Lutz Takes Over as G.M.'s U.S. Auto Chief

DETROIT – General Motors Corp. said Tuesday that Bob Lutz, a former Chrysler executive who joined GM this year to add vigor to the design of its cars and trucks, will also become chairman of its North American automotive operations, replacing Ron Zarrella.

Zarrella, a former Bausch & Lomb Inc. president hired by the Detroit automaker in 1994 to revive its marketing strategy, returns to the eye care company as chairman and chief executive officer. The moves are effective immediately.

Zarrella, long criticized as an industry outsider, had been under fire from GM's dealers. They blamed his marketing efforts for the automaker's continued drop in U.S. market share and the demise of the Oldsmobile brand, which is to be phased out in the 2004 model year.

"He had always been at very, very intense odds with the dealer organization," said independent analyst Joe Phillippi. Dealers viewed him and other executives the automaker hired from consumer products companies as "basically people who know how to sell soap," Phillippi said.

As part of the executive changes, Gary Cowger, GM's highly respected head of manufacturing and labor relations, will become president of GM North America.

GM's shares rose $1.49, or 3.5 percent, to $43.88 in midday trade on the New York Stock Exchange. Since the beginning of the year, GM's shares have outperformed those of Ford Motor Co.,its closest rival, by about 24 percent.

The 69-year old Lutz, credited with reviving the ailing Chrysler Corp. with a sharp eye for design, was hired by GM in August as vice chairman of product development, a title he will retain.

"What they've got to deal with now, and Lutz is clearly the best spokesman for that, bar none, is executing extremely strong car programs," Phillippi said. "He's got a great style and I'm sure the dealers will love working with him."

PREMIUM ON DESIGN

Since arriving, Lutz moved quickly, ordering revisions to several future vehicles and concept cars and giving design a higher prominence in the development of a new model.

"I think the dealers are really excited about what Mr. Lutz is going to bring," said Alan Starling, chairman of industry relations with the National Auto Dealers Association and the owner of the Holiday Chevrolet-Oldsmobile dealership in St. Cloud, Florida.

"I hear that people who are actually in the design studios are now being given a bigger role. When they see an ugly car, they can say it's an ugly car, and not fear that they're being disloyal," Starling said.

Ugly has often described the Pontiac Aztek, which epitomized the criticism leveled at GM. The Aztek's functionality was overshadowed by its boxy exterior styling, which made it the joke of late night talk shows. Sales of the sport utility vehicle have been lackluster since it was launched last year.

Zarrella, who joined GM as head of North American vehicle sales, service and marketing, said he left GM because he knew he could never be chief executive officer. "What I really wanted, to be a CEO, I couldn't get here," he told reporters in explaining his departure.

Ironically, Zarrella leaves just as GM is poised this year to stem its long slide in U.S. market share for the first time since 1990, due to the strong reception for its new trucks.

"I wish we as a company moved faster on trucks than we did," Zarrella said. "We gave up a lot of years of big margin and big market share hanging on to a car business that was getting smaller."

The phase-out of Oldsmobile was one of the most controversial decisions made during Zarrella's tenure.

Zarrella angered dealers when, after years of trying to change Oldsmobile's image to an import-fighter from an old man's car, he called on them to step up and sell more cars.

"We've got the products. Now it's a function of getting the marketing precisely right, and frankly, the Oldsmobile dealers need to step up and sell a lot more product," he said in July, 2000, months before announcing the end of Oldsmobile.

His departure from GM had been rumored almost since the day he joined the automaker, but senior executives had always defended him. GM Chief Executive Officer Rick Wagoner praised Zarrella for instituting zero-percent financing on the sale of new cars and trucks after the Sept. 11 attacks, which caused vehicle sales to surge despite the hit on consumer confidence.