Ed Wallace

A Lion in Winter

By Ed Wallace

One always gets the idea that if he’d had his way, Bob Lutz, former vice chairman of General Motors, would still be going to work at a major automaker every day. After all, Lutz used to love to tell everyone how his father, once vice chairman of Credit Suisse Bank, still went to work every day into his nineties. More important, those who head GM today love to take credit for the corporation’s healthy profits, but they’re not really the ones responsible. GM is where it is today because Lutz midwifed a product renaissance; Rick Wagoner took the company into bankruptcy in 2009, thereby eliminating the $70 – $80 billion in debt run up by previous CEOs; and Fritz Henderson reorganized the company to exit the bankruptcy successfully.

Bob Lutz, however, was probably the last real car guy in the industry. And his departure is already being felt — and not because Lutz was a designer himself. It’s because, like his former boss at Chrysler, Lee Iacocca, Lutz had an uncanny feel for what the public was going to demand next, long before they knew they wanted it.

Iacocca gave us the Ford Mustang in the Sixties and the first true minivan in the early Eighties, both vehicles that are still with us today. The Mustang became the Baby Boomers’ first automotive love in 1964, while the minivan became their vehicle of choice, finally killing the station wagon, as the Boomers settled down and had kids. Iacocca also had Chrysler purchase American Motors in the late Eighties simply so he could get his hands on Jeep; he saw the undeniable trend line the industry was about to follow next.

Lutz once saved Ford through Ford of Europe with vehicles such as the Scorpio and others, which were the first true so-called “Aero” designed cars. Ford would later credit them to those who designed the first Taurus. At Chrysler Lutz shepherded the Dodge Viper, the Ram truck, and the LH sedans of the Nineties into production. And at one point, those vehicles made Chrysler the most profitable company per vehicle built in Detroit.

But his early life was something else. Lutz has admitted that he was the kind of kid who threw temper tantrums until he got his way; and, in spite of the best education that a Swiss banker’s money could buy he didn’t graduate high school until he was 22. He then married, attended the University of California Berkeley, and sold vacuum cleaners part time to support his family before joining the Marine Corps to become a fighter pilot. He finally earned his degree in Production Management just before his 30th birthday. It was his father’s connections, and the fact that Lutz is fluent in five languages, that led him to start his automotive career with GM’s Opel Division in Germany. From Opel he moved to BMW, then to Ford of Europe. And it was Ford that, in the mid-Eighties, transferred him to the States — where the reality that, as he often puts it, he doesn’t suffer fools gladly, cemented his reputation.

During that period many corporations were forming cults around the concepts introduced in the seminal work, In Search of Excellence; corporate shrinks were teaching everyone to play well together — although officially it was called team building training. Having experienced that personally twice in my previous career, the concept is fine but the execution inside a corporation is close to nonsense. All corporations can be taught to function more efficiently, but it’s done by aligning a team member’s strengths and weaknesses with their position, not throwing flowers at each other and telling everyone how much you love their contributions. At Ford Lutz wrote and sent out a scathing satirical memo that read, “Ford terminology in memos, meetings, and reports is changing at an accelerating rate. New words are emerging almost daily as yet another group strives for supremacy in communicative obfuscation. Committees are now to be known as interactive synergistic substructures, and a bigger committee would now be an enhanced synergistic substructure.”

Within weeks Lutz was at his new position alongside Lee Iacocca at Chrysler.

Too bad that, though he was one of the key people behind Chrysler’s incredible Nineties turnaround, Lutz also clashed with Iacocca. That became clear when Chrysler’s board finally decided that Iacocca’s best days were behind him; Iacocca made certain that Bob Lutz would not succeed him as chairman. Decades later, the moment’s passion long since passed, Iacocca admitted that one of his worst mistakes was not handing Chrysler over to Lutz.

Lutz stayed until Daimler Benz purchased Chrysler in 1998. Having worked alongside Germans before, he wanted no part of what was about to happen to Chrysler. I knew this because I would soon have a blue line copy of his book, Guts, to review for Car & Driver; at first the chapter containing his opinion of Daimler’s takeover of his former employer was missing, but it was furnished later with the understanding that it could not be part of the review. Everyone who understood the auto industry — except the key partners, who were selling nothing but hype — knew that the buyout would never work. The obvious problem is that you don’t need or use the same mindset in designing, building and selling $75,000 luxury cars as you do when doing the same for a minivan for the masses that couldn’t be sold without a huge rebate.

Then it was on to GM and retirement for Lutz. But it turns out he is still the most vocal critic in the industry; and recently at Car & Driver he discussed a few items worthy of debate: Asked whether Lincoln could survive in the long term, Lutz expressed major doubts.

Mostly because of the fact that, in the auto industry, luxury means something that people aspire to own — some day. When our parents were coming of age, for example, they promised themselves that some day they would be well enough off to own a Cadillac or a Lincoln.

But Lutz sees a secondary problem. Lincoln is highly defined by his previous automobiles, in a world where cars are suffering and SUVs are the modern rage again. So Lincoln is targeting its past — and the slogan on a baseball cap might read, “Make Lincoln Great Again” — but in reality that place and time are long gone, never to return again.

On Tesla Lutz is even more curt than I am, although we have the same opinion. Asked if Tesla will still be here in 20 years, Lutz replied, “As it is currently, no. Tesla burns cash. It’s a cult of fanatics who think Elon Musk can do no wrong. But financially, it doesn’t work.”

Lutz reserves his harshest criticism for the entire auto industry: Lutz believes that self-driving cars will drive another huge consolidation of automakers worldwide — but that won’t matter. Why? Because, he believes, when the day comes that one simply orders a vehicle on the phone to use for the day, automotive brands won’t matter anymore, and then the auto industry dies on the vine. Lutz’s prediction? The industry’s got another 20 years.

I’m not sure I can follow Lutz’s logic on that last bit. Even if the day comes when the middle class ends up owning their vehicles for 20 years before trading — and don’t laugh; if we’d suggested 20 years ago that someday people would own their new cars for a decade, no one would have believed that, either — there will still be enough individuals in the upper middle class and upper class to leave us with a healthy car market. If nothing else, luxury car sales will survive.

Then again, Bob Lutz has been around the auto industry for 55 years. Maybe he knows something none of the rest of us do. Of course, that’s patently absurd; he’s never held back a secret in his life.

© Ed Wallace 2016

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given 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. E-mail: wheels570@sbcglobal.net

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