Leader at GM foresees new era

The automaker is launching its new Malibu.

DETROIT FREE PRESS

DETROIT — With its reputation on the mend, sales of new cars and crossovers exceeding expectations, and a new labor deal projected to cut billions from its annual costs, General Motors Corp. is in its best situation in decades, Vice Chairman Bob Lutz said in an interview last month.

But the challenge on the path to regaining revered status and sustainable profitability, particularly in the United States, isn’t over.

“It’s a substantially improved world, and I would say our situation product-wise, reputation-wise, labor-cost-wise is probably the best it’s been in 20 years,” Lutz said in an interview at a media event to promote the launch of the refreshed Chevrolet Malibu. “I would say all of the stars are aligning very nicely. ... But are the worries over? No.”

In a wide-ranging interview with the Detroit Free Press, Lutz said he wants to make up to 100,000 fuel-efficient Chevrolet Volts in the first year of production.

He said that the new UAW contract provides a big boost to GM, as well as rivals Chrysler LLC, which also has a new contract ratified with the UAW, and Ford Motor Co., which is in the midst of negotiations.

“The labor cost gap to the Japanese transplants have been narrowed, but they have not been closed,” by the new UAW contract, Lutz said.

“It’s closer than it ever was before. That’s good for a five-minute celebration, but then you say, ‘Well, now what?’ “

The big fear now, Lutz said, is “ill-conceived” government-imposed fuel economy standards at the state or federal level.

If legislation proposed in California were passed today, Lutz said, GM would have to stop building 80 percent of the vehicles it produces, and something the size of a Saturn Vue small SUV would have to take the place of a Suburban and a compact Chevrolet Aveo would become the company’s midsize car. At the same time, he said, the price would go up.

Still, GM is finally seeing the fruits of its labor with hopes to further its improvements at an accelerated pace with the recent sales launch of the new Malibu, the push to get its electrically driven Chevrolet Volt to market by November 2010 and its new cost-cutting UAW contract.

With the Chevrolet Malibu, GM hopes to have a high-volume car that can compete for the same customers that might otherwise be drawn to the top-selling Toyota Camry and Honda Accord.

The automaker has acknowledged as much that last year’s Malibu was unremarkable through the new sedan’s advertising tagline: “The car you can’t ignore.” Lutz said he believes GM’s new Malibu is better than those chief competitors.

And in a show of confidence, Chevrolet plans to offer test drives of those competitors’ cars in Chevrolet showrooms.

At the dawn of 2007, GM publicly stated a goal of producing a long-range electric vehicle by 2010 when it showed the Chevrolet Volt concept car at the North American International Auto Show in Detroit in January.

It followed that with the unveiling of a fuel-cell version of the electric vehicle at Auto Shanghai in April and then a diesel version of the so-called E-flex electric propulsion system in Frankfurt, Germany.

“These are all no-excuses vehicles,” Lutz said. “This is why I was brought in. ... It’s unleashing the engineering and manufacturing power of General Motors.”

Lutz said he continues to be increasingly confident that GM will bring the range-extended Chevrolet Volt to market by 2010. Its battery pack doesn’t yet have a cooling system, he said, but doesn’t need one for the stage of testing GM and manufacturer LG Chem are in.

GM expects to receive an experimental battery pack in December from A123Systems, the other battery supplier with which it has a contract, Lutz said.

Said auto industry analyst Joseph Phillippi: “On a scale of one to 10, GM’s probably at a four” in its renaissance. “They’re really starting to bring it all together, on the vehicle side ... and with the new contract. It took a long time for them to get there, but they’re really starting to accelerate.”

Said Lutz: “This is potentially the dawn of a new era, but we’re not there yet.”