Why the U.S. Auto Industry Failed, According to Bob Lutz

Automotive News - RICK KRANZ
April 28, 2011 - 4:13 pm EST

The American auto industry’s decades-long decline can be summed up in five points.

That’s Bob Lutz’s analysis.

During a 30-minute, question-and-answer period with a handful of journalists last week at the New York auto show, the former General Motors vice chairman covered a wide range of topics.

Today, Lutz, 80, is an adviser to sports car maker Lotus. Why Lotus? It a way to keep connected to the auto business, he says, although on a smaller scale.

As for the why the Detroit 3 tanked, Lutz offered these reasons

• CAFE: “By selecting a fleet average as the way to get fuel economy, we handed the market to the Japanese. They were all better than the average because of their small-car lineup. We were all worse because we did the big frame, V-8 cars...

"Basically the American car industry had to trash its whole model lineup, top to bottom, V-8 engines, longitudinal automatic transmissions. We had to switch to V-6, front-wheel drive, transverse mounted. There was way too big of an engineering and financial task to be able to accomplish that.

"And the Japanese did not have to change anything…because their specialty was the bottom end of the market.”

• Exchange rate: The “State Department at one point in the Cold War -- in the early 60s or may be ‘70s -- had given Japan a favorable exchange rate.

“Everyone always complained about the undervalued yen. The Japanese for decades had about a $3,000 to $4,000 cost advantage per car. It’s very tough to compete with that.”

• Big 3 executives: “Management was more focused on financial results than actual product excellence. Big 3 management is not blameless in this whole thing. There was way too much Harvard Business School-type, profit-optimization thinking as opposed to customer excellence focus.”

• UAW: “The fourth reason, it is tied-in somewhat with management, is the UAW -- the UAW’s refusal to understand that this cow could not be milked forever.”

• Media: “And then I blame the general media a lot for what I call the long-lasting, pro-import bias. If it is Japanese or German, it is good. If it is made in Detroit or by a Detroit company, it is bad.”

I would add one other reason.

Exterior styling: During this period the Big 3 produced a long list of mediocre-looking vehicles. Additionally, the interiors were composed of cheap-looking materials. Sometimes the execution seemed to be decided at the 11th hour.

In hindsight, everyone shares the blame.

 

too bad bob joined GM too late.

 

Can't say that many imports are all that terrific either. Can't get much more boring than today's toyota for example

 

He was talking about 90s/early 00s cars. And for quite a while, the import cars were better in basically every way.

 

Maybe exterior you can say the domestics were still right up there with everyone else, but the interior on 90s/00s Chevys were horseshit compared to imports. Just look at our cars, my rear speakers are held up by nothing more than a thin piece of plastic

 

• Media: "And then I blame the general media a lot for what I call the long-lasting, pro-import bias. If it is Japanese or German, it is good. If it is made in Detroit or by a Detroit company, it is bad."

Well it's good to see that Bob agrees with many of us in that area, I've been saying that for YEARS.





Was he?
Or was he talking late '70s/'80s cars?
Though I suppose much of what he was saying could possibly still be applied to the '90s as well.

 

Big 3 executives: “Management was more focused on financial results than actual product excellence. Big 3 management is not blameless in this whole thing. There was way too much Harvard Business School-type, profit-optimization thinking as opposed to customer excellence focus.”


This was and still is the problem....greed, the achilles heal of capitalism
I would'nt let Bob Lutz advise me to take a ****. He was part of the problem.

 

I'd disagree, the imports didn't make anything attractive looking until the 2000s. GM made a lot of really great looking cars in the 90s that nobody remembers as did Ford. Z34s, ZR2s, GS Buicks, a lot of great looking Tahoes and C/Ks trucks, Berretta GTs, the list goes on and on.

Detroit got caught with its pants down, making vehicles people wanted here in the states. High gas prices and a narrow minded product line is what got them in trouble. In my mind however, and if i was in their shoes, i would have done the same. People wanted pickups and SUV's build what the people want, it was a no brainer really. In that sense you could blame the public for buying them.

 

I agree.





True. And I really love how people were so quick to point fingers at the Big 3 for building/promoting these big trucks all while praising the Japanese companies for being so much smarter for selling more relevant vehicles...and yet what did Toyota and Nissan do?
Started making huge, heavy full size V8 trucks as well LOL. Even Honda, BMW and M-B joined in on the truck bandwagon in the U.S.
There's a certain hypocrisy or contradiction goin' on there.

 

RX7/Supra/NSX/300ZX/3000GT/DSMs/Civics/Integras/SC300s/GS300s...All made in the 90s, and all look A LOT better than the cars you posted. Hell, they've barely made anything attractive since the 90s; those were their glory days as far as attractiveness. Unless you love the straight edge lines of the cars you posted...

I don't think the problem was them making what people wanted; it was them making a lot of cars that didn't last half as long as the import cars. They have always made small cars too, but the quality of the Cavaliers/Neons/Escorts they were making was WAY behind a Civic or Corolla.

 

Agreed totally. I'd like to know what rock some of these people live under.

 

they still cant make a good looking car excluding the ctsv and c6

 

Isn't the whole "good looking car" thing a matter of opinion?

SC300's, Supra's, Civic's and Integra's look like *** to me.

 

And GTOs look like *** to some people as well (not me)... but I'd say as far as the law of averages goes, SCs/Supras/Civics/Integras are well-liked cars.

 

All I know is if someone buys a camary or a civic (along with 90% of other imports)....they'll set their *** in anything. Those cars are like driving a wash machine, nothing but a appliance.

 

^Ok, and how are Cavalier/Neon/Escort owners any different?

Coming from a GTO owner, that doesn't mean much And you are the first person I have heard say a Supra looks like ***, yet you are driving a bland as can be GTO.

But, like someone said already, to most people they are great looking cars. I think anyone that says differently is hardcore a GM/Domestic nutswinger.

 

Hardcore GM nutswinger?! That's awesome lol gotta put that in my sig!

 

asian automakers handed the big three its *** and then kicked it.


i dont like it. ill never buy a jap car but thats what happened.

 

As I said, everyone is entitled to their own opinion.

But let's have a look at the facts before you get all grumpy. Supra's are popular now, but before 2001 nobody wanted those cars, have a look.

http://mkiv.com/specifications/sales...il_sales.htmll

11,239 N/A and TT cars sold in 6 years time..

Funny, let's look at the GTO production numbers within the 3 years it was for sale.

http://en.wikipedia.org/wiki/Pontiac_GTO

I never said I didn't *like* supra's, they have the drive train out of a panzer tank, they simply don't break, I just don't like how they look. But I guess that makes me a GM nut swinger.

 

True.


Well, they're probably not. I guess that's sort of the point, basic transportation vehicles are just that. And much like the average fuel efficient grocery getter, is there really some huge difference in the level of excitement/desirability between a Black & Decker toaster oven and a Proctor Silex toaster oven?






Well, apparently he's not alone. While I certainly don't find it to be earth shatteringly attractive, I also don't think it's a bad looking car but still, the Toyota Supra was a complete and utter sales failure in the U.S. when new so perhaps others thought it looked like *** as well? Or maybe they were all just GM/domestic nutswingers?