Bob Lutz, the car world’s irascible granddad, appeared on an Automotive News roundtable with several other industry experts to discuss Sergio Marchionne’s continued pining for a merger with another major automaker. Turns out, Maximum Bob agrees with Marchionne—in today’s economic and regulatory climate, a merger between large-scale automakers makes sense. But he said it all as only Bob Lutz can.The Automotive News video runs nearly two hours, but the summarized transcript is definitely worth a read. Along with Lutz, former BorgWarner CEO Tim Manganello, President of TrueCar John Krafcik, and numerous other industry insiders sat on the panel. Collected here, the best and Lutziest tidbits from the meeting of the minds.
Regarding Marchionne’s argument that automakers spend far too much money trying to out-R&D each other, Lutz is in full agreement. “The automobile business consumes enormous amounts of capital, which is why our fixed cost is so high and why when there’s a downturn and the volume collapses, we’re all into the multibillion-dollar losses and hemorrhaging cash,” he said. “This is the first time somebody in the business—rather than being defensive and saying, ‘wait until next year’ and ‘we just went through a rough patch,’ etc., etc.—is agreeing with the premise that the automobile business is a destroyer of capital. It really is.”
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The knowledge that one is to be hanged in the morning focuses the mind wonderfully.
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Maximum Bob is also a little macabre on Sergio’s timing, seeking a merger when Fiat Chrysler is faced with enormous challenges. “The knowledge that one is to be hanged in the morning focuses the mind wonderfully,” Lutz says of Marchionne’s overtures.
And the former executive who’s worked at GM, BMW, Ford, and Chrysler sees a real opportunity for automakers to cut costs by sharing the engineering beneath the bodywork. “How many people—other than by the unique styling and the brand on the truck—could really discern a meaningful difference between a Ford F-150, a Chevy Silverado, a GMC Sierra, or a Ram,” he asks.
Lutz also talked about the time in the recent past when GM thought about buying Chrysler. “General Motors twice tried to buy Chrysler in recent years. It made all the sense in the world … because with the headquarters right next door, man, you could just shut down one headquarters, you could have one rear-wheel-drive architecture, you could go to one truck architecture, consolidate your crossover architectures. GM still had Hummer back in those days. It could have been easily integrated with Jeep,” he said. “I was always in favor of GM acquiring Chrysler and I honestly think it would deserve a serious look now. You would get synergies … which would be massive.”
Kinda sounds like Lutz might be the guy to talk to if Sergio wants GM to consider his modest proposals. Maybe we should get these two guys on the phone.
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