Lutz: "New" GM Will Be Smaller, Leaner "Powerhouse"
May 28, 2009

By Michelle Krebs

DETROIT -- General Motors' Bob Lutz predicts the "new" GM will be "smaller and leaner but a powerhouse" that is very profitable after the "cleansing fire" of the radical restructuring the automaker is undergoing.

Lutz would not confirm to reporters at an Automotive Press Association luncheon in Detroit Thursday if, indeed, a Chapter 11 bankruptcy filing is inevitable. Speculation is that GM will file for bankruptcy Monday and transfer its good assets to a newly created company.

Lutz did say if GM files for bankruptcy, it would be a quick one. "We intend to get in and out very soon," he said. "The U.S. government wants its money back, and our plan is to pay it back as quickly as possible. The U.S. government doesn't want to own auto companies."

If GM files for bankruptcy on Monday as planned, it will be a pre-packaged one under section 363 of the bankruptcy code. The federal government reportedly will provide as much as $50 billion more in funding, according to some media reports, for GM's court-supervised restructuring, and the government will take a 70-percent stake in the new company as loan repayment.

Task Force Should Be Permanent

Lutz, a staunch Republican who is no fan of big government, praised President Obama's automotive task force, saying the dialogue between automakers and the federal government has been invaluable and unprecedented.

This is the first time, he noted, U.S. automakers have had government support like other countries provide, such as China's automotive minister and Japan's Ministry of International Trade and Industry. He recommended -- and predicted -- that some such entity will be made permanent.

Lutz said during a display of GM's future products, the Cadillac CTS coupe stopped task force members in their tracks. to ask when it would go on sale and for how much. "At that moment, I began to take heart," said Lutz of the government's involvement in the auto business.

"The government will want to see us make the kind of cars Americans want to buy," Lutz said.

The "New" GM

Lutz admitted GM will have "a long road back" and predicted competitors will benefit from GM's restructuring in the short term.

But he believes a "new" GM without a mountain of debt built over decades will have a much-improved balance sheet and be better able to fund and focus on vehicles.

Lutz threw out a couple of telling numbers -- $103 billion spent over the past 15 years on health care and pension costs. GM's foreign competitors benefit from health-care programs provided by the government instead of industry. And, Lutz noted, GM now has 10 retired workers collecting health care and pension to every one active worker.

In the past, Lutz said, vehicle programs suffered because costs had to be cut from them to pay for such benefits.

As Lutz predicted despite GM's current financial woes and the upcoming more stringent fuel-economy rules, the automaker's future product portfolio will still include a full range of cars, sports cars, like the Chevrolet Corvette and Chevrolet Camaro (which gets a convertible version for 2011), SUVs and trucks.

Those will be sold alongside more hybrids -- both mild and full -- and more Chevrolet Volt-type vehicles, including the Opel Ampera. Lutz said GM assumes that even with a new partner for its German subsidiary Opel, vehicles will be shared, including the Opel Ampera, a version of the Volt that will be built in Michigan and shipped to Europe.

Lutz hinted other "unexpected" products are far along in development. The Cadillac Converj concept's "fate is still being debated," he said.

Lutz lamented that with the elimination of the Pontiac division, GM will produce only 1,000 copies of the Pontiac Solstice Coupe, and he has ordered the first one for himself. "I smell a future collector car," he quipped.

Lutz's Personal Game Plan

Lutz gave few hints about what's next for him. He stepped down as vice chairman of product development on April 1 to serve as a senior advisor through the end of the year, at which time he will officially retire.

Lutz said he would "do something else" and "would not be unemployed."

Posted by Michelle Krebs at 1:10 PM under Featured , GM , Personalities | Comments (3) | digg this | Seed Newsvine

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