The general direction: GM execs speak

Automotive Design & Production,  March, 2004  by Gary S. Vasilash

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During the North American International Auto Show in Detroit this past January, we had the opportunity to sit down and talk with several General Motors Executives. Here is some of what they said--in as unmediated a way as is sensible--about where the company is ... and where it is going.

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ROBERT A. LUTZ

GM vice chairman Product Development and chairman, GM North America

ON THE 2006 PONTIAC SOLSTICE The Solstice, by virtue of the very small investment and the good margins on the car can be produced very profitably at 20,000 per year. [The vehicle will be produced at the Wilmington, Delaware, Assembly Plant, which is presently a Saturn plant.] That doesn't mean we get the money back in a year, but over a two or three-year run it's a very profitable program. Now that all of the bits and pieces are in place--the Ecotec four-cylinder engine, the rear differential, prop shaft, five-speed transmission, the automatic that will come the year after the introduction of the manual-all of those things being in place, lengthening the architecture to make a Nomad or Curve or something is really not an investment-intensive thing to do. [The Chevy Nomad and Saturn Curve are both concept vehicles based on the same rear-wheel-drive "Kappa" architecture that was developed for the Solstice.]

[ILLUSTRATION OMITTED]

The Solstice has the primary purpose of helping with the revitalization of the Pontiac brand. It's not so much the volume the Solstice does as the signal it sends about our intentions about where we want Pontiac to be in terms of brand character. But having said that, it's a profitable car in its own right. The whole trick here is to overcome this old Detroit myth that you can't make money on small cars. You can make money on small cars, but they have to be interesting small cars. If they're commodity small cars, then basically nobody wants them because they're not aspirational. Look at the BMW Mini. It's a small car--and at current exchange rates I'm not sure that they're not losing money on it--but under normal circumstances, when you look at what that car is selling for, it should be a very profitable car because people want it, as opposed to being willing to take it.

ON THE VALUE OF DESIGN--& DESIRE

If you look at the content on Kappa, the amount of metal, the so-called material cost, is really not much higher than a [2005 Chevrolet] Cobalt. The stuff is arranged differently. It's rear-wheel-drive instead of front-wheel-drive. But they both have a transmission. They both have a four-cylinder engine. The Solstice has a folding top, which is more expensive, but on the other hand it only has two doors instead of four, it has two electric window motors instead of four, so roughly speaking, the material cost is not that different. [Note: the Chevy Cobalt is also available as a coupe.]

You've got the situation when you're down in the small front-wheel-drive segment, the public expects those things to sell for about fourteen and a half. But when you package the same thing as a roadster, everybody says 'Wow! Under 20? This is amazing.'

That's why the Chrysler PT Cruiser was so profitable. It was basically a Neon plus a couple hundred bucks, but suddenly instead of selling for $13,000, it sold for $21,000. That difference in selling price makes those cars profitable.

We are emphasizing design because design is becoming a major differentiator in the market in that everyone is beginning to realize that J.D. Power quality is no longer a differentiator. Just when the American companies--especially GM--are really getting good at it, it really isn't a big differentiator anymore. You can take the guy who is at the bottom at the J.D. Power ranking and the score is such that seven years ago he would have been better than the best Japanese. It is getting so compressed that anyone can go out and buy anything and they know that they're going to have an impeccable, flawless, reliable car that can be driven for years and years, and nothing is going to break on it. So on cars that are more reliable, we're starting to split hairs here, and I think the public is figuring it out.

Fuel economy is about the same in every category. Everybody uses the same technology, so no huge difference in fuel economy. Everyone has about the same level of aerodynamics. Everybody has about the same level of features. So really what it boils down to is: 'Do I like the car or not?' If all other things are equal, then picking on the basis of appearance is a completely rational decision. It wasn't rational 30 years ago when you had to tell yourself, 'Wait a minute. A car is more than a pretty face. I may fall in love with this car, but everything I read and hear from my friends is that the thing starts falling apart after six months, so I'd better go with old tried-and-true.' That's not the case anymore. You can with abandon go pick what looks best to you and you know you're going to have a great vehicle.

It's really depressing that there are no bad products any more.