Filed under: Chrysler, LLC., Ford, GM, Earnings/Financials
Lutz: One of Big 3 will die, but not us
While deftly avoiding the General Motors buyout of Chrysler issue, GM Vice Chairman Bob Lutz did say that he can see one of Detroit's Big 3 dying off in the not-too-distant future. Citing increased market pressures and too much capacity, he said in Geneva that present trends lead to only one conclusion, that one of the domestic automakers will be squeezed out. It won't be GM, however. "Right now, we're in the best position," he said. "We're approaching the end of the beginning of the transformation of GM." We agree that GM is closest to being on the right track, so it remains to be seen whether Ford can survive its own turnaround, or if Chrysler will weather the current storms and right the ship before somebody comes in and dismantles it.
Lutz went on to detail the legacy costs that are behind most of the pessimism about the domestic industry. It's stuff we've heard before like pensions and health care for employees (and retirees) that are a $2,000-per-vehicle "burden" on the manufacturers. The biggest question on everybody's mind, however, wasn't directly addressed. Rather than talking about a GM/Chrysler deal, Lutz discussed the breakdown in the Renault-Nissan talks. "Generically, synergies are easier to get in the same geography than across geographies," he said. "That was the problem with Renault-Nissan. What sane auto company would sign up for that?" What company indeed?
[Source: Detroit News]
Reader Comments (Page 1 of 3)
Gale 2:06PM (3/08/2007)
Lutz is probably right about this issue, but it's about the only time that overpaid hack has been right since GM made the mistake of hiring him.
The so-called "car guy" has presided over one dismal failure after another, imported European GM models and watched the truck line blow GM's passenger cars away for compelling designs and performance.
When the crowning achievement of the "car guy's" tenure is the overrated Saturn Aura, you know GM isn't nearly getting their money's worth out of Lutz. They never have, and if he worked for a German or Japanese company he'd been gone five years ago.
That's why Detroit can't catch up. They don't hold the highest paid people accountable for performance.
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CLYDE 2:08PM (3/08/2007)
Pretty cocky coming from the bozo who's running the worst of the Big 2.5
Maybe Hyundai should buy Generic Motors?
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Billy Ray 2:13PM (3/08/2007)
I thought his name was "Putz"
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James 2:14PM (3/08/2007)
Dodge will die, they have lost their fan base all of these cars that use names of classic cars are total failures because they do not pay homage to the original cars plus Dodge has no sense of bang for the buck.
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Fazzster 2:15PM (3/08/2007)
Full-o-Crap
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Rufus T 2:18PM (3/08/2007)
#3 - That's what he is, but not his name.
The name is a derivative for "Lut'z build some more crappy cars."
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John S 2:26PM (3/08/2007)
errmmm... James, the Charger is a big success and is a great selling vehicle. The upcoming Challenger is hugely anticipated and does a great job and bringing back the name... furthermore, no bang for the buck? Are you ill? Dodge is great bang for the buck, look at the Charger, or Avenger, or the Caravan, or Caliber.... all are well equipped cars that come in at or below the competitions prices, they offer great bang for the buck.
I have no idea where you are getting your information at or why you decided to spout that drivel but give it up.
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MikeW 2:30PM (3/08/2007)
The tire/wheel diameter is all wrong on the Aura
The base car would be fine with 215/60 16 (perfect for the 2.4 I4 and the 6T40)
Then the V6 & 6T70 should have some 235/50 17.
That is all, beside fixing the red rear turn signal.
What is with the 225/50 17 and 225/50 18 tires?
Nissan has 7x16 on the base Altima (perfect for 235/55 16), and 7.5x17 on the V6 (Hey 235/50 17 will fit)
That is the Aura's competition.
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EnviroBob 2:34PM (3/08/2007)
Actually, the first divison he focused on at GM was Cadillac. The CTS, STS and V-Series models are all under his tutelage. All successes. He also was the initiator of the Solstice / Sky program, of which the Solstice now outsells th Miata. The new G6 / Malibu / Aura are also Lutz projects and both the G6 and Aura are selling very well. The increased utilization of GM's Holden division is also a Lutz project. I wouldn't exactly say he has accomplished nothing during his GM tenure. Given how he previously helped turn Chrysler around, and before that BMW, his overall track record is pretty good.
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iQuack 2:35PM (3/08/2007)
I think Lutz is correct.
Chrysler is in play now and it'll soon be a different company owned by something other than Mercedes.
Ford is such a mess that it must find a strong partner.
GM is likely to remain independent and will strengthen as the UAW's choke hold on the company weakens.
In any case, auto manufacturing is alive and well in the U.S.A. when you consider Toyota, Honda, Subaru, BMW, Hyundai, Mercedes, and Nissan which produce excellent vehicles here with American employees. The losers are the unions and that's a happy thought indeed!
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accordsforall 2:38PM (3/08/2007)
Good, I am glad one of the big three will go under. I hate American jobs and love the Japanese.
One down, two to go.
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the marais 2:39PM (3/08/2007)
#1:
Dead wrong about the Aura. Where is your authority that is an "overrated" car? Have you ever driven one? Didn't think so.
And what is wrong with importing European designs? It was crappy American car designs that put Ford and GM in trouble in the first place. GM is bringing cars over that are #1 sellers in a market of 300 million people. Many people would agree that Opel's European or Holden's australian portfolio (Astra, Corsa, Commodore, etc.) is head-to-head as good as anything any European carmarker offers in the samae class (or any Japanese cars sold in Europe -- they are a joke over there).
In case you did not get the memo, the auto industry is going global -- where do you think the Yaris, Fit, Mini, Jetta come from? That's right. ABROAD. US carmakers cannot win any longer selling cars designed and made only for the North American market. Sure they had horrendous failures with the LeMans, Geos, or other Korean-imported cars. Times have changed.
GM needs to harnass global design talent, and they have. It will only be a matter of time before GM can iron out its labor issues, streamline design, and go after Toyota, whose management and production philsophies have had 20 years of refinement.
As for your comment that he would not last at any "german" car company. Puleeze. VWs and Mercedes have been at the bottom of quality lists for years now.
Give him a chance.
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olddavid 2:45PM (3/08/2007)
Poor Bob. Paid millions, gets too much credit when things go right, and too much blame when things go wrong. But, the sign on his desk that says"the buck stops here", is there for a reason. It was only 15 short years ago that Chrysler had a $1000 per unit build cost advantage. I think all this pessimism will be much ado about nothing when the rubber finally meets the road. There is simply too much at stake socially to watch a domestic circle the drain, especially 18 months before a (small 'p') presidential election. Most sentient adults remember Lido with that six foot government check from what,'79 or '80? I agree that the dealer network needs to be culled, and single-payer health insurance enacted, to go along with compromise on ALL sides, including executive pay and restrictive union rules, or the whole thing will die on the vine. This all depends on co-operation, not confrontation. Unfortunately, those qualities have been in short supply in past negotiations. But, I think a dying man would be damn amenable to compromise, and these guys should approach this with that mentality, because their collective demise is at stake.
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Ben 2:50PM (3/08/2007)
# 11 .... I don't know if you make these comments to goad people into responding or if you mean it !?!?!
Either way... you are a first class 'LOOSER' and really not worthy of a reply !!
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wally 3:15PM (3/08/2007)
None of "BIG 3" will die.
Chrysler since 1998s merger they have made over 4 Billion dollars! (although about 8 billion is gone from their cash on hand to FIX MERCEDES)
They got caught with their pants down with "Mercedes" guy's sales bank. He's now gone!! Things are looking up at Chrysler? (Need UAW help with retiree's health care)
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wally 3:16PM (3/08/2007)
#11 ??????????????? STUPID or WHAT?
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Bryan 3:20PM (3/08/2007)
I think Lutz is wrong. But if he was right, Ford would have the better chance. All of their new models keep posting higher than before sales. I personally saw an orange and dark amethyst edge on my way to my interview this morning. Normally you see that much of a vehicle here in Houston right off the bat if it is a popular model such as an Fseries or (barf) Camry. With every unit of Ford posting in the black next year, except here, this is starting to not only show they are here to stay, but that something is working. Chrysler I think will survive. They just need a partner or an owner that knows what they are doing. Look at Mercedes quality! Bottom of the list! If anyone is going to go anytime soon, It is going to be Mitsubishi. In any event, It is good to see GM get better, but Lutz needs to focus on the autos, not on his predictions of the future!
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MCS05 3:24PM (3/08/2007)
Nice comeback Ben...it's loser not looser.
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wally 3:26PM (3/08/2007)
JUST WAIT til yen value raise to 90-100 per dollar!!
Then see who goes.
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Gardiner Westbound 3:38PM (3/08/2007)
Legacy costs are an issue solely because GM, Ford and Chrysler deferred making the required payments into the employee benefit plans when they were due.
They also short-changed research and development into updated platforms and engines accounting for their current dire straits.
Instead they paid not-so-bright executives astronomical salaries and catered to Wall Street.
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