Lutz: GM-Chrysler Merger Makes Sense
My goodness, when isn’t former General Motors exec Bob Lutz just the best? The former GM chief recently appeared on an Automotive News panel and boy that guy has vision and the rest of us have bifocals.
Car and Driver correctly points out that Lutz makes good points regarding a merger between GM and Chrysler, but the sage’s wisdom doesn’t stop at the following quote:
“The knowledge that one is to be hanged in the morning focuses the mind wonderfully.”
Lutz, alongside TrueCar President John Krafcik, former BorgWarner CEO Tim Manganello, Aston Martin CEO Andy Palmer, among others, waxed philosophical on the car business and its apparently shrinking economy of scale.
Lutz said GM tried to buy Chrysler twice and that it would have made sense for the automakers: their headquarters are close, and there were efficiencies in their powertrains, i.e. Hummer and Jeep.
“I was always in favor of GM acquiring Chrysler and I honestly think it would deserve a serious look now. You would get synergies … which would be massive,” he told the panel.
And “Maximum Bob” being “Maximum Bob”:
“We look at DaimlerChrysler as having been a failed merger. Well, it wasn’t failed for the Chrysler shareholders. At the time of the merger, the Chrysler shareholders realized an enormous gain.
“The subsequent execution was flawed in that Daimler never stepped in. Everybody kept doing their own architecture, and you had the hubris as part of the Mercedes [side] that said, ‘We will never use a Chrysler engine.’ I have news for you: Our four-cam V-6 engine 3.2-liter was every bit as good as the equivalent Mercedes-Benz.”
And then cynical, coal-powered Bob:
“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65 (thousand) now. Yukons are in the $70 (thousands). The Escalade comfortably hits $100 (thousand). (Eds Note: It gets comfortably close.) Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”
Don’t you dare change, Bob.
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