunders-in-the-making were the result of trying to develop cars primarily to meet internal targets, such as cost, timing, parts reuse or weight, he says.
"By and large, our car development was being guided by marketing people who weren't car people," he says. "Many of the (project leaders) were not car people either. They were engineers who administered a program."
At the same time, he moved quickly to get some cars out the door that might create a buzz. In 2004, GM launched both a revival of the Pontiac GTO muscle car and the snappy little Pontiac Solstice/Saturn Sky roadster to highly favorable reviews, although the Solstice didn't go on sale until 2005 and the Sky until 2006.
"You can name any number of lousy vehicles that were the result of our previous internal focus," Lutz says. "It wasn't until we developed an external focus and started saying to ourselves, 'What is it that people want?' that we started building marketable cars."
Lutz's emphasis on quality and content has been paying off with a steady stream of warm reviews and strong response for GM's newest cars, notably the Chevy Malibu and Cadillac CTS. Although GM domestic brand sales were down 17.5 percent for the first seven months of this year, the Malibu was up 37.0 percent and the CTS 34.1 percent for the period. "The products are beginning to resonate more ... but it's been a tough battle and will continue to be," Queen says. "Bob almost single-handedly carried that torch forward."
With the basic product-development process smoothed out and working again, Lutz and his crews face an even more daunting challenge: turning development and production resources away from trucks and coming up in a hurry with must-have smaller cars and crossovers in a shaky, cash-starved environment.
The job will be huge; in 2007, trucks accounted for 58 percent of GM's domestic-brand U.S. sales. But GM says it will introduce 19 new vehicles, 18 of which are either cars or crossovers, during the next two years.
They range from a minicar to small cars for each of the brands to a new CTS wagon to the new de facto range-topper, the high-profile Chevrolet Volt electric vehicle due in 2010.
But GM is burning through cash at the rate of $1 billion a month even as the market is heading for its worst downturn in a decade. Can Lutz and his product teams get to the other side before the cash runs out?
"Well, he's an amazing guy," Lovejoy says. "I don't know how they're going to keep him going, but they absolutely need him to continue to do what he's been doing."