Lutz: GM will pay back bailout at profit for U.S.

[spookyturtle 9,465]

DETROIT - General Motors Co Vice Chairman Bob Lutz, who will retire in May, said the automaker will pay back its bailout at a profit for U.S. taxpayers without lowering quality in vehicle development.

Lutz, 78, had been serving as a senior adviser to GM Chairman and Chief Executive Ed Whitacre after shelving retirement plans to take charge of the automaker's marketing when it emerged from bankruptcy in July 2009.

In an interview, Lutz said the automaker was on track for a turnaround that will allow it to pay off $8 billion of government debt and then sell stock to allow the government to unload its 61 percent stake in GM.

Lutz said he expected the government would end up making money on the $50 billion given to GM, just as it did on the 1979 loan guarantees extended to Chrysler.

"Paying off the loans, I think, is a foregone conclusion," Lutz told Reuters.

GM will then be able to offer stock once it can show positive cash flow, improved sales with higher resale values in the U.S. market, continued growth in China and "at least a stabilizing" of sales in Europe, Lutz said.

"Once we have that story together, I'm convinced that we will be able to sell equity to private investors and take the government out of the ownership business," Lutz said.

'Car guy' among 'bean counters'

An outspoken executive who championed GM's all-electric Volt, Lutz is credited with revitalizing GM's moribund vehicle development efforts after being hired by former CEO Rick Wagoner in 2001.

Lutz, long seen in Detroit as a "car guy" in a company long run by "bean counters," said one of his first battles was convincing other GM executives that there was a financial payback in investing in vehicle quality.

"In many cases, we measured the wrong thing," he said.

One example: GM had concluded a decade ago that its paints were good enough because it had very few complaints from car buyers. Lutz said he knew immediately that was wrong.

"If you make the paints so dull that customers can't pick up the dirt, of course, you are going to have fewer complaints," he said. He prodded for better testing and new investment. The result: GM now matches Toyota Motor Corp's luxury Lexus brand in objective tests of paint quality, he said.

"It would be culturally very difficult for the senior managers to go back to 'good enough is good enough,"' Lutz said. "You'd almost have a revolution on your hands."

Godfather of the Volt

Lutz said his proudest accomplishment was kicking off the development of the Volt in 2007. At the time, many questioned whether the battery technology could keep up with Lutz's vision for a car that allow most U.S. commuters to make a 40-mile round-trip without using any gas.

But Lutz said he felt vindicated by more recent plans by rivals for their own plug-in hybrids, combining battery packs with a conventional engine to provide a charge as needed.

"In terms of really winning against the naysayers and the skeptics, the Chevy Volt is going to be a triumph," Lutz said. "I don't think we can guess yet what the long-run implications of the Volt are going to be."

The Volt is on track for a November launch. GM expects to sell up to 11,000 in the first year, but recently dropped plans to allow some consumers to take early delivery.

If GM had moved ahead with that plan, it would have had to issue recalls for early-run Volts every time it upgraded software controlling its battery system. Any fix without a recall would be controversial in the current climate, Lutz said, a reference to Toyota's ongoing safety crisis.

"I hope the legacy I leave behind is having transformed GM from a business school-type, management focused company where there were a ton of metrics and a lot of things the company was working to improve, but where the focus on product excellence and the consumer got lost," he said.

Rediscovering drive for best product

Lutz, who has also been a senior executive at Chrysler, Ford Motor Co and BMW during a 47-year career in the auto industry, said he was confident GM had rediscovered a pride in engineering and design that made it the world's dominant industrial enterprise in the 1950s and 1960s.

The GM of that era was run by executives who had "a burning desire to do the most beautiful products that could possibly be produced," he said, looking out from his office at GM's design center in Warren, Michigan.

The sprawling campus, designed by Eero Saarinen and completed in 1956, is considered a landmark of mid-century design and an icon to GM at the peak of its success. Lutz's office looks out across a man-made lake toward the pad where he lands his helicopter when he commutes by air.

"I think in the '70s and '80s, GM became focused on business priorities. And somehow this drive for the best product, most beautiful, most exciting product got lost."

In retirement, Lutz said he plans to write a book that will be a reflection on GM's struggle to come back as well as an argument for corporate leadership where "the business school people" are not necessarily always in charge.

In its long slide toward bankruptcy, GM had faced repeated criticism for a slow-moving corporate culture with endless PowerPoints before any decision.

Lutz said he believed GM and other companies needed more executives capable of making snap judgments based on a kind of educated intuition — more executives, he said, like Bob Lutz.

"One danger for all of industry, and the auto industry in particular, is to undervalue people with this different kind of creative intelligence," he said.

http://www.msnbc.msn.com/id/35838030/ns/business-autos/

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[spookyturtle 9,465]

I think it's good news. I wonder if AIG et al will do the same?

[scandal 951]

I think it's good news. I wonder if AIG et al will do the same?

AIG is in the process of selling off 2 divisions for about $50 billion which will be repaid to the Fed.

That leaves them about another $50 billion in the hole. We'll get some of it back, but not all of it.

AIG, IEA

[spookyturtle 9,465]

Bump for the skeptical.

[scandal 951]

Bump for the skeptical.

Rebump for the chopfucks. And the sheep.