Ed Wallace

Back for the Future

By Ed Wallace

In the 1990s, trying to reestablish its dominance over the American automobile industry, General Motors decided to try something different: They hired Ron Zarrella away from his executive position at Bausch and Lomb to become Vice President of North American sales. Zarrella’s background, selling identical contact lenses for different prices — as alleged by the government — GM saw as a strength in those days, for obvious reasons. And he fervently believed in the concept that automobiles were nothing more than appliances and therefore should be sold the same way.

And Other Stupid Opinions

Instead of hiring ad groups with deep experience in automotive retail, Zarrella was known for hiring marketers from companies like Samsonite. Ultimately he was one of a long line of individuals who get hired during tough times in the auto industry out of near desperation. And GM lost almost as much market share during his tenure as it had in the 1980s, when the wave of Japanese and German products hit our market.

At one point, because I’d been extremely critical of Zarrella and his work at GM, they sent his assistant, Jim Farmer, down to offer me a trip to GM in a company jet; they wanted me to spend an entire day with Mr. Zarrella so I could witness first hand just how “truly brilliant” a person he was. I suggested that Mr. Zarrella would probably fast become infuriated with me, since I would use that time to ask him why he was doing so many things that were never going to work and to dispute virtually all of his decisions. Then I pointed out that he was likely to blame Mr. Farmer for personally handing me that invitation to make his boss’s life more miserable than it already was.

Zarrella was in charge of GM when the design work was being done on the Cadillac CTS and the original SRX. His career with GM mercifully ended with the return of renowned car guy Bob Lutz.

Fast forward 13 years, beyond the GM bankruptcy, but after its brilliant reorganization by Fritz Henderson and the greatest product renaissance in GM’s history under Lutz, and we get to the hiring of Johan de Nysschen, a South African native who was not as well known to the public as South Africa’s Elon Musk. De Nysschen was given far too much credit for the resurgence of Audi in America under his watch, then managed Infiniti from a new Hong Kong headquarters for a couple of years before jumping ship again to GM.

From an outsider’s viewpoint, de Nysschen’s sole contribution to the Infiniti product was giving every well known product a new alphanumeric name badge. It took most automotive journalists a year to figure out which vehicle was which for that lineup — and potential buyers a bit longer. But to his everlasting credit, unlike Mr. Musk, de Nysschen never stood up in an boardroom meeting and suggested he was going to put a colony on Mars.

What he did do was move Cadillac’s headquarters out of Detroit to New York, where it was claimed that real luxury trends start. And to be fair, that move was suggested before de Nysschen arrived, when Dan Akerson was still running GM. The concept was that to get in touch with luxury trends, being based in Detroit might be too big a handicap to overcome. So Cadillac got its expensive digs in SoHo and went to work on the future of the car company.

It’s been claimed Nysschen clashed with executives back in Detroit over control and clashed with the dealers over the Pinnacle Program; and many of Cadillac’s current products were either already in the market before he arrived or well underway before his tenure began. Certainly, some future Cadillacs will have his fingerprints on their genesis, but as they arrive in the market de Nysschen won’t be there for the introduction.

No, fewer than four years after GM announced that it had hired the right guy to remake Cadillac for the new century, he was gone. Replaced by Steve Carlisle, a longtime GM executive. Moreover, Cadillac will be leaving New York City and returning to Michigan because, as Mr. Carlisle told the Wall Street Journal, “We’ve got to think about how we take inefficiencies out of the communications process between the Cadillac team and the GM partners. “ So much for the “spotting luxury trends” bit.

That’s the funny thing about the auto industry. People like Ron Zarrella or Johan de Nysschen are hired by companies like GM and paid millions upon millions of dollars to “remake the industry.” The PR releases for their hirings all read the same way about their previous experience and how their vision for the future is truly brilliant and so on, ad nauseam. And they never last.

What’s more important, the auto industry never learns the critical lesson that, no matter how many times they try to reinvent the process of engineering, designing, and selling their products to the masses, nothing ever changes.

Lessons of History

A mere 20 years ago the Ford Motor Company announced with great fanfare that it was moving Lincoln Mercury’s offices from Dearborn, Michigan, to Irvine, California. The Los Angeles Times carried this quote from James Rogers, marketing manager for Lincoln, “We felt moving here would give us a window on what is new and fresh in the automotive world.” Well, that might have been true if they’d moved the offices to Rodeo Drive in Beverly Hills, but Irvine isn’t so upscale that it’s on the leading edge of what hip people drive.

Then the very next year Ford hired the No. 2 guy from BMW — as famed automotive writer Alex Taylor called him, the enfant terrible of BMW — Wolfgang Reitzle, to head up the design studios for the Premier Automotive Group, comprising Volvo, Lincoln, Jaguar, Land Rover, and Aston Martin. Of course you can’t possibly convince an elite world traveler and Bavarian car guy to up and leave the fatherland for a master-planned city in Orange County, California, while telling him he’d be right in the center of the future of automotive trends. Instead Ford put his design studio in London, where he claimed he would remake all of those Ford divisions with but a handful of workers and Internet access.

On this point, it should be noted that Bob Lutz, America’s last true car guy, had nothing but incredible things to say about Reitzle. Just as Ford had, until Reitzle asked for the first multi-billion-dollar check to redesign all its stodgy products. Then again, at the time Reitzle was publicly embarrassing Ford by suggesting that its previous luxury cars, such as the Lincoln Town Car, were nothing more than Ford products, “with a little gingerbread put on it and sold for 20 percent more.” Maybe that hit a nerve; Ford was about to introduce its “Baby Jag,” which was a Ford Mondeo with a bit of gingerbread put on it, for 50 percent more.

Four years after Ford moved Lincoln Mercury out to California, it returned with its corporate tail between its legs to Michigan. Just as four years after Cadillac moved to New York, it too went home. (Notice how many years it takes for sanity to reappear?) Reitzle left Ford slightly less than four years into his London posting; rumor had it that he turned down an offer to remake Opel and Vauxhall for GM because he’d had all the fun he could stand, having worked for Detroit once. Instead he got into the forklift business.

One would have thought GM would have known that story before hiring Johan de Nysschen and moving Cadillac to New York. Heck, one would think Ford would have known its own story before opening a high-tech research center to develop the cars of the future in Silicon Valley … then announcing that an abandoned train station in Detroit might serve its needs better.

Ford would end up hiring Alan Mulally to save the company right before the Financial Meltdown. He immediately dumped Volvo, Jaguar, Land Rover and Aston and focused on the basics for Ford. That’s right, he simply went back to the well proven basics of the auto industry and saved Ford during the most brutal downturn in the automotive market’s history. Today Ford is again ignoring the basics and trying to create the automobile industry of the future. Good luck with that, guys.

We keep hearing the auto industry has changed, so why are manufacturers so dependent on new car dealers to organize and sell their products? Why, if the Internet has changed everything, does Dallas Fort Worth have three major auto shows a year to which the public rushes en masse to see the new vehicles?

Saturn was going to change the retail side of the industry, and the national dealership chains said the same. Zarrella, Reitzle, and Ford’s Jim Hackett all claimed they could reinvent the industry, but the Alan Mulallys and Bob Lutzes simply did the basics and sold more cars.

In 2000 both GM and Ford had 25 percent or slightly more of America’s new car market. Today neither one has 20 percent. Detroit doesn’t need visionary saviors to convince their boardrooms to change everything; they all need historians to remind them they’ve tried all of that before.

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: edwallace570@gmail.com