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April 29, 2005

Building the World’s Biggest Car Market

By Bob Lutz
GM Vice Chairman

I finally have a chance to offer some quick thoughts on my trip to China last week for the Shanghai Motor Show.

In two words: very impressive ... The Shanghai show is rapidly turning into an absolutely world class event, with most of the world’s automakers taking part. There’s no longer anything about the show that has the slightest smattering of less than first-class production, especially in terms of the elegance of the stands, and the elegance of the facility that houses the show. It’s all at least as impressive as many of the international shows on the circuit. It has a lot of space, and big stands for the automakers, and it’s just a great show.

What’s particularly impressive is the rapid process made by the Chinese producers who are not affiliated with anyone. They’re developing their independent capabilities and they’re coming on very fast. So is the whole of China, for that matter.

When you look at the country, anybody who says the future of China is overblown or over-hyped just doesn’t get it. If anything, it’s under-hyped. We have no conception of what that place is going to be like in 10 years, and beyond. Shanghai and its surrounding province alone will have hundreds of millions of people with enough income to buy cars. And that’s just one part of China.

They’re in the process of building 50,000 miles of interstate freeways, north-south and east-west routes, and it’s likely that cities will spring up at the nodal points where the highways meet, as the nation shifts from largely agrarian to largely industrial. Picture America’s Industrial Revolution replicated on a scale of a billion and a half people. In 10 years, China will be, by far, the world’s largest automobile market. Ignore it at your peril.

GM is positioning itself to capitalize on the market’s growth. At the Shanghai show, we introduced the new Chevrolet Aveo (see Detroit News story), which I think will do exceptionally well. It’s a nice little notchback sedan with a beautiful interior, and I think the Chinese market will embrace it. Eventually, this new Aveo will be sold in 120 countries and territories around the world.

I also took the opportunity to visit and get progress reports at our vehicle development centers both in Shanghai, the Pan Asia Technical Automotive Center (PATAC), and in South Korea at GM Daewoo Auto and Technology (GMDAT). I must say I came away incredibly encouraged by the great work being done at these facilities, and by our prospects for success in Asia and beyond. I saw some staggeringly great future designs with truly international potential that I hope we can share with you someday soon.

If any readers in Asia could weigh in with thoughts on these and other subjects, we’d be interested to hear from you. In the meantime, have a great weekend.

P.S. And oh by the way, here's some interesting reading.

Posted by Lutz at 3:26 PM
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April 22, 2005

And Another Thing ...

By Bob Lutz
GM Vice Chairman

Before the week draws to a close, I just wanted to add a follow-up to my previous post, an update of the Pontiac G6’s sales performance. I’m amazed at the amount of discussion the vehicle has generated — both good and bad. And I’m pleased about all of it — more the good than the bad, of course.

But I am glad it’s a lightning rod for discussion. And so I will just leave you with a few more facts about the G6. Offered without commentary for your own edification and discussion:

• FACT: Estimated January through end-April (at current rate of sales), the available version of the G6 will be outselling the same version of its Grand Am predecessor by more than 70 percent. That’s comparing V6 sedan to V6 sedan. (This updates the previous post’s 57 percent, which was through March.)
• FACT: Our annualized selling rate for G6 is now about 100,000 a year, and that’s before we even get to the four-cylinder engine, the coupe, the 3.9-liter high-output V6, or the hardtop convertible still to come.
• FACT: G6 buyers continue to be, on average, three years younger than the segment average for midsize sedans.
• FACT: We are currently selling 75 percent fewer vehicles to rental fleets.

I could go on, but that’s enough for now. I think these facts speak for themselves and provide a fair indication of our level of satisfaction with this vehicle’s performance in the marketplace. Have a great weekend.

Posted by Lutz at 4:56 PM
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April 19, 2005

The Sun Keeps Coming Up

By Bob Lutz
GM Vice Chairman

Every so often, we all have to do a bit of a sense check, just to make sure that the sun will indeed rise tomorrow. And, amidst all of the gloom and doom surrounding GM lately, I'd like to give yet another alternative viewpoint.

No, it's not all bad; indeed, I'm seeing some good signs.

For one thing, I am enthusiastic about the Buick Lacrosse. It may be a bit conservatively styled, as are many excellent Japanese cars, but it's wonderfully executed, has fabulous workmanship, is dead-quiet, and, with the sport suspension and the four-cam V-6, has sensationally good dynamics. Plus, on the road, it has very nice "presence." And it’s already selling better than the old Regal and Century combined. In March, we delivered 8,233 units, a 36% increase over February. That's not bad.

As many of you know, the GTO was a very quick program using an existing Australian car in order to get to market quickly. The initial response to the vehicle was tepid, so we went back to work. The 2005 GTO has a sportier stance and exudes power and verve with two hood scoops, dual exhausts and 17-inch tires. It also features the 6.0-liter LS2 engine, with an additional 50 hp and 35 more lb-ft of torque. Since this is a true muscle car, I'll hardly mention that this car has a beautiful interior and a great stereo. Despite all the negativism of the press, this car had its best month ever in March! It is selling at above the originally projected rate, and the West Coast is accounting for 3O% of national sales. Maybe we're talking about a GTO-led muscle-car revival in California? And, no, it is NOT heavily incentivized...

The Chevy Cobalt was compared favorably to the Mazda 3 in Automobile Magazine recently and did almost 15,OOO sales in March, with little fleet, and almost no coupes in the mix, and is already the number three small car in the U.S. market. The Cobalt SS is a terrific little car with a supercharged 205-hp engine and 18-inch wheels.

G6 sales are increasing rapidly month after month, even though there are no lower-priced four-cylinder cars yet in the mix. Another blog, Automobear, did a thorough analysis of this, but just for starters, the G6 V6 is already outselling the comparable Grand Am by 57% when comparing March 2004 to March 2005. Wait until we round out this lineup and then we'll pass judgment on this one!

The Hummer H3 is almost here, and we’re expecting it to do very well. I also expect that the Chevy HHR will be very successful; my gut tells me this....we'll see who's right. The tuners are going to have a ball with this car.

Oh, and don’t forget Solstice, we sold our first 1000 in a mere 41 minutes!

Even if you're not in the market for a new car, I urge you to get out and try this latest generation of GM products and while you’re there, press the “Hot Button.” Who knows, maybe you’ll get lucky. Tell them I sent ya!

Update: Also see the Car and Driver review of the Cobalt.

Posted by Lutz at 12:06 PM
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April 15, 2005

HHR Podcast

In our new podcast, host Deb Ochs interviews Mike Danowski, HHR product manager, about the 2006 Chevrolet HHR, which goes on sale later this year. He talks about its influences, interior, two engines and other options, including a standard auxiliary input jack for an iPod or other audio source. Let us know what you think.

Podcast feed

Download the MP3

Podcast help

Posted by Editor at 2:35 PM
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April 13, 2005

Clearing the Air

By Gary Grates
Vice President, Communications, GM North America

We've been reading and listening to a lot of criticism from our friends in the news media and in the blogs over the past week regarding our dispute with the Los Angeles Times. We’ve also received some praise from those -- including a few in the media -- who agree with us that the newspaper’s coverage is not always fair.

By far, the most frequently asked question has been: “Why doesn’t GM publicly detail the Times’ errors and misrepresentations?”

Since this became a news story last week, we have declined to participate in a public airing of our complaint out of respect to the Times. To its credit, the Times has an ombudsman who is investigating the issues we raised. Although some have speculated about the substance and merit of those issues, we feel that we should let the Times consider our complaint and announce its conclusions before we comment further.

Needless to say, this has not been a popular decision with those who would prefer to portray this as a “battle” or “war” in which one side wins and the other loses. It makes for good copy with lots of conflict.

In fact, our discussions with the Times have been respectful and professional. We have been very frank in our criticism, and the Times editors so far have taken our complaint seriously, which we appreciate.

We knew going into this that our action would be portrayed negatively. GM has been attacked relentlessly in the past week as being “thin skinned.” But think about that for a moment: GM has been particularly “newsworthy” in the last month. During that time, many have weighed in on our challenges and our products, and by any measure, much of the commentary has been negative. If ceasing our advertising in the Los Angeles Times were simply a symptom of our alleged “thin skin,” then why focus solely on the Times, a newspaper that covers GM and Detroit minimally?

In fact, GM is not averse to fair criticism, and we appreciate the role journalists play in our society. We advertise in hundreds of venues and media, and by and large, we consider the coverage of our company fair, balanced and thorough. We deal personally each day with hundreds of journalists from a wide range of media around the world, and we feel most of them take their job seriously and do their best to be fair. We expect critics to point out where we have done well with our products and where, in their opinion, we could do better. We often learn a lot from such criticism and take it to heart.

When we disagree, we prefer to take it up privately with the publication, as we did with the Times. We are not so naïve to expect that the media should only write positive things about GM or any other company, as some have opined.

We were one of the first companies to establish a blog where our executives could express their opinions in their own words, unfiltered by anyone else, and hear back directly from enthusiasts and others interested in what we do. Bob Lutz has stated repeatedly in this forum that criticism is welcome, and we’ve published a good amount of it, along with the praise.

But neither do we think that any business should remain mute when it sincerely believes it has been treated unfairly or attacked by reporting that is unsupported by facts and unrelated to reality. It is extremely rare that we take the kind of action we did with the Times, but it is fully within our right to spend our advertising dollars where we see fit.

We anticipate having more to say once the Times reaches its own conclusions, and we’ll share that with you here when the time comes. Until then, acting in good faith and out of respect for the Times’ process for dealing with such issues, we will opt to not add fuel to the media fire.

UPDATE: See David Kiley's column in Business Week, Jerry Flint's column in Forbes, and Automobear.com for tough but fair analyses of the issue.

Posted by Editor at 5:21 PM
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April 7, 2005

Still Open for Business

By Bob Lutz
GM Vice Chairman

Some of you may remember my opening salvo for this blog back in January: "After years of reading and reacting to the automotive press it is finally my turn to put the shoe on the other foot. In the age of the Internet, anyone can be a journalist."

What began as an experiment has become an important means of communication for GM. It has given me, personally, an opportunity to get much closer with you, the public. Often, I find your comments insightful and compelling. At times your criticism is harsh. But the fact that you have remained interested and continue to have faith in our efforts to develop great products is a worthy motivator.

Questions have been raised as to whether I will continue to be involved in FastLane given my re-focused responsibilities. The answer is an unequivocal "yes." From its inception this blog has been a forum for GM's leadership to discuss important issues with a spotlight on product... product plans, product virtues and truths. In fact, I hope to see more GM leaders begin to engage in this conversation on the FastLane over the coming weeks.

We hear your words loud and clear. We're redoubling our efforts to build great cars and trucks and we'll continue to talk about them, right here.

Posted by Lutz at 10:40 AM
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April 5, 2005

Sharpening Focus

By Bob Lutz
GM Vice Chairman

In case you missed it yesterday, GM Chairman Rick Wagoner announced some organizational changes that are going to help GM move even closer to operating as one truly global auto company, instead of four quasi-independent regional ones.

Rick is taking over GM’s North American operations himself; I will focus 100 percent of my time on my role as the head of global product development; and Gary Cowger will focus 100 percent of his time on his role as the head of global manufacturing and labor relations.

I suggested to Rick recently that I relinquish my title of chairman of GM North America so that I could concentrate entirely on the development of our new cars and trucks for all our global markets. I just couldn’t do that job the way it should be done while also having responsibility for GMNA.

And so we have gotten another step closer to doing things the way a successful global automaker should be doing them. We have now globalized engineering, design, procurement, information systems and manufacturing, with global operating and capital budgets.

It’s good for the company, and good for me. I can now direct my full energies to the area where I can make the biggest difference. I expected headlines along the lines of "Lutz and Cowger moved aside as GM slides." Such spin misses the point, but bothers me not at all.

Thanks for your feedback, and keep watching this space for more on our new vehicles.

Posted by Lutz at 4:10 PM
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