Even people who have never heard of Bob Lutz have no doubt seen the cars the 84-year-old has had a hand in developing. They range from luxury models such as the BMW 3 Series and the Cadillac CTS to SUVs such as the Ford Explorer and even electric cars like the Chevrolet Volt.
During his nearly 50-year career in the auto industry with stops at BMW, Ford (F), GM (GM) and Chrysler (FCAU), Lutz has earned a reputation for speaking his mind and angering his bosses. After clashing with then-CEO Lee Iacocca in 1992, Lutz, who was Chrysler's president at the time, was reportedly passed over for the chance to replace Iacocca when Chrysler chose Robert Eaton instead. Iacocca, who personified Chrysler in the minds of many after engineering a federal rescue, later admitted he made a mistake in not giving the job to Lutz.
Undaunted, Lutz sharpened his credentials as a maverick with the books he has authored. In "Guts: 8 Laws of Business from One of the Most Innovative Business Leaders of our Time," he included such lighthearted "immutable laws of business" as "The customer isn't always right" and "Too much quality can kill you." He has written two other blunt-speaking tomes, "Idiots: Straight Talk On Leadership" and "Car Guys vs. Bean Counters: The Battle for the Soul of American Business."
After his retirement in 2010. Lutz continued to speak his mind on topics such as Elon Musk's Telsa (TSLA), which he said has serious challenges, and why car companies fail miserably at marketing "cool cars" for young consumers. The veteran auto executive recently discussed the state of the auto industry with CBS MoneyWatch (transcript has been edited for clarity and space).
MW: The words that are used most often to describe you are "car guy." What does that title mean to you?
Lutz: It just means that I was focused during my whole career on creating great products that would make people happy as opposed to seeing the automobile business merely as a vehicle to make money.
MW: Do you have a favorite among the cars you've been associated with, or is that like asking a dad to pick his favorite child?
Lutz: I've been identified with a lot of successful cars, but I guess the last one in my career that was groundbreaking was the Chevrolet Volt because it was an entirely new and different technology.
MW: Yeah, I wanted to ask you about that. You're on the record as saying the electric vehicle was inevitable, but you're not a fan of some of the models out there, particularly ones made by Tesla.
Lutz: I'm a great fan of the vehicles. I'm certainly a great fan of the Model S. The Model X isn't working too well because it doesn't have enough roof structure, so those doors are never going to work. The Model 3 -- we'll see what happens with that. I think it's going to be delayed again.
My argument with Tesla is the business. It's a cult stock, and I've been saying for months that the business model doesn't work. They're losing a ton of money. They're running out of cash. Their sales are sideways to down.
MW: What would you say to someone who bought one of the pre-orders for the Model 3? Are they wasting their time?
Lutz: I would say be prepared for far more delays than you have bought into, and secondly, be prepared to pay more than what you thought you were going to pay.
MW: Can you foresee a time when electric cars will become as mainstream as gasoline cars?
Lutz: The problem today is that electric cars -- because of the battery -- cost more to make. Tesla's big problem is that other producers like GM, Toyota, BMW, Volkswagen and Mercedes-Benz -- everybody is going to be producing electric vehicles at a loss, a deliberate loss to get them in the market. Tesla doesn't have that luxury. Tesla has to live off the electrics. That's going t o be very tough when everybody else is selling them at a loss.
MW: Elon Musk recently announced plans to ramp up production of the Model 3 a lot sooner than people thought. There's a lot of skepticism about whether the plan is technologically feasible. Do you share that skepticism?
Lutz: You know, Elon Musk is a wonderful guy. He's a visionary. He's personally charming. He's the eternal optimist. [However,] he does make a lot of claims and a lot of statements that as time goes by prove to be not to be quite accurate. Every time somebody tries to focus in on the here and now, he dangles another grand vision in front of them.
MW: The last couple of months haven't been good PR-wise for a lot of automakers. VW was caught lying about the pollution of its diesels. Mitsubishi was caught lying about its vehicles' mileage. Are consumers going to lose faith in claims that the automakers make?
Lutz: There's an elaborate formula for coming up with your EPA fuel economy sticker. Over time, auto companies have learned how to game it legally. What's not legal is lying.
MW: Still, the VW situation was pretty surprising, considering how long it went on and how far up the chain up it went.
Lutz: Most recalls are caused by some unavoidable accident or error. They're usually errors of omission. The thing that was different about the VW scandal is that is was a deliberate act of commission.
MW: What are your thoughts on the Takata airbag scandal.
Lutz: Once again, that's an error of omission. Somebody screwed up, or the material was wrong, or the machining process was wrong. Takata didn't know its airbags were defective and said 'let's keep this quiet and keep making them.'
MW: What about self-driving cars. Are you a fan of the technology?
Lutz: I am not a fan because I think it's going to take the fun out of driving. Are they coming? Are they inevitable? Are they going to be the only long-term solution to urban congestion problems? Yeah, I am a big believer.
MW: Have you tested the technology yourself?
Lutz: Just really early versions when I was at GM. Back then, it was pretty scary technology and not well developed. In just a couple of years time, we're going to see autonomous vehicles that are far less accident-prone and far safer to be in than anything driven by a human driver.
MW: Would you talk about the impact that ride-hailing services like Uber and Lyft are having on carmakers?
Lutz: These are early manifestations of the inevitable trend to the autonomous car. Uber is nothing but an autonomous module that you call, but it still happens to have a driver. What's going to happen to the traditional automobile industry when everything is standardized models? Boy, your guess is good as mine.
MW: Recently, Toyota shut down its Scion brand. It seems that the automakers are struggling to reach younger consumers.
Lutz: That's part of the history that no automobile executive ever wants to learn. There's no such thing as cool cars for kids. First of all, most kids can't afford new cars. The idea of let's do a cute car with funky colors and weird shapes ... they always fail because it's 55-year-old guys trying to divine what they should be making for a 16- and 17-year old. It just doesn't work. You know what the popular car is for students on most college campuses?
MW: No, what is it?
Lutz: Old BMW 3 Series. Can they afford a new one? Hell no. But they can afford a fairly old one for $8,000 or $10,000. Scion was the answer to a question that nobody asked.
MW: What are customers looking for in cars today that they weren't 10, 20 years ago?
Lutz: It's depressing to say, but the number one motivator is a low monthly payment. A great motivator is still the brand. That's why brands like Audi, Mercedes-Benz and BMW have an easy time leasing out vehicles at low lease rates. People say why, should I take a Chevy Traverse when for the same monthly rate I can have a BMW 3 series, and everybody will think they have succeeded.
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