• May 13, 2011
I recently visited "Maximum Bob" Lutz at his home to interview him for the summer issue of the quarterly Motor Trend Classic and found the 79-year-old energetic and outspoken as ever six months beyond retirement from General Motors. We talked mostly product stories from his long auto career, which began at GM Overseas Operations in 1963 and progressed through ever-higher responsibilities at BMW, Ford and Chrysler, then back to GM ten years ago. But we touched on other interesting topics, too, including the effect of corporate average fuel economy (CAFE) requirements on domestic automakers.

"The feds basically handed our market to the Japanese," he contended in his memorabilia-filled office adjoining the garage where he keeps his most important historic cars. "American automakers had to tear up their entire product lines, downsize, go from full-frame to unitized bodies, V8s to V6s, rear- to front-wheel drive with transverse transmissions. It was the biggest technological tear-up in history, and it triggered a lot of subsequent problems, like poor quality and reliability. You can't re-engineer that much that fast, test it properly and get the technology matured without dropping a lot of balls, and we clearly did.

"Prior to CAFE, American quality was as good as any anywhere in the world," he asserted. "We were still selling a decent quantity of American cars in Europe because Europeans considered a Buick or a Chevrolet or a Ford to be superior in reliability to European products, which they were. The Japanese experience was no disruption whatsoever. They were way on the good side of the CAFE fleet average, so they didn't have to change a single product. They just continued to build what they had always been building." Continue reading...

There was also the issue of currency exchange rates: "The other thing that just about did us in: the State Department, for geopolitical reasons, granted Japan a very favorable dollar-to-yen exchange rate, which equated to a cost advantage of about $4,000 a car. When you've got a $4,000 cost advantage, you can translate that into more content, lower price, more marketing, more profit or a blend of all of the above."

That brought to mind an "off-the-record" dinner back in fall, 2008 – shortly before his boss, then GM CEO Rick Wagoner, found himself being publicly flogged and begging for help before an incredibly arrogant and auto-ignorant Congressional Committee – where Lutz took the opportunity to vent his frustrations "on background" to a small group of auto writers. Is that discussion still off the record now that he no longer works for GM? "Go for it, he said." So I did.

"We're the only country in the world where the national government is hostile to its own automobile industry," he told us that night. "The Korean government is in bed with the Korean auto industry, the Japanese government is in bed with the Japanese auto industry, as are the European governments – through either support or partial ownership, as in the cases of Renault and Volkswagen. Why should we be the only auto industry that is competing not only against foreign competition but against the policies of its own government?" Great question.

"There is a complete lack of understanding in Washington on reality in the automobile business, what the technological capability is and what it isn't. The regulators have no idea what is technologically feasible. They listen to complete technological idiots like David Friedman, who says: 'They can round off the corners a little, and that'll give them two mpg. Then put in a six-speed transmission for two mpg. Then direct injection is two mpg. So with very little effort, they can easily get to 35 mpg.'"

What did he see in our CAFE-driven future? "The crystal ball is a little cloudy, but it's basically filled with hybrids, extended range electric vehicles and very small or medium-size cars with very small turbocharged engines. A minimum average of 35 mpg means you have to go way beyond that at the low end, and at the high-end – with full-size pickups and sport utilities – you need to achieve a 20 to 25 percent improvement.

"Everyone is in favor of achievable improvements in each vehicle class, but an arbitrary fleet average of 42 mpg is totally ridiculous. Nobody knows how to do a full-line fleet with the equivalent of 42 miles per gallon. That's ain'tgonnahappen.com. I tell myself that if something is impossible, nobody is going to do it. And when they get to the point where the legislation is tantamount to mandating that by 2015, all cars have to hover off the highway by two inches so they no longer touch the road surface, because we don't want to deteriorate the infrastructure, I think, 'Well, that's nice.' A 42-mpg full-line fleet average is in that category, so I don't worry about it. I just know it's physically impossible, so something will have to give."

car guys vs bean countersWhat about man-made "global warming," which he once famously dismissed as a "crock"? "The global warming scare is going to provide the vehicle for massive taxation and transfer of wealth, which is why politicians around the world – everywhere but China, India and the former Soviet Union – buy into it, because they realize its moneymaking potential. If 'Cap and Trade' ever happens, anyone who owns a boat, an airplane, an outdoor barbecue, a lawnmower or more than a postage-stamp-size apartment is going to be paying carbon taxes. It will be a huge federal money generation scheme."

It would be safe to surmise that Lutz was then, and (like most of us) remains now, thoroughly unimpressed by the intelligence, integrity and motivations of the majority of the people we have elected to run this country, at all levels. "Politicians are a class of people who create horrible problems and gain votes while doing so," he said with a sarcastic chuckle, "then set about to solve those same problems while gaining votes for doing so."

Agree with him or not, the man has strong opinions born of vast experience and – now that he speaks for no one but himself – is unafraid to express them. He is now consulting part-time with British exoticar maker Lotus and looking forward to the June release of his new book, Car Guys vs. Bean Counters. Come to think of it, so am I.

###

Award-winning automotive writer Gary Witzenburg has been writing about automobiles, auto people and the auto industry for 21 years. A former auto engineer, race driver and advanced technology vehicle development manager, his work has appeared in a wide variety of national magazines including The Robb Report, Playboy, Popular Mechanics, Car and Driver, Road & Track, Motor Trend, Autoweek and Automobile Quarterly and has authored eight automotive books. He is currently contributing regularly to Kelley Blue Book (www.kbb.com), AutoMedia.com, Ward's Auto World and Motor Trend's Truck Trend and is a North American Car and Truck of the Year juror.


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  • 82 Comments
      crazybabydoc
      • 3 Years Ago
      Let me guess . . . those 2 ton, V8/V6, rear-wheel drive cars Bob Lutz recalls lasted 10-15 years and were extremely safe due to their superior engineering? Here's the truth: Bob Lutz was a member of an exalted class . . . automaker executive. For decades, they designed/manufactured vehicles that literally started falling apart while being driven off the lot. But it didn't matter b/c we didn't have many options. European cars were too expensive for many Americans. Both US and European carmakers sold 'image' as opposed to transportation. Then the Japanese learned to export. All of a sudden, Americans could actually buy what they needed instead of 'bigger'. But US automakers didn't care b/c gas was cheap and they were making bank. Then gas became more expensive and Americans woke up. When reliable, fuel efficient transportation became paramount, the Big Three had nothing to offer but garbage. But look at the recently failed GM brands. With the exception of Saturn, it's heavy metal that should have gone out with the dinosaurs (Oldsmobile, Hummer, Pontiac). Saab doesn't count since GM essentially destroyed that company. Without CAFE does anyone really believe that Ford and GM would have so many relatively fuel efficient options in virtually every vehicle class?
      Neil Blanchard
      • 3 Years Ago
      To paraphrase Mr. Lutz: "It's too hard to put in good engineering." Neil
        fly by wireless
        • 3 Years Ago
        @Neil Blanchard
        LOL!!! Weren't he and his ilk in the industry up in arms about raising the standard to 30mpg, saying it too was impossible? I got an idea. Raise the standard to 50mpg!!!
      Liberto Mex
      • 3 Years Ago
      Bob just forgot to add : "and now the feds are going to hand our market to the Koreans"
      2 Wheeled Menace
      • 3 Years Ago
      Doesn't the Cruze eco get 42mpg highway, in a big fat ol' 3000-some lb frame? Don't you have a Volt that you are so proud of that can do 32-38mpg on gas alone? The victory lap can't be far, Bob. You just have to try. Would have been nice if GM was putting money into alternative engines since the 90's as Toyota, Honda etc were. All i hear is whining from this man, current past and present. What is it with the American car companies being Ameri-cant's?
      • 3 Years Ago
      The thing that gets me is that Lutz implies that small cars are low end. As a guy who prefers small cars, and who is moving up a little, that probably mean that GM is passing up my business. That's OK for me since Subaru, Toyota, or Volvo will be happy to sell me a small wagon car with nice amenities that I'm looking for, but not so good for GM.
        Marcopolo
        • 3 Years Ago
        GM, and Ford, tried to sell imports from their European divisions. Primarily UK Ford and Vauxhall, Small compacts and sub-compact will very little success. (Although, oddly the Australian GM Holden division has some success with large engined V8's). AMC, (Nash, Hudson) tried to sell compacts to the US market in the fifties and sixties, but sales became uneconomic. The reason why US car makers didn't make compacts or even subcompacts, was the overwhelming majority of US buyers rejected them, particularly in the 1960's.
      Marcopolo
      • 3 Years Ago
      Ben, Thank you for accentuating the differences. I think what Bob Lutz and I, along with so many of our generation would describe as 'Bean Counters', you would describe as 'financial managers, or directors', usually with some accounting background, rather than actual accountants. It's a management style and approach to business that emphasises the 'bottom line' and short term profit over the more visionary long term approach.
      krona2k
      • 3 Years Ago
      I still can't believe they had to go from V8 to V6 - LOL - oh the humanity!
      Noz
      • 3 Years Ago
      WHERE"S CARNEY???? IT"S ALL OPEC'S FAULT!!!!!!!!!
        carney373
        • 3 Years Ago
        @Noz
        Oh, I'm around. OPEC was indeed the proximate cause of the economic crash. By taking the price of oil from $10 a barrel in 1999 to $140 a barrel in 2008, representing a "tax increase" of hundreds of billions on the economy as a whole and an increase in the portion of income of an average family of four going to oil from 3% to 33%, small wonder big purchases like homes and cars were deferred. In turn, the most vulnerable sectors of the mortgage industry (sub-prime) and auto industry (GM and Chrysler) took the biggest hits. Now when the question is why those sectors were so vulnerable, there are a number of factors. Certainly Lutz's complaint makes sense to me. Union imposed costs are another. Excessive dealerships another (it was crazy that GM and Toyota had equal sales but GM had several times the number of dealerships, but those dealers are very influential especially in state and local politics.) The whole mania for fuel efficiency is of course pointless anyway. CAFE and other factors increased our fleet average from 13 to 20 from 1976 to 1990, but despite being able to go the same distance on much less fuel our fuel consumption went UP from 89 to 103 billion barrels. Population growth, economic growth, and human nature make reversing energy demand impossible. And of course if GM and the rest of the auto industry had leaped to implement full flex fuel technology (compatibility with methanol and all other alcohols as well as ethanol) as soon as it was available in its modern form in the early 1990s, the brutal OPEC-imposed recession would never have happened anyway. Given a choice of dirt cheap methanol, consumers would have just turned to that if OPEC had tried to jack up the price. That's a failure of vision that CAN be laid at Lutz's doorstep.
          Marcopolo
          • 3 Years Ago
          @carney373
          I think you overestimate the role of oil, especially from OPEC. OPEC does not represent the majority of the worlds oil producing nations, (in fact about 5%), true the OPEC nations represent about 42% of the worlds current production. However, OPEC members process very small reserves of Natural Gas, Coal or Uranium. The difficulties of the US car industry, are as much about US Labour policies and the US government support of free trade, as Oil pricing. But, much of what you say makes more sense than the rest of the comments posted in response to Bob Lutz.
          Noz
          • 3 Years Ago
          @carney373
          Keep drinking the koolaid Carney....you're as delusional as ever.
      Jeff Zekas
      • 3 Years Ago
      Mr Lutz: CAFE didn't cause Detroit's quality problems-- Rather, the short-sightness and "profit before quality" motive is what killed the Big Three. Your Chevy Celebrity has peeling paint after one year? Tough. The aluminum head on your Reliant cracks? Oh well. Your Pinto motor dies at 70,000 miles? Too bad. CAFE didn't give the car market to the Japanese... rather, lazy corporations who would rather build big, expensive trucks gave the market to foreign competition.
      erhcanadian
      • 3 Years Ago
      I thought the 1973 and 1979 oil shortages and subsequent oil prices killed the American full-framed V8 sedan. But now the "feds" did it, in a conspiracy to boost Japanese automakers?
        BipDBo
        • 3 Years Ago
        @erhcanadian
        More like a perfect storm. The oil shortgage made a market for higher efficiency, but CAFE made it a requirement. Many people may buy a gas guzzler even when gas is expensive if the product is inexpensive and of high quality. More importantly, and often forgotten, CAFE also restricted tailpipe emmissions. The addition af catalytic converters cleaned up the exhaust, but it decreased mpgs. I would hate to contradict BOB Lutz, but I think that today the US auto industry is much better prepared to compete on efficiency than it was in 1970.
        ufgrat
        • 3 Years Ago
        @erhcanadian
        I think blaming the fall of the American Auto industry on any one factor is incredibly shortsighted, naive and ridiculous-- but it's what our society encourages. Don't bother looking at the big picture, just single out one scapegoat, and make that the source of all our problems. We live in a very short-sighted, instant gratification society.
      Noz
      • 3 Years Ago
      WHY are people like this clown in positions to make decisions? What a disaster.... With people like him, the public doesn't need enemies.
      Ben Crockett
      • 3 Years Ago
      @Marcopolo Sure, maybe we have different definitions. In short, my definition is: Accountant (non-CFO) - compiler of financial information for Management, stockholders and CFO but no/little say in decision making. CFO (Chief Financial Officer) - Head Accountant, but expanded role deals with Management, attends Board meetings and does have a hand in decision making. Management - decision makers and users of financial information prepared by Accountants.
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