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Lutz and Not Sweating Small Stuff

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http://www.freep.com/apps/pbcs.dll/article...5/1002/BUSINESS

MARK PHELAN

Lutz says GM won't sweat the small stuff

Carmaker to focus on high-volume, big-profit products

BY MARK PHELAN • FREE PRESS COLUMNIST • July 16, 2008

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The troops need something to fight for, not a feeling of endless retreat.

General Motors Vice Chairman and retired Marine pilot Bob Lutz gave his beleaguered company that goal Tuesday, saying the company will concentrate its engineering and design efforts on vehicles it expects to sell profitably and in high volumes.

He pointed to successes like the Chevrolet Malibu and Cadillac CTS as evidence that GM's plan to sell large numbers of attractive cars is more than the empty boasting that has accompanied so many turnaround plans in Detroit.

"This is not the time for niche vehicles," Lutz said. "We can't afford to hit singles and bunts. We need triples and home runs."

This ain't batting practice, though. From Toyota and Honda to BMW and Mercedes, the world's best automakers have been successfully selling fuel-efficient cars for years.

"We're targeting everything to be high volume," Lutz said, acknowledging the competition, but with a confidence born of GM's recent successes with the Malibu, CTS, Buick Enclave and GMC Acadia.

Chevrolet is key

GM's best-selling Chevrolet brand is key to the plan. Chevrolet has at least four small cars or crossovers that will debut before the end of 2011: the Cruze compact car, a new version of the Aveo subcompact, the Traverse midsize crossover that goes on sale soon and a new version of the Chevrolet Equinox compact crossover.

All will have class-leading fuel economy and the kinds of features and design that have increased Malibu sales 95% this year while taking in an extra $4,000 on each car it sold, Lutz said.

If those four vehicles hit the market with the same strength the Malibu did, they could easily account for 800,000 or more sales a year.

Profit matters far more than sales volume, however. Small cars like the Cruze and Aveo have been break-even business at best -- and frequently money losers -- for GM.

Lutz said the Cruze has been developed to match or exceed the Honda Civic for looks, fuel economy -- and more important, selling price.

That's far from Chevy's current compact, the Cobalt. Cobalt sales have soared this year, but Lutz estimates the car sells for $3,000 less than a Civic.

GM employees got their first look at the Cruze when Chief Executive Officer Rick Wagoner addressed them Tuesday. The car -- which will be sold around the world, though the U.S. version will come from Lordstown, Ohio -- makes its public debut at the Paris auto show in September.

The eagerly anticipated Chevrolet Volt, an extended-range electric vehicle due to go on sale late in 2010, also could contribute far higher volumes than previously announced, Lutz suggested. GM has said it plans to build about 10,000 Volts in 2011, the car's first full year of production.

Any projection for the Volt is iffy because the vehicle relies on new technologies and suppliers, he said.

"We're in uncharted territory. If global demand is there, my personal guess is that vehicles like the Volt could be 500,000 a year in a few years' time," Lutz said.

GM plans to use the Volt's technology in vehicles it will sell around the world, including some vehicles that will be built alongside the Volt at the Detroit/Hamtramck assembly plant and shipped to Europe.

The engines that drive GM

Chevrolet and Cadillac are the engines that drive GM, and Cadillac will introduce two new CTS models in 2009: an extravagantly stylish coupe and a reportedly breathtaking sport wagon. CTS sales are up 30% this year, and the car is selling for an average of $8,000 more than the previous model, Lutz said. He expects the same from the wagon and coupe.

GM confirmed several other new vehicles that should hit the road in the next two years Tuesday. Cadillac and Saab will build crossovers based on the well-received concept cars they unveiled at the North American International Auto Show in Detroit in January.

Despite the intense financial pressure on GM, new-vehicle development escaped Tuesday's belt-tightening largely unscathed.

"We will build world-class vehicles. That's absolutely not something we will sacrifice," Lutz said, providing a rallying cry GM's designers and engineers needed on a grim day.

Contact MARK PHELAN at phelan@freepress.com or 313-222-6731.

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When I read this, I get a sense that GM is now really Chevrolet and Cadillac.

I'll bet that GM could do very nicely with just these two brands.

Maybe not number one but a much better company.

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Like I have been saying for months, when all is said and done, in North America it will be Chevrolet, Saturn, Buick and Cadillac. Niche cars and brands are done in North America.

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Like I have been saying for months, when all is said and done, in North America it will be Chevrolet, Saturn, Buick and Cadillac. Niche cars and brands are done in North America.

I agree with you. I'm not totally convinced about Saturn but who knows, the new Saturn might be a the most genius thing GM has done.

Really that lineup makes so much sense.

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some don't want cheap chevys. some don't want or can afford caddies. you need the inbetween.

Buick as the "luxury experience" in between, Pontiac as the "driving experience" in between. Isn't that the way it should be? :scratchchin:

Oh, as for Saturn, just kill it and rechristen those cars as Opels here in the United States.

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Pontiac needs to be in the equation. YJ do you think Pontiac is going anywhere personally? And I value your view on this.

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Pontiac needs to be in the equation. YJ do you think Pontiac is going anywhere personally? And I value your view on this.

It's been said countless times, everything at GM is on the table and being looked at. It's really quite hard to give a firm yes or no. Just a friendly disclaimer. :)

However, my gut says Pontiac might still have hope, though. I don't think GM has thrown in the towel for it just yet. :AH-HA_wink:

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The other brands are pretty much niche brands...

As was the plan...

The plan from 2005 was that Chevrolet and Cadillac would 'carry' GM. The rest is icing on the cake.

Like I have been saying for months, when all is said and done, in North America it will be Chevrolet, Saturn, Buick and Cadillac. Niche cars and brands are done in North America.

So you're saying that GMC, the number 2 selling division at GM, is a niche brand?

You're saying that Pontiac, the number 2 selling CAR division at GM is a niche?

You're saying that Buick, a brand with only 1 hot selling model and 3 models total is NOT a niche brand?

You're saying that Saab doesn't have the SAVIOR that you said it had?

Once again, the "facts" change as the news leaks out.

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It's been said countless times, everything at GM is on the table and being looked at. It's really quite hard to give a firm yes or no. Just a friendly disclaimer. :)

However, my gut says Pontiac might still have hope, though. I don't think GM has thrown in the towel for it just yet. :AH-HA_wink:

Look at what has been said... (Despite what PCS wants you to believe)

Pontiac does MORE volume with less product (old, rebadged, etc) than Saturn.

Pontiac sales are UP!

Pontiac HAS the established dealer network that Saturn lacks and GM doesn't have the $$$ to build.

Pontiac has MORE share than Saturn.

It's just as cheap or cheaper to rebadge a Chevrolet than an Opel.

GM doesn't have the $$$ to phase out divisions.

And even Bob Lutz hinted that Saturn is just as in trouble, if not more than Pontiac.

Saturn has been given the BEST and most co-hesive product offensive in GM history, yet it still HAS NOT produced results. The brand has little equity and few buyers. If this is all news to GM, then something is wrong.

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For the month of June (an admittedly tough month for all) Saturn sales were down 12.8%. No other GM division had that small a sales decline. For comparison Pontiac and GMC suffered 15.7 and 24.1% declines respectively. The heart of Saturn's lineup was taken away (ION) and they still outperform the other divisions on a % basis. I don't know which divisions should go, but all this bitching and moaning about Saturn seems to be without basis.

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Look at what has been said... (Despite what PCS wants you to believe)

Pontiac does MORE volume with less product (old, rebadged, etc) than Saturn.

\

I wonder what Pontiac's consumer sales volume is relative to Saturn, though...once you factor out the fleet sales.

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i really wish we were talking about crap asian brands going away. hyundai kia toyota honda acura lexus

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I wonder what Pontiac's consumer sales volume is relative to Saturn, though...once you factor out the fleet sales.

It still dwarfs it, Saturn doesn't have the distribution to touch Pontiac's numbers.

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Sales volume is of course another way to compare brands. Of course it's not as simple as it looks (more sales; more cost). Even with its much larger sales outlet, Pontiac only managed to outsell Saturn by 9000 cars for June of 2008. That is just one month of typical sales for the ION before its termination was announced. Even more telling is that Saturn out right outsold 4 brands for the first 6 months of 2008; Buick, Cadillac, Hummer, and Saab.

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Even more telling is that Saturn out right outsold 4 brands for the first 6 months of 2008; Buick, Cadillac, Hummer, and Saab.

KILL CADILLAC!!!

:neenerneener:

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"Lutz said the Cruze has been developed to match or exceed the Honda Civic for looks, fuel economy -- and more important, selling price."

What about driving dynamics, build quality and fit and finish? They already beat the Civic on price by a few thousand dollars and the Civic blows away the Cobalt in sales.

Lutz also said they were going to get away from niche products. If so, shut down Hummer and Saab. The Sky/Solstice don't sell in volume, even the Enclave sells about 40,000 units a year, that isn't a volume seller. Saturn Astra and Pontiac G8 are low volume. Personally I like cars that aren't overly common like an Accord or Camry, but if they do what Lutz says about 1/3 of their cars would have to go away.

When they make 4 lambdas, soon to be 5 theta/epsilon SUVs, they had six GMT360 SUVs, soon to be 5 or 6 epsilon sedans (depending on Saab), etc you have lower volume niche vehicles because they are trying to hit all these different corners of a market segment.

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>>"...if they do what Lutz says about 1/3 of their cars would have to go away."<<

Depends on one's definition of 'niche'. I wouldn't call 40K (Enclave) 'niche' even in the arena of 1960s GM volume.

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If I remember correctly, isn't Buick right now selling less units than Oldsmobile was when the decision was made to kill it?

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