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ETROIT, Oct. 18 ? Robert A. Lutz, stogie lodged in crooked-toothed grin, is explaining how his approach to the car business differs from that of his new employer, General Motors (news/quote).
"It's more right brain," said Mr. Lutz, a veteran of all three big American automakers who was recently named G.M.'s vice chairman for product development. "It's more creative."
Pausing for a moment during a tour last weekend of the four garages on his estate outside of Ann Arbor that house such idiosyncratic collectibles as his father's 1952 Aston Martin, a hulking Swiss troop transport and a 1934 LaSalle convertible that looks like it was birthed by a zeppelin, Mr. Lutz could not have stood out more from the bland bureaucracy long associated with G.M.
"I see us as being in the art business," he said. "Art, entertainment and mobile sculpture, which, coincidentally, also happens to provide transportation."
Mr. Lutz has a mandate to reinvigorate G.M.'s design process, particularly its passenger cars, but there is little doubt that he also hopes to shake the company out of its overall stodginess. Even as they are cheering him on, though, many Detroit insiders wonder whether he will help propel G.M. forward or simply be too different to fit in.
Mr. Lutz's arrival at G.M. comes at a time of increasing stress for Detroit's Big Three, which face intensifying pressure from foreign automakers that are invading the market for sport utility vehicles, unpredictable demand after the Sept. 11 attacks and an incentive war with one another.
For the moment, G.M. appears to have the upper hand as it aggressively tries to siphon market share from Ford Motor (news/quote) and Chrysler, a unit of DaimlerChrysler (news/quote).
After the terror attacks ? when car sales virtually halted ? G.M. started offering interest-free financing deals on its entire lineup, leading Ford and Chrysler to follow suit. Such increased incentives have propelled October sales to the third- highest monthly pace since 1980, according to a projection made today by G.M.
Profits? That is another matter. Incentive costs cut deeply into earnings and, earlier this week, top executives of Ford and Chrysler criticized zero percent financing as unsustainable. G.M., however, extended its plans until Nov. 18. After losing market share for decades, G.M. is actually winning a little back from its competitors.
And while G.M. said today that it had a third-quarter loss of $368 million, if certain one-time charges are excluded, it was able to manage a profit. Ford and Chrysler are losing money by any measure.
Looking beyond the immediate crisis, Mr. Lutz says he thinks the way to compete in a market where every niche has been filled and demand is expected to drop next year is to create risky "love them or hate them" designs. He has a visceral and intuitive approach to creating appealing vehicles. As president of Chrysler in the 1990's, he championed the Jeep Grand Cherokee, the first stylish sport utility; the Dodge Viper, an American high-performance sports car; and the PT Cruiser, which recalls a 1920's gangster-style car.
G.M., however, has been known for its reliance on a strategy borrowed from consumer product companies, called brand management. In it, focus groups and marketing largely dictate how vehicles will appear.
That is why it was such a shock when Rick Wagoner, the chief executive of G.M., hired Mr. Lutz in August. How could Mr. Lutz, the blunt- spoken, unreconstructed car guy, auto industry insiders gasped, possibly mesh with G.M., a huge company known for its decided lack of flair? But they applauded as well. The Detroit Free Press, reflecting the mood here, celebrated his hiring with eight articles in the next day's paper, a timeline of his career and a banner headline.
Can Mr. Lutz's right brain blend with G.M.'s left? In Detroit, Lutz stories are the stuff of legend. There were his clashes with Lee A. Iacocca, his boss at Chrysler who thwarted Mr. Lutz's ambition to succeed him.
A framed cartoon, from The New York Observer, hangs in one of Mr. Lutz's garages. The cartoon shows Mr. Iacocca and Kirk Kerkorian, the financier, tottering on canes ? the two men led a failed takeover bid for Chrysler a few years after Mr. Iacocca's departure. The caption asked, "Would you sell a car company to these used men?"
His run-ins with Mr. Iacocca still rankle. In his garages, Mr. Lutz has the second Dodge Viper ever made.
"Guess who got No. 1," he groused gamely, referring to his former boss. "He probably never drives it."
Then, there are the high jinks. There was the time he landed his Czech fighter jet without putting the landing gear down.
"It's unbelievably stupid," he said, "but easy to do."
Already, he has given G.M. a dose of something different. In his first memorandum to executives, he advocated a corporate culture of confrontation over consensus building. He told them that focus groups could be misleading and urged elevating design to the highest priority.
His words appeared to strike at the heart of G.M.'s current approach.
Brand management was imported in 1994 by Ronald L. Zarella, the former president of Bausch & Lomb (news/quote), who is now president of G.M.'s North American operations. The idea was to help overcome the complaint that G.M. vehicles, regardless of the nameplate, all seemed to look and drive alike. The idea was to discover different market niches for each of G.M.'s lines and then tailor the vehicles' outside and inside looks, develop distinctive gadgets that appeal to different groups and adjust marketing accordingly.
The initial hurdle for Mr. Zarella was simply to give Buicks, Chevrolets and Pontiacs different body designs and limit their competition with one another. But brand management has been criticized for treating cars like soap, tilting the car creation process away from designers to marketers and letting focus groups have too much say. In any event, it, too, failed to reverse G.M.'s market slide.
"I'd argue that the most serious problem we've had over the last several years is this market momentum, or lack of it," said John Devine, G.M.'s chief financial officer, explaining in a conference call today the company's extension of its incentive offers. "For the first time in a long time we are gaining momentum and it's very important to keep that up," he added.
The Keep America Rolling interest-free financing and marketing campaign, which Mr. Zarella began, helped stop the erosion, sending G.M.'s third-quarter domestic market share up slightly, to 27.7 percent from 27.4 percent last year. But G.M. paid a price in the tougher business climate. Its third-quarter earnings from continuing operations fell 54 percent, to $385 million from $829 million in the third quarter of 2000. G.M. stock fell 75 cents today, to $42.02, on the news.
To turn things around over the longer run, Mr. Lutz and Mr. Zarella have promised to cooperate with each other. Mr. Zarella acknowledges that there will be some shift to the design process, but says research will remain important.
"Focus groups serve a very valuable purpose, and I think Bob believes that, too," he said. Mr. Lutz does agree. Unless you keep him talking.
"All of that stuff is very useful," he said. "I'm not anti-research. But I like to have the big idea first and then test it, as opposed to using testing, testing, testing to try to come up with the big ideas."
Warming up to his theme, Mr. Lutz compares designing a successful new car to creating a Hollywood film with artistic merit as well as popular appeal.
"It would be like Steven Spielberg trying to do a blockbuster new movie by interviewing people that come out of theaters and saying, `What did you like about that movie that you just saw? Was there enough violence? Was the car chase long enough? Would you like the car chase two minutes longer?' "
Plenty of Hollywood movies are put together just about that way. But not the best ones, Mr. Lutz says.
"I'm exaggerating to make a point," he said. "Steven Spielberg does great movies because he, and presumably a little band of guys around him, brainstorm, and suddenly, hey, you know what, here's an idea for a movie: how about a German officer who helps Jews. And then they develop the theme and out comes `Schindler's List.' And it's totally different."
"Overreliance on research," he added, "is like trying to drive by looking in the rearview mirror."
Mr. Lutz was born in Zurich and was raised in Switzerland and New Jersey. He served as a fighter pilot in the United States Marine Corps and started his auto industry career at G.M. in the 1960's. He was an executive at Ford in the 1970's and 1980's. As a collector, he favors cars from the days of his father, a former executive of Credit Suisse who had dual citizenship. He considers the 1930's and 1940's banner years for car design, when curves swelled and detail, like the art deco vents on his LaSalle, mattered.
He is old school. So what does he think about more recent issues like the environmental consequences of America's love affair with sport utility vehicles and the reliance on the internal combustion engine to power the most popular mode of transportation?
"A lot of the statements about the problems caused by the world's automotive industry are drastically overstated," Mr. Lutz replied.
He would like to make the passenger car cool again, however ? this from a company increasingly reliant on gas-guzzling S.U.V.'s. Mr. Lutz has little sympathy for many cars on the road today.
Take the Ford Taurus.
"Not this one," he said, meaning the current model of the Taurus, "but the ugly one just before it, with all the ovals."
The smoke from his stogie accumulates, and he begins explaining the finer points of "surface development," how curves and lines and geometries can imbue a car with a rich topography or conspire against it. The Taurus "was so bad," he said, "it wasn't even professional."
"It's rare," he added, "that you get a car that's a beautiful three- dimensional piece of sculpture."
To be fair to Ford, Mr. Lutz is an equal opportunity critic. Talking about G.M.'s newish Pontiac Aztek "Sport Recreation Vehicle," which looks like a sharp-angled Pacer grafted to a downsized Hummer, he said he was "even beginning to like it ? like you'd like an ugly dog."
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