Dinner with Bob Lutz: Looking back at nearly 50 years in the car business

Bob Lutz is retiring--again.

He has tried this twice before: at Chrysler in 1998 and with his abortive exit from General Motors last year. But this time, at age 78, it may stick, even for the car guy who has operated at the industry's highest levels since the early 1970s. So a small delegation from Automotive News heads to Lutz's country home outside Detroit for an exit interview.

After passing through the security gate and winding through manicured grounds to his chalet-style home, we sit for a brief drink in the living room. Then we walk to one of his garages to shoot video of his car collection.

Lutz shows off two Cunninghams, a 1934 Riley competition roadster, a hulking Pinzgauer military vehicle and a 1952 Aston Martin DB2 that belonged to his father. He says that he may set up an office in the garage to write a book on his GM years. Lutz says the book is likely to anger GM old-line executives with its critique of the company's pre-bankruptcy culture.

First, take of tour of Bob Lutz's garage:

Bob Lutz's Garage, from Automotive News
Uploaded by AutoWeek.

After a short drive to a nearby country club, we order dinner and settle in. For the next 90 minutes, Bob Lutz holds forth. These are edited excerpts of that conversation.

When he arrived at GM in 2001, Lutz felt GM was overthinking design, with an internal think tank passing ideas down through several layers of designers. Lutz's recollection:

It was completely dysfunctional. It was intellectually very sophisticated, in that these visionary designers will be at the peak of the creative process, and they will pour out these ideas that will then go to the next level of conceptual designers, who will actually do sketches of how you could do a real car out of it. Then it moves down to Anne Asensio's brand studios, and she will do brand-focused executions on these.

And then it went down to Jerry Palmer's production studio. Already this was a five-stage process, and Jerry Palmer would take the stuff out of the brand studios from Anne Asensio and say, "This doesn't make any sense," and he'd start over. It was a complete waste.

Wayne Cherry had no control over design. He hated the stuff that was coming out of GM, and he was the vice president of design. I said, "Wayne, how can you be the vice president of design and hate the stuff that's coming out?" He said, "Because I have no control over it. The individual vehicle line executives have the final say over the styling."

Wayne wouldn't even sign the contracts for these cars. They said, "The hell with you, we don't need you."

General Motors had way too many intellectually superior people--too much IQ for this business. Common sense no longer came to the fore because everybody was always gaming common sense to think, "There must be an even better way to do this. A 90 IQ guy would say, 'Do great products, and those will sell.' But that's too obvious, there must be something else here."

Seriously, that's the way it was.

Lutz grants that GM executives worked long hours--but on the wrong things.

That was part of the problem--working on a bunch of stuff that didn't matter. I mean, everybody was in one-day brand immersions where they would take a whole day to look at presentations on the meaning of the Hummer brand, or the meaning of the Pontiac brand. I'd listen to this stuff, and I'd think, "Holy smoke, get off of this sociopsychological crap. This business is easy. You do great cars for Pontiac, and they sell."

Lutz recalls that when he arrived at GM, the company had a large chart of its goals, with "product excellence" as only one of dozens of priorities.

It's dead simple: Do the best product that you know how to do, that looks the best, drives the best, and if it costs 500 bucks more than the other guy's product, it doesn't matter. It's going to win.

If you have the hottest cars, you automatically get the best designers out of design schools. If you have the hottest cars, you automatically have the best relationship with your suppliers because they know you're going to take the parts that you're committed to. If you have the hottest cars, you're going to have the most efficient manufacturing because you're going to have a stable production schedule.

Ed Whitacre [GM CEO] just throws all this stuff out. He asks, "How does this benefit the customer?" If he doesn't get a clear answer, he asks, "Why are we having this review? Why are we talking about this?" And it gets killed immediately.

As Lutz talks about Whitacre, he mimics the Texan's drawl.

Ed is at 40 to 50 thousand feet and says, "I don't understand this business. I don't think I need to understand it."

He says, "It's pretty simple. We do great stuff that looks beautiful, and it's successful. We do mediocre stuff that's not so attractive, and we don't do well. What's so difficult to comprehend here?"

He always has this conversational style where he asks questions. He says, "Don't y'all think that if we do that we're gonna be successful?"

Yes, sir!

"Well, then why don't we jest focus on that?"

He is brilliant in his simplicity. American manufacturing business has been almost destroyed by the overintellectualization of the approach to business. Ed Whitacre cuts through all that. He sees it all exactly right.

He's constantly simplifying the system, and he's constantly asking questions like "Why do I have to see it?"

We'll say, "Well, normally CEOs like to see the major projects."

Lutz spent 12 years at Ford Motor Co., heading Ford of Europe, truck operations and serving on the board. He recalls feeling a kinship with Henry Ford II.

We got along famously. I really liked him, and I think he really liked me. We were similar in many ways in that, you know, Ford was full of disadvantaged farm kids who had gone to school and made vice president. Henry Ford II saw in me another guy from a fairly well-to-do family, not an authentic poor boy. He saw that I had the benefit of an upbringing that was European, which he greatly admired.

He and I hit it off extremely well. Never had a problem with him. You had to watch him when he drank because he was not a friendly drunk. He could turn very hostile very quickly.

While at Chrysler, Lutz says he sometimes failed to treat Chrysler CEO Lee Iacocca with the necessary respect--and that hurt Lutz's career.

When it came to succession plans at Chrysler, he had what was called the "ABL program," called "Anybody but Lutz." And that's OK. But he has since said on numerous occasions that he feels the number one mistake he made in his career as he looks back is not making me CEO of Chrysler.

In 1971, Lutz was hired away from GM, his first employer in the industry, by BMW. But the stint at BMW proved to be the first of his failed attempts to become a CEO.

The headhunter said, "BMW is currently in the hands of Eberhard von Kuenheim, and Eberhard von Kuenheim is destined to take over the whole [parent company] Quandt group. The company is really looking for a guy to move into the CEO slot of BMW." I thought, "Wow, here I am in my late 30s and a chance to be CEO of a car company," so I went. I had been there for about six months, and I realized that Eberhard von Kuenheim had no ambition to go anywhere. He was perfectly pleased to be CEO of BMW, and he was only three years older than me.

Von Kuenheim and I had a tense relationship, in that he was the Prussian aristocrat, very much a member of the German upper class. I was the brash, Swiss-American motorcycle rider. He tolerated me for three years, but he was glad when I left. That's another of my "two steps ahead of the sheriff" moves.

Lutz stands by one of his most-publicized--and, some say, foolhardy--remarks. In 2005, he caused a firestorm by calling Pontiac and Buick "damaged brands" at a conference in New York.

Pontiac and Buick were "damaged brands." I couldn't see why anybody would get upset about that. I mean, we knew it. The dealers knew it. Everybody at General Motors knew it. The media knew it. I probably should have used a phrase like "brands that could benefit from product renewal."

But they were damaged! It didn't matter what media review you read. The whole rest of the world was saying, "Why don't they get rid of Buick and Pontiac?"

Keeping me around as sort of a constant critic and adviser is not a long-term strategy. The company now has to put its faith in people like Mark Reuss [president, GM North America] and Tim Lee [president, GM international operations]. We have to move beyond the so-called Lutz era.

When you're Lutz, it's always painful to realize at age 78, the era comes to the end. But whatever emotional pain you might feel, it's just like dealing with your own death. Intellectually you understand that it has to happen, but personally you regret it.

I hate to anoint myself as--but you know, I do have a unique blend of talents. Maybe it's going to be difficult to find somebody who has the product skills coupled with the verbal communication desire. I just--I just love it. That may be difficult, but that doesn't matter. As Ed Whitacre says, maybe we talk too much. Maybe we'd be better off if we talked less.

Lutz has a vision for the future of transportation, and it's not necessarily a car guy's dream.

I say this without a great deal of joy, OK, but it's going to be individual transportation pods that are charging in your garage. You hit one of your normal programs, like your "go to work" program. And the thing goes out into the street--GPS-guided or wire-guided--blends into traffic, consolidates, goes to some sort of mass-transit station, converges onto a train and parks itself along with all the other little modules. At some station, your module gets off. There will be no driver involvement.

The automobile is a transient stage in the evolution of mankind's ability to transport oneself to any other place rapidly. And, ultimately, as we evolve, I think physical travel will become less and less important. Because if you can bring 95 percent of the experience in virtually--in, let's say, a 360-degree, full-screen, three-dimensional environment--you get 95 percent of the experience instantaneously. The need to travel goes down drastically. And ultimately I don't think humanity is going to be able to afford a situation where every citizen of the Earth has a car and is zooming around all over the place on concrete highways. It's just not going to work, and at some point it's going to stop.

By Dave Guilford and Chrissie Thompson- Automotive News