This is a rush transcript from "Your World With Neil Cavuto," June 2, 2009. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: "Well, we feel pretty good about the second half of the year" — a top GM executive commenting moments ago on what otherwise looked like some lousy sales last month, down nearly 30 percent for the now bankrupt car giant, but some expected even worse, a lot worse.

GM vice chairman Bob Lutz convinced things will get only better.

Robert, very good to have you. Thanks for coming.

BOB LUTZ, VICE CHAIRMAN, GENERAL MOTORS (GM): Thanks for — thanks for having me.

CAVUTO: Let me ask you about that. I guess the financial community mildly surprised sales were not worse. But they were pretty bad for GM. They were pretty bad for pretty much all the auto guys, just degrees of difference here.

Yet, you are encouraged. Why?

Video: Watch Cavuto's interview

LUTZ: Well, because — I am encouraged because we are going through this cleansing reorganization process, which is going to leave us as a much leaner, trimmer GM, without the — without the things that dragged us down before.

It was not the lack of sales that dragged us down, because, as you point out, everyone is down about the same amount. What — what finally caused the collapse of the old GM was these monumental legacy costs: the huge health care obligations, the retirees, the debt-serving obligations. When, in the last 15 years, we have spent $103 billion on health care and retiree health care. And I know your previous guest argued vehemently for the present private system. But I will tell you, this is the only country in the world — in the industrialized world where the manufacturing companies have to pay for the health care of their workers and their retirees.

The Japanese don't. The Koreans don't. The Chinese don't. The Germans don't. They all have some...

(CROSSTALK)

CAVUTO: So, you — you would argue that puts — that puts you at a competitive disadvantage.

Bob, I mean, I know the unions made progress trying to get some of those costs down to size, but the rap against this agreement is they didn't get them down to size enough, and the bondholders and investors gave up more skin in the game than they did.

What do you make of that?

LUTZ: Well, look, the deal is the deal.

The shareholders — in any Chapter 11, the shareholders wind up getting nothing at all. That is — that's just the way it works. Executive pay has been cut. The UAW has given up on some — some pay and benefits and work practices. The UAW has agreed to the closure of a large number of manufacturing facilities and to a reduction in — in hourly labor.

So, everybody has had to come to the party on this, because we were simply, I would argue as a nation, but certainly as an industry, we were living beyond our means.

And this is — this is the big correction. And we will go through Chapter 11, and then we will take off from there.

CAVUTO: But let me ask you about this, that do you think — especially upon hearing today that the Hummer is going to be sold to a Chinese concern — that had taxpayers known in advance that a Chinese company was going to buy an American icon, and, furthermore, bankruptcy that would never have been entertained a few months ago would be freely entertained now, that GM would have gotten so much as a dime from taxpayers?

LUTZ: Well, you know, it — it started with the Bush administration, when it was obvious — when it was obvious that the American automobile industry was in a great deal of difficulty and would need some financial assistance.

We have — the — the — the process started under the Bush administration. And we knew that the Obama administration would finish the process.

CAVUTO: Right.

LUTZ: The only choice here, Neil, would have been to practically let the whole automobile industry — the whole American automobile business and supplier industry basically fail.

And I have to tell you, from a national economy and national health standpoint, I don't think we would have wanted to do that.

CAVUTO: Well, no, I can see where you are coming from. And you're a car veteran. And, obviously, you would not have wanted to entertain bankruptcy then or now. But we're there now. And we could have done it then.

LUTZ: Sure.

CAVUTO: I guess we can — we can argue whether timing was everything.

But let me ask you this, Bob. I — President Obama has made it very clear that, now that the government has a 60 percent stake in the new GM — or whatever will evolve as the new GM — that does not mean he is going to be snooping around and dictating policy or even car models.

But he has been very strong on the types of cars he would like to see. This is from President Obama over these many months.

LUTZ: Yes.

CAVUTO: If you can listen real quick:

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: If the Japanese can design an affordable, well-designed hybrid, then, doggone it, the American people should be able to do the same.

We need to raise fuel economy standards, put plug-in hybrids on the road.

The future is going to be in fuel-efficient cars. It's going to be in these plug-in hybrids.

(APPLAUSE)

(END VIDEO CLIP)

CAVUTO: What if he's wrong?

LUTZ: Well, look, I — I know he says that in the speech, but, with all due respect, I would say is mildly misinformed, in that General Motors builds a lot of hybrid vehicles.

We build the most sophisticated hybrid system in the world. It's called the two-mode hybrid system, which permits our full-size trucks and sport utilities to get astonishing mileage, with the world's — the world's best mileage of any sport utility of that kind.

And when he says the Japanese can build fuel-efficient vehicles, hey, so can we. In many categories, our vehicles are better than the Japanese on fuel-efficiency. And all our — all of our vehicles are highly fuel-efficient. I don't think we have one vehicle left in the — in the lineup that is not competitive or better than competitive on fuel-efficiency...

CAVUTO: Well, to be fair — and, Bob, to be fair to you, you have been on the vanguard of a lot of these new-wave technologies, including what is going to be maybe a — a crucial one for GM, this Chevy Volt.

But let me ask you, though, when I talked to Fritz Henderson yesterday, the CEO, and I asked him: If you're now running the show, but you have got this auto task force to deal with, and you see, as GM is back on its feet, that certain of these models the president really wants you to sell aren't selling and that the American people aren't buying them, and that, yes, they do like green technology, but they still like their big vehicles, are you going to be able to tell the president, no, that won't...

LUTZ: Yes.

CAVUTO: ... that won't cut it?

LUTZ: Yes.

CAVUTO: Do you think he can? Do you think the president will say, oh, all right, all right?

LUTZ: No, listen, Neil, you have got to listen to me on this.

The — the automotive task force, which is in charge of this thing and with whom I have talked at great length, they want us to meet the law, the 35-mile...

CAVUTO: Right.

LUTZ: ... 35-mile-per-gallon mileage mandates. And we know we can do that.

CAVUTO: Right.

LUTZ: And we got a very reasonable deal on that, partially because of the good dialogue between us and the government. And they want us to meet safety regulations on crash and roof crush and rollover and all of that stuff. And we will do that, too.

So, as long as we meet the nation's laws, which are applicable to everybody, we will continue... and, by — by the way, we are encouraged by the government to continue building a large array of vehicles. Some of them will be highly fuel-efficient, like the upcoming Chevrolet Spark.

CAVUTO: But, Bob, what if they only want the...

(CROSSTALK)

CAVUTO: What if they want only the highly fuel-efficient; they don't want these small cars? You know what I'm saying?

(CROSSTALK)

LUTZ: No, they're not going to do that.

CAVUTO: Can — can — can — does GM have the chutzpah to come back and say, no, we're — that is not selling?

LUTZ: Well, hey, well, you can't have one law that applies to General Motors and another law that applies to everybody else.

And we have to meet the 35 miles per gallon...

CAVUTO: Right.

LUTZ: ...with a wide array of vehicles. We are going to continue doing Camaros. We are going to continue doing Corvettes. We are going to continue to do full-size sport utilities. By the way, ours is the most fuel-efficient in the world.

CAVUTO: But you do have the power to say to the...

(CROSSTALK)

LUTZ: And, at the same time...

(CROSSTALK)

CAVUTO: Real quickly, you do have the power to say to the auto task force: no, you are wrong on this?

LUTZ: No, I will tell you, I talked to the auto task force. I talked to Harry Wilson...

CAVUTO: OK.

LUTZ: ... very reasonable, well-educated, sound individual.

CAVUTO: All right.

LUTZ: All — his whole mandate is non-ideological.

CAVUTO: OK.

LUTZ: He doesn't want us to go super-green and lose money.

CAVUTO: All right.

LUTZ: He wants General Motors successful.

CAVUTO: Gotcha.

LUTZ: That's what he's being measured by.

CAVUTO: Bob Lutz, always a pleasure. Thank you very, very much.

LUTZ: Thanks very much, Neil.

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