THE AUTOEXTREMIST

March 3, 2010

Time keeps ticking, ticking away for America’s “forgotten” car company.

By Peter M. De Lorenzo

AND SEE SPECIAL BOB LUTZ COMMENTARY BELOW...

(Posted 3/2, 8:00PM) Detroit. By now you’ve seen the sale results from February - with Ford up a stunning 43 percent - its fifth straight monthly sales increase and the first time since 1998 that it has eclipsed GM in a month of sales action. And Subaru was up a whopping 38 percent, Nissan up a strong 29 percent, BMW up 14 percent, Honda up 13 percent, GM up 11.5 percent, Jaguar Land Rover up 11 percent, Hyundai/KIA group up 10 percent and Toyota - in the midst of the recall crisis - down just 9 percent, an impressive performance given the fact that they’re the whipping boys du jour right now.

And the majority of those numbers are easy to explain. Ford’s momentum is growing by the month, and consumers who are turning away from Toyota are giving serious consideration to Ford first, and it shows. But Ford’s upward trajectory is not confined to disgruntled Toyota intenders, because its market reach is spreading wide across all spectrums. GM’s product offensive may be beginning to register with consumers too - although these numbers were heavily influenced by sales to fleet – but there’s room for a shred of optimism down at the RenCen. Subaru continues its meteoric performance, while the Hyundai/KIA group impresses again. And even Nissan showed signs of real life.

But then there’s Chrysler.

With sales flat-lining in February – Chrysler says its sales were up 1 percent, but for all intents and purposes they were flat even with a year ago - Chrysler is stalled in the market again. But then it has been mired in this perpetual state ever since it emerged from bankruptcy. Chrysler is in a holding pattern, treading water as it struggles to stay afloat in a sea of much more formidable competitors. Adding to its woes, Chrysler has sunk to the bottom in the Consumer Reports 2010 Automaker Report Cards rankings.

Even though I’ve applauded Chrysler for coming out swinging with cleverly-written ads for its Dodge Charger (the work even provoked a searing female-oriented rejoinder that’s a hit on YouTube), it’s clear that time is running short for the gang in Auburn Hills.

I’ve written repeatedly that despite Sergio Marchionne’s track record in rescuing Fiat, the Chrysler situation is dramatically different, and to assume that because he did it once he can do it again is wildly optimistic and woefully off-base, because it’s impossible to overcome years of product neglect with a finger snap and a curt “we know what we’re doing” dismissal of the facts.

And the facts are these...

1. We’re talking about a company desperately bereft of new product, thanks to the almost criminal malfeasance of Cerberus – the blood-sucking greed posse that gutted the company and left it for dead - and the previous Daimler-led regime, which pulled up stakes on their investment after they realized they had embarrassingly overpaid by a bunch, leaving Chrysler flat-busted and broke by the side of the road. Now Chrysler is on the outside looking in with an array of shockingly “yestertech” products in a market that even in these depressed times remains driven by the “buzz” about the latest and greatest new products available.

2. Chrysler cannot play in this new product “buzz” arena, at least not yet. Why? Because they’re busy running around tweaking and fixing products that never resonated with the consumer to begin with. Yes, the new Jeep Grand Cherokee with its all-new Pentastar V6 should be excellent, but we’re talking mid-summer for any sort of in-dealer stock. And the new Charger and Chrysler 300 makeovers should be worth considering, too, but they’re slated for the late fourth quarter, which means, in reality, next January at the earliest. But trying to resurrect the Sebring with new front and rear clips, some suspension tweaks and a new name? A new name? Really? You mean a change in zip code might help that rolling monument to mediocrity? Should we expect another Florida-themed name this time? Something like the “Tampa” or the “Boca” - ? Yeah, that should make a huge difference in the outcome of things.

And there’s more. Maybe I missed the memo somewhere along the way, but is there really a crying need for a large Dodge Durango crossover based on the new Cherokee? How about no? Or similar tweaks to the Dodge Avenger like what’s being done to the abomination formerly known as the Sebring? Ugh. There’s always the minivan franchise at least and we’re being promised dramatically different styling on the Chrysler Town & Country, to differentiate it from the Dodge Grand Caravan, so there’s that. And Ram Trucks, of course...

But the reality in this situation is that the huge gap in time between its “new” and “reinvigorated” products, combined with the dismal day-to-day sales performance – or lack of same - of the current products, is not working in Chrysler’s favor.

Product cadence is the new mantra in this business, and you either have it, or you don’t. And Chrysler doesn’t have a lick of it right now. A bunch of re-dos and a few serious product makeovers all crashing into the market by the first quarter of 2011 does not constitute product cadence. Not even close, as a matter of fact.

And to those who would suggest that it will all work out, that all of Chrysler’s frantic moves now will set the table nicely for the great Chrysler-Fiat product renaissance coming in 2012, I’m not buying it, because it looks to me more like a slow-motion train wreck that’s unfolding with one sickening thud after another.

3. On top of Chrysler’s myriad product program problems, the other ugly reality for Chrysler is that it has almost completely fallen off of the American consumer public’s radar screen. Of the two post-bankruptcy companies GM is just barely scratching the surface with its herky-jerky marketing efforts, but at least it can be argued that its products are finally gaining recognition for being at least in the game, whereas before only minimal consumer consideration would have been expected.

But Chrysler? Even with a few catchy ads popping up it’s barely moving the needle in this market. Serious consumer consideration? It’s nowhere to be found, certainly not with any momentum behind it. The only thing keeping the whole enterprise afloat for Chrysler - at least for now - is the deal. Rebates and incentives, and lots and lots of ‘em too. But that, of course, isn’t a marketing strategy; it’s only a desperation ploy to tread water. And the incentives aren’t going to make a damn bit of difference once Toyota cranks up its scorched earth sales push that began today, ironically enough.

No, right now Chrysler is America’s “forgotten” car company, with products too old and too stale to make a difference in its short-term future, and product promises that are way too far down the road to matter, especially with an economy that’s slowly, make that excruciatingly s-l-o-w-l-y getting back on its feet.

Time keeps ticking, ticking away for Chrysler, and at this point Sergio & Co. are going to need a miracle for a shot at survival.

That’s all I got for this week.

Editor's Note: With the announcement today that GM Vice Chairman Bob Lutz is retiring May 1, we thought we'd re-run the column Peter wrote in February 2009 - when Lutz first announced his retirement. - WG

The End of an Era: The Ultimate Car Guy Takes His Leave.

By Peter M. De Lorenzo

 Detroit. The news came over the Internet Monday morning like a bolt of lightning. Bob Lutz, GM’s vice chairman of global product development, is retiring at the end of the year. Lutz, who turns 77 on Feb. 12, was the “straw that stirred the drink” for GM and the man most responsible for GM’s product renaissance over the last seven plus years.

Lutz had dropped hints all along that the debut of the production Chevrolet Volt - due at the end of 2010 - would be his crowning achievement in this business, so the suddenness of the news reverberated around this town and throughout the industry, coming much sooner than anyone expected.

From the day he was hired by CEO Rick Wagoner back on Sept. 1, 2001, Lutz set GM on its ear and turned it back into a real car company again after it had languished in Brand Management Hell for years. Up until the Lutzian Era, GM had been at the mercy of an endless succession of so-called marketing "gurus" led by John Smale and his acolyte Ron Zarrella, two guys who contributed immeasurably to GM's product and market share slide, almost running the company right into the ground. But all that changed when “Maximum Bob” arrived. For the first time since Ed Cole retired in the early 70s, the Product was well and truly King again at General Motors.

Rick Wagoner deserves all the credit for having the smarts to know back then what GM needed. After decades of fumbling and floundering, after dealing with various "Messiahs" of The Week who turned out to be the Bums of the Year, after countless bad decisions on top of non-decisions, and after suffering from years upon years of non-car mercenaries running rampant over the corporation for their own personal gain, GM finally got one very big thing right when they brought Bob Lutz on board.

This is what I wrote back in 2001 upon the news that Lutz was coming to GM:

“For the True Believers at General Motors who thought this day would never come, the ‘Bob Lutz Effect’ will be nothing short of a miracle. Make no mistake about this fact: GM still has a lot of very talented men and women toiling away inside its halls. They're everywhere too - in every department and from every discipline. These are the kind of people who fight for every last inch of product integrity. These are the people who have had to watch in recent years while the good ideas got sidetracked or killed, and the mediocre or just plain bad ideas got into production. These are the same people who have had to stand by and watch as non-car people basically did everything in their power to run this once-proud corporation right into the ground. Yet these same people are the ones who still bring the fight with them every single day. The same ones who have done stunning design concepts and who have managed to get some pretty respectable cars and trucks to the street - against some unbelievable odds. You stumble upon these people every once in a while at a racetrack or at car shows or at press previews, and it shocks you, because when you continuously read about the problems that plague GM at the top, you forget that these people are out there, still fighting the good fight, still being True Believers. These are the people who will benefit most from the presence of Bob Lutz. These are Maximum Bob's people. These people can now look at the top of their company and see someone who 'gets it,' someone who has fought the battles and won the wars, someone who understands what they've been up against and someone who they can finally believe in - because he is one of them. When Bob Lutz hits the ground running, these are the people who will be required to burn the midnight oil and do everything in double and triple time, but they will relish every moment of it because for the first time in a very, very long time they have someone at the top whom they can respect.”

Bob Lutz’s first order of business when he hit the ground running at GM? To restore the swagger of the Design Staff. Working with Ed Welburn, GM’s gifted design chief, Lutz returned GM Design to its rightful place as the showpiece for the corporation. In GM’s heyday, GM Design (“Styling” back then) was the soul of the company and it rocked the automotive world with one design “hit” after another. But even with a rich design legacy powered by two of the most legendary figures in the business – Harley Earl and Bill Mitchell – GM Design had fallen on hard times, struggling mightily under the choke hold placed on it during the Brand Management Reign of Terror. And even though GM Design was showing signs of life a couple of years before Lutz arrived, Bob pulled the design function up by the lapels and gave them free rein to create, lead and inspire, the three ingredients that propelled GM Design – and GM – to such heights in its glory days.

And it worked magnificently. All of a sudden GM Design was the talk of the industry, dominating car shows with adventurous, exuberant designs bristling with swagger and passion. And Bob Lutz, along with Ed Welburn’s inspirational guidance, made it all happen.

The other crucial thing Lutz did for GM was undertake a massive reorganization of its moribund product development system, the “behind the curtain” dimension to this business that few outside it understand but one that is absolutely crucial to its success and profitability. Lutz cajoled, prodded, demanded results and kicked some ass when he had to, and the result was that the company was able to translate GM Design’s conceptual brilliance into a series of outstanding production vehicles - like the Buick Enclave, Chevrolet Malibu and HHR, Cadillac CTS and CTS-V, Saturn Aura, Pontiac Solstice, Pontiac G8, Saturn Sky, Corvette ZR1 and the briefly resurrected Pontiac GTO – while doing it on a global scale for the first time in the company’s history. Lutz turned GM’s old-school product development system into a global powerhouse brimming with impressive expertise and capabilities and it simply transformed the company, a historic achievement unto itself.

I can’t imagine what shape GM would be in right now if Rick Wagoner hadn’t brought Bob on board seven years ago. I would venture to guess that GM might not even have made it this far without him; he has been that instrumental to the company’s well being.

Was Lutz able to save GM all by himself? No. Market conditions and the worst economic calamity in this nation’s history conspired against him. But if GM does manage to survive it will be due in large part to the absolutely superb job Lutz did during his tenure and the rich legacy of achievement and excellence he left behind.

Bob’s impending exit is a serious blow to GM, make no mistake about it. He galvanized the entire company, got everyone on the same page, and forced them to aspire to greatness at times by the sheer force of his will and personality alone. His departure not only marks the end of an era for General Motors, it marks the end of an era for this business and frankly I hate to see it because Bob is truly one of a kind and we will not see the likes of him again, unfortunately.

Sadly, without Lutz this business will continue to be overrun by politically correct bean counters and slick corporate willies who have little or no feel for the product, no sense of automotive history, and even worse, no sense of humor. A giant bowl of Not Good in my book.

Bob Lutz’s accomplishments in this business are legendary, and even though there’s no need (or enough space) for me to recount all of them here, suffice to say he’s had one of the most glittering careers this industry has ever known.

In terms of his relentless vitality, his legendary wit, his unquestioned knowledge of the business, his passion for the product, his uncanny “gut” and his unerring feel for what the essence of the product is all about; Bob Lutz is simply second to none.

Having spent enough quality time with Bob over the years I can safely say that he is, in my estimation, the greatest product guru of the last 35 years and he will leave the stage as one of this industry’s all-time greats.

Thanks for listening.

See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and friends this Thursday evening, at 7:00PM EDT at www.autolinedetroit.tv.

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