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GM Heals as Toyota ‘God-Like Status’ Wanes, Lutz Says

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GM Heals as Toyota ‘God-Like Status’ Wanes, Lutz Says (Update1)

March 31, 2010, 11:12 PM EDT


By Keith Naughton

April 1 (Bloomberg) -- General Motors Co. is poised to regain momentum as Toyota Motor Corp. suffers permanent damage to its reputation from worldwide recalls of more than 8 million vehicles, GM Vice Chairman Bob Lutz said.

“We are well ahead of plan and growingly so,” Lutz, 78, said yesterday in an interview at the New York auto show. “Toyota’s God-like status will never be reclaimed.”

GM and Toyota both said they will report U.S. sales gains today for March, when they boosted customer incentives. Toyota’s U.S. sales, including its Lexus and Scion brands, fell 12 percent through February after recalls to fix defects linked to unintended acceleration. GM’s sales rose 13 percent.

Lutz, retiring May 1 after a 47-year automotive career, has long admired and antagonized Toyota, which surpassed GM as the world’s largest automaker in 2008. Lutz said while he respects Toyota’s quality and manufacturing techniques, the Japanese automaker became too revered.

“Toyota was put on an illuminated plinth, 100 feet high,” Lutz said. “From now on, they’ll be down on the floor slugging it out with the rest of us.”

GM is improving cash flow and profitability faster than projected as new models such as the Chevrolet Equinox small sport-utility vehicle produce higher margins, Lutz said. Detroit-based GM’s reorganization in a government-funded bankruptcy last year substantially lowered its costs, he said.

‘Financial Success’

“The Equinox is sold out and has a transaction price $5,000 higher than the old Equinox,” Lutz said. “When we can demonstrate financial success, we will regain the momentum.”

Chief Executive Officer Ed Whitacre has said he hopes for a profit in 2010 at GM, which is 61 percent owned by taxpayers as part of last year’s bailout after about $88 billion in losses from 2005 through last year’s first quarter. Toyota’s 436.9 billion yen loss ($4.7 billion) for the fiscal year that ended in March 2009 was its first annual deficit in 59 years.

Toyota, which announced Jan. 26 it was widening a recall of autos for defects linked to unintended acceleration, has lost 3 percent this year. The shares fell 0.4 percent to 3,730 yen in Tokyo as of the 11 a.m. trading break.

“We know we have work to do. We need to continue to address any remaining concerns consumers have,” said Mike Michels, a Toyota spokesman. “Our only goal is to have No. 1 status with each individual customer.”

Lutz’s Tenure

Lutz announced last month he was stepping down after Whitacre moved him to an advisory role. Lutz, who helped lead each U.S. automaker, guided GM’s global product development and championed the Chevrolet Volt electric-drive car, which is set to go on sale this year.

On March 29, GM completed the first Volt at the Detroit assembly plant where the production models will be built starting in November, Lutz said.

“There were no bugs, no holdups, no problems,” Lutz said. “It’s a fitting exclamation point to what, for me, has been a very interesting career.”

He said Toyota’s recalls will erase the Toyota City, Japan- based automaker’s reputation for infallible quality.

“Toyota will obviously recover, but from now on they’ll just be another one of the guys,” Lutz said. “I don’t think they’ll ever reach the exalted status of the world’s best auto company.”

Lutz was succeeded as vice chairman for product development last year by Tom Stephens. Whitacre has since added two other vice chairmen: Chief Financial Officer Chris Liddell and director Stephen Girsky.

--With assistance from Alan Ohnsman in New York and Katie Merx in Southfield, Michigan. Editors: Ed Dufner, Ian Rowley



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