The Car Guys Take Charge at General Motors

Lutz's promotion marks another blow to brand management

In early August, nearly a month before he officially took over his job as General Motors Corp.'s (GM ) vice-chairman for product development, Robert A. Lutz had already begun to shake things up at the auto giant. The former Chrysler Corp. (DCX ) car guru checked out the concept cars the company planned to show at the prestigious Pebble Beach classic car show later that month. Lutz astonished GM's design team by rejecting several of their prized models. In his typical fashion, he set them to work--nearly around the clock--to remake the designs before the show.

For stodgy GM, such behavior is downright revolutionary. That's just why Chief Executive G. Richard Wagoner hired the industry maverick in the first place. On Nov. 13, he took the gambit one step further by promoting Lutz to the post of chairman of GM North America. He takes over for Ronald L. Zarrella, a consumer-goods marketer who left GM after seven years to take over the CEO's seat at his old employer, contact lens maker Bausch & Lomb Inc. (BOL ). Lutz's big challenge: reverse GM's market-share slide. "We've got to get our cars more in the `I gotta have it' mode," says Lutz.

The shift marks the first time in years that "car guys" are in charge at GM's key U.S. unit. Zarrella, who spent four years as head of sales and marketing and three as president of North American operations, had championed a brand-management philosophy that relied on consistent brand imagery and strong marketing, rather than innovative styling, to sell cars. The approach has largely failed: During his tenure, the company's share of U.S. vehicle sales slid a disastrous five percentage points, to 28%. GM had been backing away from brand management for some time prior to Lutz's arrival, and now, with Zarrella out, few of its proponents remain.

BY THE BOOK. Lutz still has to weed out some of its traces. To ensure consistency, for example, many rigid rules were set up that resulted in boring cars. Stylists had to consult lengthy design manuals for each division; some had 40-page sections just on designing each brand's crest. And that's not the only problem Lutz faces. In recent years, powerful engineering executives more interested in cost savings and efficiency than design had gained influence, pushing design to the backseat. The result: too similar styling and chassis across GM's seven divisions.

Now Lutz, who will reign supreme over every aspect of vehicle operations from the design studio to the factory floor, wants to change all that. Responsible for such hits as the Chrysler PT Cruiser, he's the very definition of a car guy. Since September, he has ignored "recipe book design," says one senior GM designer. Nor does Lutz even look at market research until the exterior styling of a vehicle is completed. According to Zarrella, Lutz has been busy trying to get GM execs to realize that if customers don't like a car's exterior, "they'll never get in it even if you get marketing right."

He won't be alone, though. Gary L. Cowger, who was group vice-president of manufacturing and labor relations, will report to Lutz as president of North American operations. GM insiders say he's more willing to bend the rules to produce hot-looking cars than previous GM executives have been. Says Cowger: "Our job is to provide flexibility to do different styling."

The enthusiasm seems to be catching. In the past, GM's engineers, designers, and manufacturing execs have battled over vehicles, with engineering and manufacturing usually winning out. No more. "Lutz is getting no resistance," says one GM executive.

Even so, the new chief isn't taking chances. Lutz has also given designers more power. Final decisions on styling are now shared by the project's top engineering manager and the design chief. If there's a dispute, "I hold the tie-breaking vote," says Lutz.

Lutz has even gotten out his drafting pen. Although consumers won't see a car designed entirely under Lutz's watch until around 2005, they will see some of his editing work on models being launched in 2003 and 2004. He ordered changes to the next-generation Corvette and toned down the new Grand Prix sedan, set for launch in 2004. Designers say Lutz demanded more-dramatic styling for the next generation of full-size pickup trucks, due in several years, even as he softened designs for GMC and Cadillac. Take the STS, which replaces the Cadillac Seville and is expected to hit showroom floors in 2004. Lutz has rounded its harsh lines and given the car a more conservative appearance. "It looks a lot different than it did a month ago," marvels Dallas Cadillac dealer Carl Sewell. "He really helped them improve [it]." Now Lutz has a chance to work the same magic on all of GM's lineup.

By David Welch in Detroit

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