Bob Lutz on Erasing GM's 'Reputational Deficit'

Outgoing Vice Chairman: Automaker Will Emerge a 'Powerhouse'

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DETROIT (AdAge.com) -- General Motors Corp.'s potential tagline in bankruptcy: "GM. Yes, we can."

Bob Lutz
Bob Lutz
That was the joking suggestion of the automaker's outspoken vice chairman, Bob Lutz, who stressed several times today in a talk with reporters at the Automotive Press Association that a final decision has not been made about whether to file for Chapter 11. He would not speculate on whether the company would go through "the cleansing fire of a restructuring. In a matter of days, we will find out which way it goes."

But the veteran industry executive, who is scheduled to retire from GM at the end of the year, said if the automaker does have to file, "we will come out of this rid of a lot of historic legacy costs that have been dragging us down for the last 20 years or so." He added that GM's current ratio of retirees to active workers is 10-to-1, and the company has paid out $103 billion in health-care benefits in the past 15 years. "That is a charge our foreign competitors simply don't have," Mr. Lutz said.

The Obama administration's auto task force has taken some criticism for what some observers see as meddling in the affairs of Chrysler and GM, as the panel works with the two automakers to get through these treacherous times. But Mr. Lutz said he is thrilled that Detroit has an ear in Washington and hopes some form of the panel is made permanent. He said the government doesn't want to run the two companies; rather, it's in the government's best interest for both automakers to be successful in the future so taxpayers can be repaid.

'Brilliantly executed mediocrity'
The outspoken Mr. Lutz poked fun at GM products of the '70s, '80s and '90s as "brilliantly executed mediocrity," adding that he hopes his legacy as product czar is "the whole organization understands there's no such thing as good enough when it comes to product."

He told the APA that GM has made progress in the past decade improving buyer consideration for its eight brands. Yet that clearly isn't enough. GM came out on top in its own research of more recent unbranded models shown to consumers against competitors' unmarked vehicles. But Mr. Lutz said once people learned the car they liked most was a Buick and their least favorite was a Toyota, they switched their votes. "You can't change that overnight," he said. "What you can change is product." He cited "the sheer number of awards we've won" from third parties for product excellence as recognition that GM has made great progress in the past nine years.

While GM has erased product and fuel-economy deficits, Mr. Lutz said, the toughest challenge is erasing the "reputational deficit. How do you change people's minds? We don't have the answer." He said it may take several generations of new products before people get the message.

Moving the metal
When asked by Advertising Age how well GM's Total Confidence customer-assurance program was moving the metal, Mr. Lutz said sales have been ahead of projections in the past few days. "I think Total Confidence can work, but I would say our initial advertising on it was a little too intellectual. 'Reinventing the ownership experience' doesn't exactly convey the message that we will guarantee your [car] payments."

The "new" GM, Mr. Lutz said, "will be smaller and leaner, but it will be a powerhouse." He added, "The minute we're out, we'd make a strong communication effort about how strong GM is," before making the quip about the "Yes, we can" tagline.

GM is working with two of its Interpublic Group of Cos.' roster shops, McCann Erickson, Birmingham, Mich., (Saab and corporate) and Deutsch, Los Angeles, (Saturn) on a confidence-building ad campaign to reassure Americans the company's vehicle warranties will be honored, a spokeswoman told Advertising Age. That effort will be similar to Chrysler's "Look what we're building" ads after it filed for Chapter 11.

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