I’ve often wondered if there is a relationship between the decline of the automobile’s cultural relevance, and the decline of the larger-than-life auto executive. Clearly the car’s waning ability to excite, inspire and shape material culture is a complex phenomenon with no single cause, but it’s got to have some kind of connection to the people making the cars. After all, the original Mustangs, Corvettes, and Model Ts emerged from firms led by such oversized presences as Lee Iacocca, Bill Mitchell and the original car-guy-as-folk-hero, Henry Ford. Today there’s no shortage of brilliant, engaging, passionate people working in the car industry, and yet few contemporary executives have made the kind of cultural impact that their predecessors once did. This, in a nutshell, is why Bob Lutz fascinates me: though he never made as wide of a mark on popular culture as an Iacocca or DeLorean, he’s one of the last remaining links to an era in the car industry that now seems impossibly out of reach.
But because he is not a man of the times, it’s incredibly easy to misunderstand the guy. In fact, having spent several hours chatting with him on and off the record, I’d argue that the best anyone can hope for is to simply not misunderstand him. In that spirit, I’ve assembled ten impressions of the man that I found not to be true in our conversation. But be warned: just because these “myths” aren’t completely true doesn’t mean they’re completely untrue either…
1. Bob Lutz is calculating about his own image.
This is a bit of a tough one to start with. Even as I write this, I can hear the clamoring from the comment section. “He got you, Ed,” you’re thinking. “So much for that journalistic toughness, you got played by a master.” But bear with me. Clearly Lutz has a well-defined persona: the cigar-chomping (he puffed an enormous stogie throughout our interview), martini-drinking, Cobra-driving, jet-piloting, hard-charging corporate warrior. And there may well have been a time when he worked at that image. But having spent some time around a number of latter-day execs and PR guys, the directness with which Bob Lutz engages you, his apparent lack of internal filters, is one of the major impressions I left our interview with. Even when his answers to a question skewed more towards self-serving rather than purely truth-serving lines of logic, they emerged almost as soon as the question was asked with little of the pause for calculation indulged in by modern execs (this was particularly surprising when he was faced with questions he clearly wasn’t expecting, like “why are GM cars so heavy?”). Reasonable people can disagree over whether there is daylight between his truth and their personal version of the “objective truth,” but he tells his truth with the spontaneity of a person with no concern for what the world thinks of him. Indeed, over the course of our conversation I picked up the distinct impression that Lutz would rather be seen as complex, even contradictory, than consistent. And by the time I left his pied-a-terre outside Ann Arbor, I had a less concise idea of who the guy is than when I arrived.
2. Bob Lutz hates the media.
In his most recent book, Lutz rails at length against the media, assigning it what I believe to be an unfair share of the blame for the decline of GM. Heck, he even calls The Truth About Cars “a website that often offers anything but”… for a headline written by a New York Times editor. And yet, nobody held a gun to his head and made him invite me to his own home for an extended conversation. And because he did invite me, I was able to ask him about his relationship with the media. We were talking about the politicization of the Volt (see myth number three) when the subject came up, so I asked Lutz: “you devote quite bit of the book criticizing the media, and yet most people in the media feel that you’ve always been pretty well treated…” Lutz jumped in
I was, yeah. I have no complaints about my personal treatment, I mean, I always got along well with the media, and that’s globally… I think they recognized that I was a force for the good. No, I’m talking about the way the media generally treated the US car industry. We had a colleague of yours from Der Spiegel magazine in Germany… he asked “what were the factors behind the decline of the American car industry,” and I said, well, you know, I mentioned the US media. And he said, “you know, this is a curious thing because this is the only country that I know of where the media routinely trashes the domestic product. He said “the German media thinks Volkswagen, BMW, Porsche Audi are wonderful. Opel and Ford of Germany are semi-wonderful because they are, after all, American owned. French cars, well, if you must and the Italians and Japanese… yes, yes, they’re getting better, but they’ll never be [a German car]. Same thing in France. Japan. Korea.”
I’m not for a chauvinistic media, it should be objective and realistic, but with the American media you could put out some pretty good stuff and it was… dismissed. Dismissive was the best you could hope for. The Cobalt was routinely trashed in the media, but every time anyone actually drove a Cobalt, they said “this is a nice little car.” It’s very refined… it’s peppy, has good brakes, good steering, the interior is… OK… seats are nice. I mean, it’s a nice little car. It deserved a lot better press than it got. I’ll put a Cobalt against a current generation Corolla any day.
Now, this whole rant was not unlike what appears in Car Guys, and it hardly disproves myth number two. But here’s the thing: I had driven a rented Cobalt out to Lutz Farm, and he was right. It was nowhere near as terrible as I was expecting. And looking through TTAC“s Cobalt review archives, the conclusions certainly belie TTAC’s reputation for GM bashing. Because Lutz has some valid complaints (there’s another that I’m saving for a final installment of “Cars Only Bob Lutz Remembers”), and more importantly because he only seems to really care about what the media said about his cars, I don’t get the sense that there’s as much personal animosity as comes through in Car Guys. On the other hand, I’m also not convinced that the media isn’t something of a convenient villain for the Car Guys narrative, and that Lutz gives it too much credit for the downfall of GM.
But all that aside, when pushed with the fact that Toyota reviews now feature the word “beige” with the same consistency that Buick reviews used to feature the word “elderly,” Lutz admit that
there’s a gradual change in how American cars are being treated in the American media. The Toyota troubles forever destroyed the myth of Japanese invincibility and superiority.
Now that the shoe is on the other foot, and Toyota, rather than Buick is getting the “one-note” treatment from the automotive press, Lutz seems less concerned with the media’s failings.
3. Bob Lutz is a right-winger.
So, obviously Bob isn’t a left-winger. His views on global warming, for example, are well-documented. But if you tease out the politics that he weaves throughout his answers, what emerges is a man well out of step with the modern right wing. He sings the praises of socialized healthcare as an issue of economic competition, arguing that placing that burden on private business puts manufacturing industries at a disadvantage. He argues strongly for an “intelligent” gas tax, on the grounds that oil price volatility wreaks havoc on product planning. He even concedes that the latest version of CAFE is not totally objectionable. And when it comes to the Volt, he has nothing but contempt for what he calls the “extreme right wing” that tried to publicly kill it. When I asked if the politicization of the Volt was inevitable, or if it had something to do with the car itself, his immediate answer was unequivocal:
I think it predominantly had to do with the extreme right wing media, who will grasp at anything, right, wrong, accurate, inaccurate, to attack the Obama Administration. The Rush Limbaughs, the Glenn Becks, the Mark Levins… these guys said “how stupid is this? This is the kind of car you get when the government owns a car company.”
Again, the guy has a point. When, in my NYT Volt Op-Ed I had written “In short, the Volt appears to be exactly the kind of green-at-all-costs car that some opponents of the bailout feared the government might order G.M. to build. Unfortunately for this theory, G.M. was already committed to the Volt when it entered bankruptcy,” Rush Limbaugh quoted the first sentence repeatedly and left the second sentence un-quoted. But Lutz wasn’t done attacking the right:
“…and,” [said the right-wingers], “this thing is so bad, the government is going to offer you a [$7,000 tax credit] to get you to buy it. The same government that is forcing this on the American public is, in addition, going to spend your tax dollars to get you to buy it.” Conveniently forgetting, of course, that the [tax credit] went in under the Bush Administration. GM was the target of the extreme right. If they hadn’t have worried about a backlash (which would have inevitably happened), they would have cheerfully organized a right-wing boycott of General Motors.
Regardless of how Lutz feels about any one political issue, his ultimate loyalty is to Detroit, to the American car business. After all, have you ever heard a right-winger argue that
it’s silly for us to be paying $3.50 per gallon when Europe is paying $7 or $8 dollars per gallon
4. Bob Lutz only cares about extreme cars.
Even though we were sitting in an office festooned with models of yellow HUMMERs and billet Cadillac Sixteens, as soon as I mentioned that he was best known for his “emotional” cars like the Viper and Solstice, he cut me off
That’s a little bit unfair because I was highly instrumental in the second-generation Chrysler minivan, you know, the great big round one. At its heyday we were doing over 500,000 of those things each year and they were ringing the cash register like mad. I also get very excited about full-sized pickup trucks and sport utilities… I mean, I lavished so much affection on the current generation of GM sport utilities and pickup trucks. Supporting design in certain things and then getting the body gaps down to, like, Lexus-minus tolerances and getting beautiful interiors in… still, I think the Tahoe and Yukon have, for a mass-produced SUV, still one of the nicest interiors around. And of course the Escalade is off the charts… it’s “bling,” but it’s beautifully done.
So, I get just as excited about stuff like that as I do about a Corvette ZR1… in fact, maybe more so. The Lambdas, for instance… one of the beautiful things when you see an Acadia, Enclave or Chevy Traverse, is that beautiful taper towards the rear. You know, the way the body goes from near-vertical, to where it starts to roll in gradually, and you get that lovely tumblehome from the back which makes it look so stable. It gives them that dramatic appearance on the road. When they started out they had straight bodysides, like a Honda Pilot, and I said “why are we doing that?” “Well, it increases rear seat width and maximizes the internal cube.” I said “guys, that’s not what it’s about.” They also said “there’s one more thing. If we do it the way you want, we’ll never have a version with sliding doors.” I said, “well, we’re not doing a version with sliding doors.” [As a result], I think the Acadia, Enclave and Traverse are, from a body-surfacing standpoint, some of the best work done by the American industry.
So, why did it take so long for Lutz to put his touch on the Malibu, GM’s entry in the most important mass-market segment?
Yeah, [chuckles], three, three-and-a-half years. That’s normal. I had to live with the stuff that had been done before.
5. Bob Lutz hates “bean counters.”
As I point out in my review of his most recent book, the title “Car Guys vs. Bean Counters” seems almost to be more a reflection of the author’s internal complexity than a description of an actual battle within GM. Lutz has spent enough time in the business world to know that no business can survive with creative chaos or stifling discipline alone. And just as GM as a whole ebbed and flowed between the creative power of design and the disciplined control of finance, Lutz acknowledges that it takes a balance of two very different instincts to create a successful business. He admits:
The beanies do their job. I’m all for finance, financial controls, cost-cutting and tough discipline… I did it myself… for instance, the Malibu LT2 had a regular aluminum wheel with very shiny, circular machining on it. The LTZ wheel had finer machining, to where it almost looked like the surface of a compact disc. The guys showed them to me and said… “there’s a forty buck difference, it’s ten dollars a wheel.” I said “take it out.” [Costs] get in that shouldn’t be there in the first place. You just can’t let the beancounters be in charge and philosophically drive the organization… because that’s when it gets off track.
Indeed, the king of the car guys has an MBA, not an engineering degree, and his entire argument for his turnaround of GM was predicated on a beancounter’s argument: if controlling the bottom line is killing you, do something about the top line.
The product development guys, whether at Ford, BMW, Chrysler or GM, liked my leadership because I insist on good rather than cheap. And it’s definitely paid off. The average transaction prices of GM cars are up so much it more than offsets, way more than offsets, the maybe thousand bucks I put into the vehicle.
6. Bob Lutz loves/hates electric cars.
Nowhere are Bob Lutz’s internal complexities better displayed than in the world of electric cars. To the EV enthusiast community he’s been both a villain of “Old Detroit”, railing against “the theory of man-made global warming” and the savior of the electric car, as internal champion of GM’s Volt. In hopes of getting to the bottom of this mystery, I asked Lutz if he thought Nissan would gain a “first mover” advantage (alá Toyota’s hybrid advantage) over the competition by being first to market with a mainstream pure-electric car. To which he answered:
No. I don’t see the Leaf generating the “cool factor,” the “gotta have it factor,” the “this is the car to have factor.” I don’t see that in the media, it’s not generating any of the buzz you would expect from that. I think the Leaf is going to be a relatively low-volume vehicle. The problem is range anxiety. You hook a range extender onto that, which of course immediately drives cost for a second powertrain, but if you have a nominal 100 miles electric [range] plus another 200 on the gas engine if you need it… now you’re talking. But people with a pure electric, unless it’s got a 250 or 300 mile range… and the Leaf doesn’t even get 100 miles after a few years, or on a cold day. So, the Leaf gets 70 miles on a good day and 50 miles on a bad day… meanwhile there are guys getting 56 miles [of electric range] on the Chevy Volt.
In short, when the topic turns electric, Lutz wants to talk about his baby: the Volt. He half admits that the range-extended Chevy was a “PR exercise,” saying
PR has such a nasty flavor… let’s call it a “reputational adjustment exercise.” What the Viper did for Chrysler in 1992, the Volt is doing for the Chevrolet brand [in an entirely different way].
And he argues that, although the Volt’s design is fundamentally less efficient over longer distances than a conventional hybrid or PHEV, that misses the point. “People want to drive 40 miles on electric power,” he says, “if you look at it through the eyes of the customer and not the EPA, they see it as ‘I’m getting 40 miles every day, practically for free.'” Is it, I asked, counter-intuitive to design a “green halo” car not to maximize efficiency?
It is if you look at a hypothetical usage profile. But we knew that 80 percent of Americans drive 40 miles per day, and the Volt is for them. I wanted to look at the real usage profile. An airplane engineer will tell you “you know, we can make this fighter much more efficient if we don’t add all the weight and complexity of an ejection seat”… but good luck finding someone to fly it.
Of course, even at a 70-mile range, the Leaf will still be able to get most of that 80 percent to work and back… especially if they can charge at work. But finding a consistent principle in Lutz’s opinions generally isn’t a question of analyzing any of these arguments. Though he wasn’t being paid by GM at the time of our interview, it was clear that Lutz’s principles are allied almost entirely with GMs. And if he has any regrets anything about the concept and development of the Volt, he isn’t ready to admit them.
7. Bob Lutz hates industry-outsider auto execs.
Though he rails against the “brand management” era of the 1990s, and the outside board members and packaged-good industry executives who championed it, Lutz is not entirely against outside influences on the car industry. He is not, as are many longtime industry insiders, completely convinced of the notion that you must be steeped in the car business to understand the car business. Quite the contrary, he argues
Because we’re all trained the same way, a traditional automobile person from Ford, GM or Chrysler can move from company to company, and the way programs are created, the way they’re measured, the way they proceed through the approval process, the way they’re then finally executed… you hardly notice the difference. It is this finance-driven, metrics-driven approach that was originally put in by McNamara and the “Whiz Kids” at Ford… and it eventually translated to the whole industry. Ford Motor Company is so proud of the fact that they, I would call it infected, the whole industry with it. So, you take some 30-year veteran of that system, they know how that works, they know those rules, they know you set tough cost targets and then you turn the crank again and you drive costs down some more, the top line is more or less assumed, the argument that if we make a better car it will bring in more money just is not recognized. The top line is the top line, don’t mess with it.
So if [post-bailout GM] had gone back to some veteran automobile guy, there would be a high risk that we’d lose it. Again. But the fact is that all the Detroit Three are run by non-traditional Detroit guys, and the way Dan Akerson and Dan Ammon look at it, is “30 years of doing it the wrong way resulted in decline and ultimate failure. Now, with a focus on excellence, and willingly doing the best engineering and manufacturing that we possibly can, do not skimp, don’t try to substitute margarine for butter… now our average transaction prices are up four or five thousand dollars.
Though a product of the system he derides, Lutz was able to see its fatal flaw: a fundamental lack of desire to improve the top end. Convincing outsiders that you can “leave the butter in” and see investments in product quality generate much larger returns in transaction prices (again, a “bean-counter” argument, at its heart) was actually easier than convincing executives steeped in the Detroit business model. And in the old days of GM, changing the basic approach to the business was nearly impossible due to what he calls a culture of “genteel arrogance.”
It wasn’t an aggressive arrogance, and it wasn’t an active arrogance. It was a passive, genteel arrogance… somewhat like medieval aristocracy dealing with the peasants. Infinitely polite, fair… [mimics an upper-crust Mid-Atlantic accent] “yes, that’s a good point… I don’t think we’ll be using your idea, but thank you very much.” So it was always very genteel, but it stemmed from this somewhat inbred culture that never drew people from the outside. It was almost a world of its own, and it was bred in the 50s and 60s when GM inarguably had total dominance of the market.
So, once his “top-line” argument started being taken seriously by Wagoner, the post-bailout influx of outsiders actually helped build support for his ideas. He recalls being told by one of GM’s new senior execs that “your fingerprints are all over this company,” and from the sound of that anecdote, there are no plans at the top of the Ren Cen to get away from Lutz’s basic philosophy. The contrast to the “brand management” days is clear: then, outsiders came in thinking they knew it all; now, the outsiders are steeped in the Lutz philosophy. No wonder the tune has changed.
8. Bob Lutz hates Toyota.
Lutz agreed that Detroit-based car executives “had good reasons to dislike Toyota,” but one of the biggest surprises of our conversation came when I asked if Toyota were owed some credit for its innovations.
Oh, absolutely. I don’t think they’re great at product creation… I’ve always said Toyota is vulnerable because the only image component that is driving sales is reliability and resale value, and if they lose [those two qualities], God help ’em. The cars look average, they drive average… I mean, let’s face it, they’re bland-mobiles. It became a default purchase for people who knew nothing about cars, and didn’t care about cars… and sure enough, [the reputation for reliability and resale value] was true. And, early on, Toyotas were also beautifully finished, inside and out. Even a Camry or Corolla had a beautiful interior… not so much any more.
But, there was no doubt that Toyota’s success lay in the actual manufacturing of the car. The Toyota Production System, Just-In-Time inventory, error-proofing, Andon cords in the factories, the blend of human operatives and automation… all of that stuff, we undeniably learned from Toyota. If you have a bracket that has to attach to something, Toyota would engineer that bracket in such a way that you could not mount that bracket upside-down. The whole industry was transformed from… looking back, you almost have to say haphazard manufacturing and quality control to designing a process flow in manufacturing that almost guarantees you perfection with every single vehicle. So, all the credit in the world to them for that.
I also think they had a very good and productive relationship with their suppliers, which we didn’t always have. Detroit keeps slipping into these periods of “let’s beat the hell out of [suppliers] and suck all the profitability out of them because it belongs to us”… with devastating results each time. They also showed, maybe by default, that you maintain residual value by not oversupplying the market. We would oversupply the market… “alright, another 50,000 into daily rental”… it looks good in the short term, you make the numbers, you make your market share, and then you wonder why the two-year-old off-lease Malibu was worth only 38 percent [of its original value].
This last bit is pretty key to Lutz’s “bean-counter” argument about improving the top-end of the business. That he learned the lesson at the hands of Toyota and manages to give credit where it’s due is a compelling admission, given GM’s notorious reputation for “not invented here syndrome.” And later in the conversation, when the new Camry came up in passing, he remarked
Apparently they were able to take 250 lbs out of it, while maintaining structural rigidity… everyone says it’s not a bad car… good for them.
Apparently he even has more respect for Toyota’s product development than you might think.
9. Bob Lutz can’t admit a mistake.
The quote above might be enough to show that Lutz is more reflective and self-critical than his “damn the torpedoes” public image would suggest, but his most significant admissions of failure have to do with GM. The on that is most damning, in my eyes, is his admission in Car Guys that he was not enthusiastic about GM’s expansion into China. Had Lutz been in charge, you could make the case that a late entry into China would have damned the company to bankruptcy years earlier than 2009. But there are other, more concrete examples of mistakes that he heartily admits to… mistakes in his own area of expertise. None looms as large as the GMC XUV, a vehicle he calls a “disaster.” And though he discusses this incident in the book as well, in our conversation he connects the episode with his critique of GM’s culture: executives at GM were, by and large, too smart for their own good. And Lutz himself, a man with no lack of confidence, found himself overwhelmed.
There were some times when I deferred to the GM people because they seemed so smart and seemed to have done their homework so well and they were so convincing and the PowerPoint presentations were so great. I felt like I was dealing with people of a really superior intelligence… and I was! That’s how the GMC XUV happened. I just got myself convinced… I hate it, but that doesn’t mean anything. I may not be the customer for this sort of thing, but these people have done their homework and we’ll let it go. That one proved to be a waste of about $275 million, down a rathole, for nothing. That vehicle was a joke.
This anecdote goes against the grain of the bean-counter-slaying Bob Lutz narrative, but it also confirms a basic premise of his philosophy: being too smart is as bad as being dumb. Over-thinking things can lead to as many bad decisions as it can avoid. And if Lutz is going to admit a mistake, it will typically be a mistake caused by the head winning out over the gut.
10. Bob Lutz is old and out of touch.
When I showed up at Lutz Farm for our conversation, it never occurred to me that Lutz was just days away from returning to the payroll at General Motors. I knew he had been doing some “consulting,” but I didn’t imagine that he was as involved in decisions as he is. Indeed the first hint that he might still carry significant weight inside GM’s product development organization came in the answer to my very first question, in which I asked him to compare his time at Chrysler with his time at GM. After some background he explained
First of all, when I arrived at Chrysler, I didn’t have the all-encompassing powers over product development that I do now.
Part of me wanted to ask him how much I should read into that little Freudian slip, but Lutz was off and running and I spent the next several hours just trying to keep up. And really, it would probably be a better question to ask Mary Barra, the relatively unknown actual head of product development at GM.
In any case, Lutz’s continued involvement at GM has raised more than a few accusations that “it’s time to let Lutz go” and that “the old man is past his prime”… but I saw nothing that led me to believe he couldn’t be helpful to a young exec trying to take charge of GM’s product development. When he was serving espresso before the interview began, I thought I saw his hand shake almost imperceptibly… otherwise, I wouldn’t have pegged him for a day over 60. For hours he puffed his cigar and kept up with my often-abstract questions, answering them rapidly, deploying pop-culture-references and decades-old anecdotes alike. His phone and Blackberry chimed relentlessly throughout the interview, and he would sometimes interrupt the interview briefly to fire off Blackberry messages with the dexterity and nonchalance of a 13 year old.
I certainly hope to be in his shape when I reach 79… and anyone fascinated by the world of cars would be glad for the opportunity to spend part of an afternoon listening to his prodigious perspective. There’s no doubt that Lutz is a man from another time, but he’s also a man with the grit and determination to stay remarkably relevant in a rapidly-changing world. Agree or disagree with him, love him or hate him, Bob Lutz is a living link to an automotive era that seems unlikely to return… and from which the industry can still learn a lot.