Financial issues will continue to hold back General Motors from regaining the ground it has lost to foreign imports in its North American home market – but it is fighting its corner according to product chief Bob Lutz.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“We are increasing our spend on research and development while our build quality meets or exceeds world best standards,” he told just-auto.
“But we are a 98-year-old company with massive legacy costs and it’s going to take time to fix these. We can’t walk away from our pension or healthcare obligations, we just have to make them more bearable.
“We have something like two and a half or three retired employees to every active one and a healthcare bill running in to billions of dollars – these are issues that the Asian or European manufacturers do not have to bear.”
Despite problems at home, things are going well globally, Lutz said. “Chevrolet sold 4.2 million units last year making it the fastest-growing brand in the world. Sales are up in Europe, Asia Pacific, China and Latin America.
Would he like to see help from the US government to ease the company’s financial woes? “I would like to see it, but I don’t think it will happen with a Republican government which sees this as a dog-eat-dog global economy.
“Some sort of national healthcare would be useful but the view is that if you agreed to make commitments 30 or 40 years ago you have to stand by them.”
Pragmatically, Lutz does not believe volume is everything, even on a global scale. “I don’t think anyone can aspire to having anything like 25% market share anywhere anymore. There is too much choice available and everyone is selling right around the world.
“It’s just not reasonable for GM to get back to the days of 30% share of the US market, but we did sell nine million vehicles around the world last year and our main growth is outside North America.”
GM’s research and development budget has been increased this year by US$1 billion and despite the financial constraints, Lutz said it would be a mistake not invest in new products and technologies.
“Our overall spending on new products is higher than at any time in our recent history. Not to continue to do this would be false economy – it might make you feel good right now but it would give you problems in the future.”
Can GM maintain its grip as the world’s number one car maker under the challenge from cash-rich Toyota? “I’d prefer it if Toyota did not overtake us and we’ll do everything we can to try and make it not happen, but looking at their growth in other markets they may be difficult to stop.
“Actually being number one does not really matter to the buying public and the media might not want to gang up on us as much for being the big guy. Being number one is just good for our self esteem and there is no economic effect.”
He admitted GM had also lost ground to Toyota on environmental technology. “We were late into the game,” he added. “Economically it made no sense to invest in these technologies a few years ago, especially with the low petrol prices in the US.
“The fact that we left it to other companies to take the lead was a mistake. Toyota took up the challenge and is now seen as an environmental hero and the public are starting to associate hybrids as the upcoming technology and we have to make up some lost ground.
“I’ve always said that the auto business is show business – Toyota outdid us in terms of show business.”
Chris Wright
