“To dial the industry back to a point where it’s viable at 11m is going to be hard – though we’re going to try,” GM Car Czar Bob Lutz promised at the don’t call it the Detroit Auto Show [via just-auto, sub]. “But there’s a question as to whether any car company in the world can survive on an 11m market for a sustained period of time. If it continues I would imagine you’d see massive consolidation in the industry, massive plant shutdowns, massive layoffs and much smaller product programmes.” Needless to say, Maximum Bob doesn’t like that idea one bit. OK, well, a little. “A better proposal is not to get it back up to 17.5m because on a sustained basis you could argue that was an unrealistic number with a financial and housing ‘bubble’ effect,” Lutz said, taking no responsibility for helping to create that self-same bubble. Anyway, thatleaves us… “I don’t think it’s unreasonable to expect an industry level of 13 or 14m – with the restructuring we’re undergoing, that’s going to be OK.” When asked if that was a PR-oriented asessement or a promise to stay away from the federal bailout buffet, Maximum Bob showed NFL-quality broken field running. “Talk to Rick Wagoner- I don’t do money,” Lutz demurred. “I do product development – I only spend it.” How great is that?
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More consolidation?
Why do we keep joining two bad companies to make a bigger bad company? Are we so insane that we don’t see that this friggin’ DOES NOT WORK?
I’ve had it these idjits; they all deserve to go out of business.
Hold the phone. GM has been steadily, consistently reducing the size of its workforce for decades now. How can they not survive an 11m car market now when they did in the past with more people and a smaller market?
Lutz is wrong. Most carmarkers won’t survive in that kind of market – but once enough of ’em drop out (assuming that the weak are allowed to fail), then the ones strong enough to have survived the short-term downswing will pick up enough marketshare to return to profitability. This is how the system is supposed to work.
Last Man Standing. Who’s got the guts to play this game?
It’s also a bit sad to think that the executive of a major corporation doesn’t have at least a cursory understand of his employer’s fianances. Can’t exactly call it a surprise, but it doesn’t make it right, either.
I am tired of this BS of equating GM to the entire auto industry. I mean, it’s fine that GM and Chrysler cannot survive a 11M market. After their bankruptcies, Toyota, Honda and Ford will be perfectly viable in that same 11M market.
Auto sales have been down by 30% and the combined market share of GM and Chrysler is 30%. So, everyone will be back to normal after they are gone. A 30% reduction in output is very common in other industries. I don’t see why it should be different in the auto sector, and why auto jobs should take precedence to jobs in other industries.
I find it interesting that Lutz is referring to the North American market at 11M vehicles.
Isn’t GM a global auto manufacturer? Why the focus on North America? Is the Lutzmeister so provincial that he doesn’t think in terms of the global market? Didn’t this guy once work for BMW?
I love the photo you have selected for this article… Unless I’m mistaken, that’s the egomaniacal and delusional Lutz signing the hood of a Volt test mule vehicle with “We are making history today.”
As if.
His toy car, allegedley scheduled for sale 2.5 years later, had just managed a lap around a test track and, on the same day it did so, Toyota sold something like 500 Priuses.
And made money on them.
Bob, you already proved you can’t survive – by taking my tax dollars.
I don’t know why the exec market is so ridiculously incestuous, but I’d rather the UAW kept their contracts and you lost yours… and that is saying a lot since I am not a huge fan of the UAW either.
I am just surprised how a multi-million per year car guru could say something this stupid.
If what he said (no one can survive 11M market) is correct, then the natural response would be to stop aiding the weak ones, so that the strong one may still have a chance. Otherwise, the strong one will die with the weak one, as he put it.
Maximum Bob:
“…I would imagine you’d see massive consolidation in the industry, massive plant shutdowns, massive layoffs and much smaller product programmes.”
Exactly. That’s what the folks who are giving you our money are saying you’re supposed to do — CHANGE THE WAY YOU DO BUSINESS SO THAT YOU CAN SURVIVE.
In everything I’ve seen — especially the Today Show nonsense from last week — it looks like these guys don’t intend to change a single thing. They’ll piss our money down a rathole, just like they’ve been doing with all the rest of the money they’ve been borrowing. Kiss your money good-bye, folks!
Why should the carmakers change? It’s like a dad that won’t force his son to grow up and make his own way in the world. Every time he needs money, he goes to his dad and gets it. Always with a stern warning that next time he will have to make it on his own. Always next time.
So if the executives don’t understand product (engineering), marketing, or finance, what are they there to do? Play accountant with their own salary and benefits?
Bob, don’t worry. We, the taxpayers, already bailed our GMAC and GMAC already promised to provide loans to those who don’t deserve those loans just like GM and GMAC don’t deserve our tax dole. The magic circle of non-repayable loans to idiots who purchase your non-competitive products continues and surely there are more then 11 millions of those idiots in the great land of ours.
Bob Lutz needs to take responsibility for creating the housing bubble?
I know Farago’s got that Northeasterners-bash-everyone gene, but this seems half-baked even for same.
I hope someone in the industry hires Bob when GM tanks. Hey, Toyota could use something to liven up their image!
I hope he is “productive” (quote-wise) for another 20 years. I will miss the simply amazing things he says.
BTW-Since when has the current management team at GM shown that they can survive in a market of any size?
wsn-no one at GM has any idea that there is any auto industry outside of Debtroit. They are still trying to figure out where all those unaccounted for vehicles have come from.
Cheerio,
Bunter
KnowItAll
GM and GMAC were prime movers in the sub-prime market. Zero percent for anyone with a heartbeat?
Can we please all (and by all I mean the knobs in DET) just admit that the automobile industry is,
wait for it, cyclical.
Non-optional, non-debatable.
Has been since, oh, the dawn of the industry.
We just came off the most ridiculously long, strong, and unsustainable upswing in history.
Econ (and physics) teach that the universe seeks equilibrium. There is going to be a counterbalancing down to make things close to right again. Look at industry sales over the last 80 years. There is always a bust after the boom. Always.
11MM? Has Lutz been raiding Hunter’s old stash?
GM and GMAC receive bailouts from us the taxpayers (and loyal GM owner), for that we get our local GM/Toyota/Chrysler dealer, Prospect Motors, Jackson, CA, cut off by GMAC five days before Christmas. GMAC froze the dealers credit lines because the owner was 16 days late on his mortgage payment (on a brand-new facility) to GMAC. Then GM and GMAC get bailed out. Nice. What do we get in our rural/suburban community in return for the bailout? Our 35-year local GM dealer closed and bullcrap answers from GMAC spokespersons, plus a one hour drive to another GM dealer for warranty/service repairs.
I have a message to GM and GMAC from all the local Amador and Calaveras Co, CA GM owners/customers and businesspeople: Bring back our dealer or give the bailout money back and go bankrupt. You don’t know the first thing about customer and community service!!!! Maybe its time to buy a Toyota after 25 years of buying GM vehicles!!
I don’t know, I like Lutz. Really don’t understand why anyone would get riled up about anything he says given his obvious role as a straight up product guy. Does anyone really think GM would be better off without him? Maybe all of you miss plastic strips on pontiacs and cars that weren’t held to any particular performance standard.
Not that there isn’t a few good reasons to get pissed at GM, but again, I don’t see how Bob Lutz is the cause of any of them. I’ll go out on a limb and hope that if anything happens to his contract at GM he goes to Toyota and burns the conservative house down. Because wouldn’t the world be a better place if every camry could power oversteer?
amadorgmowner, similar things are happening to dealers all over the country, since part of the ex-big 3’s problems stem from all of them having too many dealers. Unfortunately when it comes to dealerships being closed, all too often it won’t be the right ones; but ones that for some reason run into a late-pay problem or some paperwork foulup.
For some reason, all the dealers in the Port Orchard – Bremerton area where I live are still up and running, although I have no knowledge if any of them are close to the edge.
“GMAC froze the dealers credit lines because the owner was 16 days late on his mortgage payment (on a brand-new facility) to GMAC. Then GM and GMAC get bailed out.”
All across the land bankers are still acting like tough minded thugs with struggling customers while at the very same time getting government handouts themselves. If full on socialism is bad, this round of “private-public partnerships” is proving to be even worse.
I like Lutz for the reason at least he speaks his mind. Often, he ends up chewing on a large shoe, but at least he not afraid. Lutz, just like Pontiac, Buick, Saab, GMC, and Saturn no longer serve a purpose.Like the brands,Mr. Lutz, the smiling cheshire cat needs to fade away into the distance.
Putz should put on a dunce cap and drive an Aveo into the sunset of retirement.
amadorgmowner: “.. we get our local GM/Toyota/Chrysler dealer, Prospect Motors, Jackson, CA, cut off by GMAC five days before Christmas. GMAC froze the dealers credit lines because the owner was 16 days late on his mortgage payment (on a brand-new facility) to GMAC.”
I’m sure there’s more to the story than that. In the 80’s oil bust when FDIC was shutting banks down, they treated borrowers that way, but there was a reason: government employees get paid the same no matter what happens. A sane lender doesn’t want to arbitrarily force a borrower out of business.
What does it say about a company that has to hire an outside overaged manager to come in and save their entire product line? The largest company in the auto world had no bull pen, or bench to back up the starters when they retired? What would Al Sloan the legendary chairman of GM think, if he was told that his company had run out of talent and could no longer make profitable exciting cars? It’s not just the designers that are AWOl at GM, it’s the entire management team. If you think things will improve, today they named the Hyundai Genesis as the North American car of the year.(Right in Cobo Hall Detroit) The genesis comes right from Korea in all of it’s lexus like looks and content. The word lead isn’t even in the American auto makers dictionary. Hell, they can’t even follow.
tedward (selected edits):
I don’t know, I like Lutz. Really don’t understand why anyone would get riled up about anything he says given his obvious role as a straight up product guy. Does anyone really think GM would be better off without him?
I’ll go out on a limb and hope that if anything happens to his contract at GM he goes to Toyota and burns the conservative house down. Because wouldn’t the world be a better place if every camry could power oversteer?
I think Lutz is an absolute, total moron. The biggest buffoon in the entire auto industry. GM can’t make money because NOT ENOUGH PEOPLE WANT TO BUY HIS PRODUCTS. It’s like your thought about “power oversteer” — that’s about the 100% total opposite reason why more people buy the Camry than any other car in this country.
The money wasted by Lutz and the like-minded buffoons at the other 1.8 on Camaro/Challenger/Mustang has been absolutely ludicrous. You bet, a veritable handful of sales of V8 musclecars ought to bring these companies to profitability.
NOT!
In spite of all of the venom spewed at Toyota in here daily, they have succeeded by following mainly one principle:
“Let’s make cars that LOTS of people will want to buy.”
Yes, I know, they stopped building truly “sporty” cars quite a while back. Because, you know, for one simple reason: NOT MANY PEOPLE BOUGHT THEM, relatively. If you’re gonna spend all of your time and money and effort to build something, why not shoot for products that’ll make as much money as possible?
And that’s the difference between Toyota and the 2.8. Oh, I suppose a few people will buy the G8, Mustang, Camaro, Challenger, 300, Charger, and so on, but they’ll all add up to maybe a tenth of the Camry sales. Or some other number well under half of Camry sales — it’s hard to say what’s really going on now, sales-wise.
If Maximum Bob is so good, just let him “prove it” by doing one thing — come up with the “most sales for a car in the country,” like way back, when the Taurus handily beat Camry and Accord. If Lutz is such a “product genius,” why can’t he do a simple thing like that?
thoots,
Even though it doesn’t make a “V8 musclecar” even Toyota feels the irrational urge to burn rubber occasionally, witness the IS-F and on/off LS-A supercar. They think throwing cubic money at NASCRAP and F1 ($400 million per annum! Zero wins!!) will help build credibility as a maker of sporty cars.
And then, in real life, they build a Corolla.
The market’s tank has really hit Toyota hard –such that they need to ask their employees for a 10-percent pay cut and they’re kicking out the CEO– so maybe they aren’t that brilliant after all; perhaps they were just lucky that Ford stopped caring about the Taurus and let the Camry take over as the #1 seller.
What about the $2 billion Toyota arguably burned build the hulking new Tundra and its Texas plant? That doesn’t sound like smart business, does it? Autoline Daily is reporting that Toyota’s cash reserves is down to $18 billion, not much better than Ford’s position. No one criticizes ToMoCo management here the way we pound the D2.5, maybe because Tokyo (er, Toyota City) is so far away.
Bottom line: rage all you want at the Mustang, Camaro, etc. but if the market was strong, I bet Toyota would be scrambling to resurrect the Supra. In a big, diverse market such as ours, there’s plenty of room for Priora and Mustangs.
thoots…I’m not trying to defend the GM model line, just Lutz’s influence on vehicles developed recently (and he’s been at GM what? 6 or 7 years?). I’d say that under his watch GM has increased the attractiveness and performance of its models (not just the SS and V models) to the extent that they can play fair with the competition. Brand perception is awful, and loyalty is key in this market, so I wouldn’t expect them to produce an immediate blockbuster anyway. I’d agree with you that the new muscle cars are somewhat mistimed, but I don’t think that is Lutz’s purview, instead his job is to make sure that the new Camaro is good to drive and look at, which it seems to be. In fact, it is far more of a complete package (on paper) than the mustang and challenger are right now (better engines, better drivetrain, good exterior, better suspension), so good job to Lutz and a big fail for GM’s long term product plan.
But like I said before, if you prefer GM’s old product, then by all means hoist up “Maximum Bob” by his undies, but from what I can see he is changing GM product for the better.
I do think he’d be a better fit in a near luxury or sporty brand (Acura for instance) and that it is a real shame that GM needs to pay him that salary when there are car guys across the country, and already in the company, who could provide that same perspective for a fraction of the cost.
and I was definitely kidding about power oversteer in the camry, I wouldn’t expect it of the malibu either. But I do think (and have frequently ranted) that Toyota desperately needs someone competent to vet their product for driver appeal. Someone like Lutz, but perhaps less of a blowhard a-hole, would do that company wonders and, I think, save them from the fate of the current GM.
James2 :
January 13th, 2009 at 12:56 am
thoots,
Even though it doesn’t make a “V8 musclecar” even Toyota feels the irrational urge to burn rubber occasionally, witness the IS-F and on/off LS-A supercar. They think throwing cubic money at NASCRAP and F1 ($400 million per annum! Zero wins!!) will help build credibility as a maker of sporty cars.
And then, in real life, they build a Corolla.
The market’s tank has really hit Toyota hard –such that they need to ask their employees for a 10-percent pay cut and they’re kicking out the CEO– so maybe they aren’t that brilliant after all; perhaps they were just lucky that Ford stopped caring about the Taurus and let the Camry take over as the #1 seller.
What about the $2 billion Toyota arguably burned build the hulking new Tundra and its Texas plant? That doesn’t sound like smart business, does it? Autoline Daily is reporting that Toyota’s cash reserves is down to $18 billion, not much better than Ford’s position. No one criticizes ToMoCo management here the way we pound the D2.5, maybe because Tokyo (er, Toyota City) is so far away.
Bottom line: rage all you want at the Mustang, Camaro, etc. but if the market was strong, I bet Toyota would be scrambling to resurrect the Supra. In a big, diverse market such as ours, there’s plenty of room for Priora and Mustangs
But Toyota doesn’t make any non-luxury sporty cars. If they are Lexuses, they can charge a premium for them that makes up for the high costs of development. That is, GM should make sporty Caddys, not Pontiacs.
As for Toyota’s cash reserves being low, I don’t buy that for a second. Plus, even if that’s true, they have a AAA credit rating-they can borrow infinite amounts of money if needed, even in the current credit market. Toyota may lose money this year (or break even), but in the past four fiscal years or so they made ten billion dollars a year. GM lost something like thirty billion dollars last year-before the economy tanked.
What I think the domestic auto industry should really do is let the big, monolithic manufacturers die a natural death. The day of a company making all things for all people are over. Today customers are no longer brand loyal, they buy best-of-breed. Instead they should start up various small companies making specific products. One that that focuses on making the best minivan in the world, for example. One that makes the best family sedan in the world. One makes the best pickup truck. One makes the best engine, and sells it to the others. But each company stays fiercely focused on their core product. Perhaps eventually you might have a GM like holding company that incorporates these together to get the benefit of scale on things like media purchases, steel and other raw ingredients, etc. But each stays a unique company, and only focuses on the product it makes best. That is how a domestic auto industry can survive and indeed thrive in a increasingly competitive, global environment and deal with a shrinking North American base. Just my thoughts.
In a world where the miata, mustang and 350Z (among others) make money, there is clearly room for a smart automaker to play in this segment. The question is how do they accomplish this and why? Alfa turned out a sexy coupe as a marketing excercise, losing money on the car, but paying for seriously good public exposure. Better companies develop a few sports cars that can make money or break even, not just to let the public know what they can do, but also to develop the engineering required to compete in more profitable segments and bring their entire product line to a higher spec while distributing the cost.
If Toyota had just built the Supra, then cancelled it, I would understand that as prudent cost cutting, but instead I see a Toyota that can’t make a sports car, or even make a regular car that is competitively sporty in top trim, because they haven’t played that game in years.
As wsn points out. Take away the 2 sickest patients (Gm + Chrysler) and the rest of the market is OK. I am not a big market self-regulation cheerleader but I have to admit that this definitely looks to be one of the times that market self-adjusted itself ahead of all the market watchers and participants. Now if only the 2 were let quietly go.
wsn:
“Auto sales have been down by 30% and the combined market share of GM and Chrysler is 30%. So, everyone will be back to normal after they are gone.”
No, no, no WSN. You got the script wrong. The script is when CHRYSLER goes out of business “everyone (GM) will be back to normal”. Even though Chrysler’s market share split between the two remaining domestics is not enough to make GM viable without the restructuring the “best and brightest” say needs to happen. This script of course assumes that ALL of Chrysler’s sales (last year, 1,450,000+) go to GM and Ford, which they won’t. A significant amount will go to Toyota, Honda, Nissan, Kia, Hyundai, etc. So the “dead cat bounce” will be minimal. Of course GM going under would allow everyone, including Chrysler to be viable but those here just can’t seem to wrap their brains around a world without GM like they can a world without Chrysler. Go figure.
Imagine a 4 million per year new car market.
As I’ve mentioned before, that’s the equivalent of what happened in the US between 1929 and 1932. The market cratered to ONE FOURTH of it’s pre-depression level.
How many car companies would survive THAT scenario?
I’ll guess – in the US market – only a handful.
Toyota (certainly not Scion maybe not Lexus Div).
Honda (probably not Acura Div).
Hyundai-Kia (perhaps only as Hyundai, though).
Ford – MAYBE – if GM and Chrysler collapse soon enough to allow Ford to soak up some of the “US cars only” buyers
(of course, these same folks conveniently “forget” / “don’t notice” that many of Ford’s products for the US are built in Canada and Mexico, ditto Chrysler, and many GM products are from Canada, Mexico and even South Korea)
One of my colleagues even went so far to take note of that fact, then change his story of “only buying US” to “where the HQ is”. Sad, eh?
So I replied that Honda was sick of Japan Inc and rumors had it that they might be moving to the US. He was speechless…
I agree with thoots. Lutz is a moron and the ultimate hype machine with nothing to back it up. I think we should just give all that bailout money to Ford which could at least responsibly use the money.
As for comparing to the Z or the other sports cars, you get to play in that sandbox when your core products are solid.
Sure there is room for a bit of sportiness… look at Mazda who has sold based on that rep plus good looks (new 3 with braces not included).
OK, this has passed along to the back pages, but I’ll go ahead and reply to my replies, if anyone wanders back here to see them…..
James2 :
Even though it doesn’t make a “V8 musclecar” even Toyota feels the irrational urge to burn rubber occasionally, witness the IS-F and on/off LS-A supercar. They think throwing cubic money at NASCRAP and F1 ($400 million per annum! Zero wins!!) will help build credibility as a maker of sporty cars.
Yes, but the IS-F is mainly one engineer dropping a V8 engine into an existing vehicle. It’s “budget dust” compared to the dough it has taken to bring Camaro and Challenger and such to the market. LS-A is just a few more specks of that dust — a few prototypes.
“Winning” in F1 is a tough nut to crack. The top few teams are so entrenched that they’ve won virtually every race, for decades. At the least, Toyota has improved yearly for its efforts — look at Honda to see what “failure” is all about, as its F1 team truly embarrased the company.
Toyota in NASCAR is really a strange development. There’s certainly no “research and development” to be performed there — it’s really just “advertising” and not anything else. And with all of the Big 3 Toyota Haters going ballistic, plenty of the publicity has been negative. In the end, though, it sure has created a ton of publicity!
As an aside here, the really odd duck of motorsports is Honda powering the IRL. In a collapsing economy, this becomes even more nonsensical. Advertising that “they won the Indy 500” seems to be the only thing of value, and the Big 3 Honda Haters aren’t any happier with it than they are with Toyota in NASCAR.
….perhaps they were just lucky that Ford stopped caring about the Taurus and let the Camry take over as the #1 seller.
Oh, please. That’s Big 3 apologism at the extreme. The general history of the Big 3 has been “they ignored ‘cars’ in their zeal to build more trucks and SUV’s” — meanwhile, the imports just continued to improve and refine their cars. This is what is so wrong with Lutz and the other “geniuses” at the Big 3 — they just let these vehicles become outdated and mediocre, and didn’t do a thing to make them more reliable. Camry and Accord have beat their butts for entirely good reason.
What about the $2 billion Toyota arguably burned build the hulking new Tundra and its Texas plant? That doesn’t sound like smart business, does it?
Didja read what I wrote in my original message? Something about “building cars that LOTS of people want to buy.” Don’t forget that the full-size truck segment has always been a huge portion of the consumer vehicle market — it’s very most definitely a segment for which you can build vehicles that LOTS of people want to buy. Toyota certainly found that this market didn’t want its previous, smaller “big” trucks, so it needed to enter the full-size truck market with everything it could throw at it. Of course, four-dollar gas and the credit collapse have hurt all truck sales, not just Toyota’s. But the segment should continue to move a lot of vehicles over the years to come.
Bottom line: rage all you want at the Mustang, Camaro, etc. but if the market was strong, I bet Toyota would be scrambling to resurrect the Supra. In a big, diverse market such as ours, there’s plenty of room for Priora and Mustangs.
Umm, well, gosh, but the market was very strong over the past few years, and Toyota didn’t lift so much as a finger to resurrect the Supra or the Celica or the MR2 or the 2000GT. But yes, I agree with you that there is room in the market for V8 muscle cars. I’m just saying that the relatively paltry amount of sales to be made with them isn’t likely to earn the manufacturers much in the way of profits.