UPDATE 1-GM restructuring efforts 'bearing fruit'-Lutz

source: Reuters
Thursday 25 May 2006, 11:11pm EST

By Kevin Krolicki

DETROIT, May 24 (Reuters) - General Motors Corp.'s restructuring efforts are "starting to bear fruit" and a new approach to car design has shaken up what was an overly bureaucratic and failed product planning process, the auto maker's vice chairman said on Wednesday.

"Our turnaround at General Motors North America is starting to bear fruit," Bob Lutz, also GM's global product chief, told an industry dinner at which he was honored.

"We will get this thing turned around and we'll do it on the back of the great cars and trucks we have and the ones we'll be introducing at an incredible pace in the near future."

Lutz also said he believed GM would opt to produce a version of the revamped Chevrolet Camaro muscle car that it showed off as a prototype in January, pending board approval.

He said GM was allowing its designers freer rein in creating vehicles such as the hot-selling Pontiac Solstice convertible.

"The way the world is seeing GM is coming from a very negative place to a slightly more positive place and we think as we roll out more new products that momentum is going to build," Lutz said.

"We have the insider's view and we know what is coming over the next three years and it is going to be an array of products that is going to be best-in-class. That's a focus we lost for about 30 years," he said.

Lutz's comments came after GM shares gained 8 percent on the New York Stock Exchange earlier on Wednesday, buoyed by Merrill Lynch raising its rating on the view that the auto maker's cost-cutting program was moving faster than expected.

GM shares have gained over 30 percent since the start of the year on a growing belief that its restructuring could head off a deeper financial crisis for the auto giant that is closing 12 plants and cutting 30,000 jobs.

GM stock had dropped by more than two-thirds between August 2004 and December 2005 amid investor fears over declining sales and high legacy -- pension and healthcare -- costs.

Lutz said GM had also shaken free of what he described as a "purely mechanical, bureaucratic, highly left-brain, analytical" product planning process, in which all the important decisions were left to marketing analysts.

"Why should we give your future products to statisticians who troll through the past two years of market trends as opposed to letting our creative people take the lead," Lutz said.

Lutz said GM had "several" upcoming but still unannounced models that had emerged from its designers in a departure from past GM practice that would give the cars a more emotional connection to consumers.

"There's no doubt that a design-driven philosophy is the only one that will work," he said.

"People who are not sensitive to design, people who don't care about vehicles, people who view a vehicle as an appliance, they just default to Toyota. We will never win that one."

Lutz said the new Camaro, inspired by the 1969 version of the legendary muscle car, would be priced at about the same level as the Ford Mustang and produced in similar volume.

"We're assuming it will be an approved project," he said. "We're doing a lot of the basic engineering and cost estimating, the basic architecture, but at GM projects are not approved until the board signs off."

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