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Reuss: 'We're making the roadblocks go away'

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Reuss: 'We're making the roadblocks go away'

Peter Brown

and Chrissie Thompson

Automotive News -- May 17, 2010 - 12:01 am ET

Why did you run the controversial commercials about the federal loan repayment?

We knew there were some people that didn't like it. I think some people need to know that there are some good things happening in the company.

At this time last year, Mark Reuss was running General Motors' Holden subsidiary in Australia. What a difference Chapter 11 makes.

After GM emerged from its 39-day bankruptcy last summer, Reuss returned to the United States to run global vehicle engineering. A few months later, CEO Fritz Henderson was out, and Ed Whitacre, the new GM boss, appointed Reuss president of GM North America.

Editorial Director Peter Brown and Staff Reporter Chrissie Thompson interviewed Reuss, 46, on May 4 in his Renaissance Center office decorated with a statue of the Holden lion, a Holden racing hood and a map of the famous Nurburgring race course.

How do you look at GM culture today, and what needs to change?

In North America, this is a completely different company than it ever has been in 26 years of my history here because every single year we did something around structural cost or reorganization. We did something to pare it down. And now we're looking at -- because we went through bankruptcy -- how do we run the business to create revenue, sell vehicles that customers really want?

The culture piece of it is nothing more than the behavior of the management. It's a reflection of that. It'll take a little bit of time to completely manifest itself, but I would say there's not a meeting that goes by that I and the rest of the leadership here don't say, "Do we have to do that?" Because there's been a lot of rules in place. That kind of freaks people out. But we've got to make sure that we're making the roadblocks go away.

How do you attack the arrogance at GM, a sense that "all the answers are inside our walls"?

I attack it every day, but there is still defense -- I don't know if it's arrogance -- but there's defense of what happened, rather than embracing what happened and saying, "Never again."

We can be really smart. We can be really analytical. But if none of that leads to actually someone taking their wallet out and saying, "This is the biggest [purchase] other than a house that I'm going to make a commitment for" -- and that commitment is far beyond the product. It's believing in the company. Until we understand and respect that, we won't have really changed.

How do you make that visceral connection with what the customer wants?

The other week was the first time we had our field staff here in 10 years. And no one's actually said to them, "What do you think the dealers in your zone would do on a merchandising basis for this offer?"

We went through this painful thing of how GM has not done a good job anymore in L.A. And then we go through this thing that claws back tenths of share points. So I said, "I don't want to do this for five years." I said, "What are we going to do in the next 24 months in L.A. that's going to make a big difference to get momentum back?"

They couldn't believe I asked it. You know: "If I gave you some resources to do this, what would you do?" And just something as simple as that question was -- like, I got an e-mail back an hour after that: "Wow. Do you think we could really do this?" We've got good people, but no one's asked them.

You've taken a pretty high-profile spot as the point person for dealers seeking reinstatement. How do those discussions go with dealers who are likely to close, even though they want to stay open?

Everyone's different. But I'll get a certified letter from someone who says, "I've been in business a long time. This hasn't been such a hot deal for anybody. Please help me not be here anymore."

I've gotten the ones who've said, "I've looked over the edge of the cliff. I don't like what I see. I want to be a good dealer. Here's what I'm going to do. Help me do it."

And then we've gotten the ones that play games with me, quite frankly, and so I play the game a little bit there, too.

Has Cadillac given up on being a global competitor to Mercedes?

No, but "a global competitor to Mercedes" implies that we take them on in Europe for volume in share. We're going to put Cadillac in there for people that want to buy an American luxury car. So if we go copy everybody -- I've seen the movie before. It doesn't work.

What's the answer for the Buick-GMC dealers who depended so heavily on Pontiacs?

There are some, particularly in the Chicago area, that really did depend on them. But right now they're achieving better profitability than what was going on with Pontiac. With Pontiac, there was a lot of inventory sitting around for a long time, and then they'd wait to blow it out. We've just proved that that doesn't work, in a very painful way.

Then Reuss talked about GM's supplier relations. A few days after the interview, Planning Perspectives Inc. released its supplier survey. GM finished fifth out of six automakers but dramatically improved its score.

How would you characterize what purchasing chief Bob Socia is doing relative to supplier relationships and optimization?

I would say the trust level of co-development is quite different than what it used to be. So if we wanted steering development and we wanted to see the best of what a supplier had to offer, I'm not sure we really ever saw that. I think we're beginning to see it. But this didn't happen overnight. It won't be fixed in three months.

What do you need to do to regain suppliers' trust?

Do what you say you're going to do. Treat people like you like to be treated. It was written a long time ago. It's not magical.

I've heard suppliers say very complimentary things about Bob Socia. It's not clear that it's permeating the whole.

All I can do is hit it every day. It will permeate, just like it did the other way here. It's never done.

In that relationship, there's always built-in tension because you would rather pay less and they would rather get more.

Yeah, a little bit. But the big thing is we will pay a fair price for the best. I'll pay a little more if I think I'm getting more value or a better product. And that's a radical change from where this company has been.

If we only go for the lowest-cost supplier, do you think we'll ever get the best value for the customer on that component? No way. That is not the way we're going to operate this. I love cars too much.

Now that you have seen the backlash against the commercials announcing GM's federal loan repayment, do you think it was a good decision to run the ads?

Yep. We knew there was risk in it. We knew there would be some people who didn't understand it, including some of our own employees. When we talk about earnings and performance [today, May 17], I think it will be a lot better for us and more understandable. It's an indication that the company is producing some solid results, and that's the message that we tried to convey.

But if you go out and ask people if they agree with GM taking money from the government, they're going to tell you, "No." And so we put that in the ads. We understand that, but here's the great products that we make. And I don't think that's boastful at all. We did research the ad. People generally felt that it was not boastful.

What's GM going to look like in 2016, when there's an utterly new corporate average fuel economy regime?

I think it will leverage what we've put in place on batteries and electric motors. We still have a lot of folks in this country that earn their living with pickup trucks, but how that pickup truck operates and what's in it could be quite different. We could see, instead of "I buy my pickup or my car, and it's multi-use" -- they buy a second or third car that's less expensive but is more purpose-built for whatever their commute is.

Will small cars be profitable?

Small cars will be profitable very, very shortly, within the next year.

Read more: http://www.autonews.com/article/20100517/OEM02/305179991/1179#ixzz0oBjJfm8N

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Reuss: 'We're making the roadblocks go away'

Has Cadillac given up on being a global competitor to Mercedes?

No, but "a global competitor to Mercedes" implies that we take them on in Europe for volume in share. We're going to put Cadillac in there for people that want to buy an American luxury car. So if we go copy everybody -- I've seen the movie before. It doesn't work.

Haha, it sure looks like they have given up. Mercedes dominates Cadillac in sales in China and Australia as well, it isn't just Europe. Mercedes beats Cadillac in volume everywhere. But the difference is status, right now Mercedes is the standard of the world. I think Reuss needs to look beyond sales volume in Europe and rebuild the brand. Cadillac as it stands now will get laughed out of Europe. I'd agree not to copy people but what is the SRX? They copied the Lexus RX and Lincoln MKX. Next thing you know, they'll be putting a Cadillac badge on a compact Chevy or a midsize Opel tying to get volume, oh wait...

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Mercedes also has the A-class, B-Class, E-class taxis, Sprinter, and a full truck line....

You really want Cadillac to sell those... or would that best be left to Chevy? Cadillac will never beat MB in total volume because Cadillac will never be, and shouldn't be, a full line manufacturer like MB is...... so don't try and say that it's all $60k E-classes that MB is winning over. The A-Class, B-Class, and Sprinter are like cockroaches over in the EU. I NEVER want to see Cadillac chase that.

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If Cadillac wants to make it they need to be Cadillac in their own way and focus on making great handling cars that looks great and are of the best quality.

They need to realy get this right with the Alpha as this will be the high volume Cadillac that most people will come in contact with in their daily life. You get this one right it will make people want and pine for the next level and next level. BMW was built in America on the 3 series and it grew from there.

They need to keep from just things like the Roadster based Vette and the like. Offer options and technology you can't get on a Chevy or Buick. Also make a car that may not mimic a Benz but is better in every aspect. If they can do that at a lower price they will have a winner.

If you copy Benz and try to make it better and cheaper you just get a copy of a Lexus.

Make Cadillac a car people want to be seen in again.

His note on the truck will prove to be intersting. If they do make things more complicated on the trucks with electric and hybrid ideas will the traditional buyer still be happy. Most love trucks as they were straight forward and simple. Now if they get older and more expensive to repair will more people back away from them? The guys that have to have them will buy but what about the people who could move to other options like a Crossover that get better mileage with less added features?

Mark is continuing to doing what Lutz started and seems to have the power to take it to the next level. He has a lot riding on this as he is doing the right thing by enabling everyone at GM to do what they can.

Edited by hyperv6

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If Cadillac wants to make it they need to be Cadillac in their own way and focus on making great handling cars that looks great and are of the best quality.

They need to realy get this right with the Alpha as this will be the high volume Cadillac that most people will come in contact with in their daily life. You get this one right it will make people want and pine for the next level and next level. BMW was built in America on the 3 series and it grew from there.

They need to keep from just things like the Roadster based Vette and the like. Offer options and technology you can't get on a Chevy or Buick. Also make a car that may not mimic a Benz but is better in every aspect. If they can do that at a lower price they will have a winner.

If you copy Benz and try to make it better and cheaper you just get a copy of a Lexus.

Make Cadillac a car people want to be seen in again.

His note on the truck will prove to be intersting. If they do make things more complicated on the trucks with electric and hybrid ideas will the traditional buyer still be happy. Most love trucks as they were straight forward and simple. Now if they get older and more expensive to repair will more people back away from them? The guys that have to have them will buy but what about the people who could move to other options like a Crossover that get better mileage with less added features?

Mark is continuing to doing what Lutz started and seems to have the power to take it to the next level. He has a lot riding on this as he is doing the right thing by enabling everyone at GM to do what they can.

Good points, Cadillac needs to be both aspirational and inspirational again in order to really succeed in the modern luxury market. The Cien and Sixteen both are good examples of what Cadillac needs to strive for in order to get anywhere near that.

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No, but "a global competitor to Mercedes" implies that we take them on in Europe for volume in share. We're going to put Cadillac in there for people that want to buy an American luxury car. So if we go copy everybody -- I've seen the movie before. It doesn't work.

That's the sort of line Acura reps gave me and 68 when we asked why they were going with FWD cars and weird styling in the face of RWD luxury makers with V6's AND V8's.

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Mercedes also has the A-class, B-Class, E-class taxis, Sprinter, and a full truck line....

You really want Cadillac to sell those... or would that best be left to Chevy? Cadillac will never beat MB in total volume because Cadillac will never be, and shouldn't be, a full line manufacturer like MB is...... so don't try and say that it's all $60k E-classes that MB is winning over. The A-Class, B-Class, and Sprinter are like cockroaches over in the EU. I NEVER want to see Cadillac chase that.

General Motors is a full line manufacturer, just like Mercedes is. Mercedes Corporation just chooses to sell most of their products under the Mercedes brand. GM uses several brands and doesn't sell any GM brand products. Cadillac isn't it's own company, it is just a product line within GM. The same company that makes the CTS-V makes the Aveo, just like the same company that makes the E-class makes the A-class. The difference is, Mercedes has the S-class and Gullwing and they build great high end products as well as great commercial/fleet products. GM does a good job with trucks and crossovers, and gets a good car every now and again, but GM builds nothing high end. I want Cadillac to go high end and be something people aspire to, not a car that people settle on because it was cheap during a memorial day blow-out sale.

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So why are you bitching that Cadillac isn't going to outsell MB then? GM as a whole outsells MB as a whole.... easily.

Who cares if MB sells 100 gullwings? GM sells more ZR-1s.

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Good points, Cadillac needs to be both aspirational and inspirational again in order to really succeed in the modern luxury market. The Cien and Sixteen both are good examples of what Cadillac needs to strive for in order to get anywhere near that.

Cien and Sixteen are ok and all but Cadillac needs to make it mark first with the cars that most buyer will buy. Reps are built on real cars drive by real people. A Sixteen would be nice for halo and all but that is not what build a creditable image.

GM needs to beat BMW, Benz and Audi in the classes that the ATS and CTS are in in the states. Once they lead the class here then they can worry about Europe. If Cadillac can't beat em here how will they in Munich?

In the 70's everyone wanted a 3 series and then they moved up as they aged and made more money. They looked to the 5 and 7 series then. But the 3 series really was what moved BMW from just another Euro sedan you would see once in a while to being a car that gave it's driver a image others wanted.

The Cien and Sixteen would be wasted if no one took them seriously. If Cadillac can't compete with the bread and butter cars who is going to spend the big dollars for the image car that only a few will have?

Once we see people paying only $500 off sticker and waiting like they are for a ATS like they do for the new Equinox then we know Cadiallac has made a dent in the market. The thing is with Cadillac is not so much with volume but image and profits.

The key to Cadillacs future is to make more money while selling low volume. With all cars of distinction less is more. Just look what happened to Porsche's image when they cheaped out and built a lot of 924/944's. They became the Kmart sports car vs the image of what they once were. They cut volumes and raised prices and are doing well if you don't count the SUV deal for image and profits.

Edited by hyperv6

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