Tuesday, September 20, 2005

Change of Tune

by Tom Bozzo

GM's Robert Lutz, March 2005 (from the April 23 NYT, possibly free for Times Select subscribers):
"Everybody thinks high gas prices hurt sport utility sales," said Robert A. Lutz, the vice chairman of G.M., in an interview last month. "In fact they don't."
GM's Robert Lutz, at the Frankfurt Auto Show, September 2005 (from Automotive News, Sept. 20):
GM Vice Chairman Robert Lutz says higher fuel prices, if sustained, inevitably would push Americans toward smaller cars.

"If U.S. fuel prices start equaling fuel prices in Europe, we will have the same vehicle type over time that Europe does - a very large B-class at the bottom with the vast majority of people driving Cobalt-sized cars," Lutz said in an interview at the Frankfurt auto show.
Comments:
And people wonder why I think American industry would be doing much better without executives being picked by their golf handicaps.

He's seen the light; that's why CNBC has been discussing the new Tahoe all day...
 
But the first comment is just so stupid. Of course sustained higher gas prices will change behavior! It takes an idiot not to think that. In sum: Ken Houghton is correct and more concise than I.
 
Ken: I agree with you, though Lutz was not so much an executive hired for his executiveness -- his job ostensibly was to bring "car guy" sensibilities to GM's appliance-selling culture. That, of course, doesn't mean that the sensibilities of a septuagenarian rich guy who owns an ex-Soviet fighter jet are the right ones to tap.

Isaac: Yes. I had provided a slightly extended quote and some critique at the time. Basically, Lutz argued that people who bought GM gas guzzling SUVs were too rich to care about gas prices. Obviously, economics would predict that even the rich evenutally would, to some extent, substitute alternative means of flaunting one's wealth.
 
The American auto exec mentality is crazy. I read today that the Ford exec complained that Japanese auto makers are hogging hybrid auto parts. It seems that GM and Ford have difficulty looking into the future and are still behind the Japanese auto makers. May the best car makers win.
 
Bryan: Damn straight. I'd read that shortages of some components was set to limit Toyota's hybrid production, but insofar as the domestics basically treated hybrids as an annoying fad that they hoped to ignore until high gas prices blew up large SUV demand (at profitable selling prices) -- or in the alternative, got on the bandwagon by licensing technology from Toyota -- they have no standing to complain to which anyone should pay serious attention.
 
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