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GM’s Lutz: Toyota Scored a Major Coup with Hybrids

24 March 2005

During a session at the Morgan Stanley Global Automotive Conference in New York, Bob Lutz, GM Vice Chairman, Product Development, and Chairman, GM North America, gave his take on the importance of a number of technologies in the auto industry. (Webcast here.)

Hybrids, he noted, are of growing importance:

Whether the market becomes giant for them or whether it flattens out to, say 300,000 units per year— which in the context of the entire American market is a pittance—BUT it has become symbolic with “Is this company technologically capable, is this company environmentally aware” and it is a sort of go, no-go gauge. If you have hybrids, you’re OK, if you don’t have hybrids, you’re not.

I will say that Toyota scored a major coup by going ahead with hybrids even though they didn’t have a business case.

It doesn’t matter [if Toyota had a business case or not]. We have this artificial separation in our mind between what we spend on consumer influence in advertising and what we spend on the product, and sometimes the most effective sort of consumer influence is to do things like a hybrid with the product.

Lutz is a “car guy”—loves product, loves cars. But while it is encouraging to see that GM recognizes the  strategic marketing importance of Toyota’s Prius, the company (or, at least, some of the executives) still don’t seem to acknowledge the full strategic importance of that segment of the market. The Prius didn’t just score consumer awareness points—it was the vanguard of a product rollout strategy that is accelerating, refining a technology that will be important for years to come, and making it more affordable.

It was, in a sense, what GM was trying to accomplish—albeit with a much longer time-line—with its hydrogen fuel cell research and development. Toyota, however, has grabbed the leadership position.

Lutz also noted that diesels are “almost sine qua non in Europe, and almost irrelevant in the US.”

GM has scrapped plans for an upcoming new line of rear-wheel drive mid-market sedans, and is applying the freed-up manufacturing and engineering resources to speed up the launch of its new full-size SUVs (Chevrolet Tahoe, Cadillac Escalade). The hope is that brining the high-margin vehicles out even a few months early will significantly help GM’s financial situation.

The company will then focus on mid-size SUVs and crossover vehicles.

Presumably not diesel, and eventually with the new hybrid system.

March 24, 2005 in Hybrids | Permalink | Comments (4) | TrackBack (0)

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Comments

Argh. I just knew that they'd try to get out of their financial troubles by pushing even more giant squared-out minivans.

Sounds like they're missing the boat completely. Didn't Christiansen say something about moving towards the high margin space while eschewing newer technologies and low margin products? Hmmm, where'd that get the steel industry again?

I found another GM exec's comment revealing. He said that the reason for GM's sales drop is consumers are unaware of the unique features of GM vehicles. He said GM needed to work harder educating consumers about this. This is the response of a top oligopolist to trouble: blame those darned misinformed consumers and their foolish purchase decisions... Right. How big will the next bailout for GM be? What form? More tax relief or perhaps an excuse from health care and pension obligations. Those darned retirees!

As Oil prices continue to go up, GM has circled the SUVs. You get the feeling that some PR company has convinced them that it's all a communications problem. Unfortunately for GM it isn't. If I was a GM shareholder, I would be very worried.

When the plugin hybrids start coming out, GM could be in real trouble.

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