The idea was for Bob Lutz, the vice-chairman of General Motors, to challenge doubters of the beleaguered automaker to race him on Utah’s Bonneville Salt Flats. He would drive Cadillac’s muscular, 556-horsepower CTS-V luxury sedan while challengers would have their choice of rival production models. And, with any luck, Lutz would win and a brilliant marketing campaign would be launched.
But the ad agency’s concept apparently wasn’t bold enough for the former Marine, who, incidentally, flies fighter jets in his spare time. He pushed for having the throwdown on an actual racetrack, where the chance of damage to GM’s battered brand would rise with each twist and turn. “I said, ‘Hey, that’s an interesting idea, but let’s not use the salt flats, because going fast in a straight line isn’t proving anything to anybody,’ ” Lutz said in an interview with Maclean’s. “The world has always known that Americans can build cars that go fast in a straight line.”
Predictably, it wasn’t long before someone—namely, the automotive blog Jalopnik—picked up the gauntlet that “Maximum Bob” had thrown down. The race took place last month at a track in upstate New York. And while Lutz may have ultimately lost to a 21-year-old BMW driver, he handily beat Jalopnik’s Mitsubishi Lancer while first, second and third place went to other Cadillac drivers. (Seven of the 10 cars on the track were Cadillacs.)
More importantly, the race got people talking about GM’s vehicles—not its financial woes—for a change. “He doesn’t pull punches,” CSM Worldwide analyst Mike Wall says of Lutz, who was brought out of semi-retirement to be the automaker’s product and marketing czar when GM exited bankruptcy protection in July. “He wants to shake things up and make sure these vehicles get on people’s shopping lists, which isn’t easy.”
With Lutz leading the way, GM appears to have regained its swagger in record time. Sales are up, market share is growing, and at least one Ontario plant is increasing production. GM also startled the industry last week by putting the brakes on a planned deal to sell its European division, Opel-Vauxhall, to Frank Stronach’s auto parts giant Magna and a Russian partner. Not bad for a company that was left for dead at this time last year. Analysts warn, however, that the road back to profitability will be a long one. GM still depends heavily on sales incentives to move vehicles off dealers’ lots, and consumers still harbour doubts about the reliability of its cars, trucks and SUVs. And then there’s the not-so-little question of paying back the more than US$50 billion in taxpayer bailout money that’s currently keeping GM afloat.
Progress is being made, but it’s not yet clear whether the “new” GM is fundamentally different than the old one. Indeed, as GM’s confidence grows, its biggest challenge may be avoiding the same missteps, including a tendency to overreach, that brought it to the brink in the first place.
The future is looking brighter than it has in months from inside the gleaming showrooms of Carter GM, a dealership with two locations in Greater Vancouver. While it had to close its Port Coquitlam location earlier this year as part of a North America-wide downsizing, president Bill Mitchell says Carter’s remaining dealerships in Burnaby and North Vancouver are witnessing renewed interest from customers in recent months. “Our biggest challenge with General Motors today is getting enough product,” says Mitchell. “Trucks, for some reason, are very hot right now. We sell every one that lands.”
It’s tempting to dismiss Mitchell’s enthusiasm as a car salesman’s well-rehearsed pitch. But what leads Mitchell to believe a transformation is truly afoot is the type of customer walking onto his lots these days. He says an increasing number belong to the Lower Mainland’s large Asian community, a category of consumer he says has typically been more difficult for the Detroit Three to crack.
Observers credit the rising interest in GM vehicles to buzz surrounding new models—the hot-selling Chevy Equinox “crossover” SUV is one example—and GM’s 60-day cashback guarantee, which allows customers who purchase a new car or truck to return it with no questions asked for a full refund. Mitchell, for one, says he has yet to have anyone return a vehicle to his two dealerships. Meanwhile, GM says more than 176,000 vehicles have been sold in the United States since the offer was put in place, and only nine cars have been returned. Originally scheduled to end Nov. 30, the program has been extended until early January.