From the GM Summit 2003: Rick Wagoner

Peter Hanenberger has expressed the desire to make the Holden brand more international, to sell products in China, Korea, Middle East... Do you feel that Peter would have some legitimacy in taking this global tack given Holden's profitability and unique rear wheel drive capability, especially when Saab - bleeding money and struggling to survive, already has a global reach?

A. Yes. There's nothing like producing results to give you a strong voice at the table. I would caution to say that your observation is exactly right. I think it was about ten years ago that Holden was in a similar position to what Saab is now - losing a lot of money, doing a poor job in the marketplace. So, I don't think today's position for Saab is what we expect for them in the future. I think at GM we get the guys that aren't doing too well, doing better and keep the people that are doing terrific - like Holden - running strong.

So we're very pleased with the progress of Holden. I think the idea of moving the RWD product to the Middle East has worked very well. It has opened up a lot of opportunities. Part of the reason it has been successful is it's a good product. The other part is it has leveraged an existing distribution network. Could we see Holden outside Australia? Never say never. Is the current plan big scale? Not today.

Do you think the Pontiac GTO would have happened had Peter Hanenberger not been at Holden?

A. I think to be honest, it wouldn't have happened if we didn't have a great car. It wouldn't have happened if we didn't have Bob Lutz. For years we've been talking, I've been party to discussions of using that product for the US. I think people always liked the product but began to want to make a lot of changes to fit certain perceived US needs etc.. And by the time you did the sums it cost as much as it would to do a new car, and why take the trouble to ship it. I think Bob basically said 'hey guys, this car approximately fits very well. We don't need to spend $500 million to make it exactly fit. Let's use it pretty much like it is and have it come in. So I think it's a combination; Bob on the pull side, Peter on the push with his knowledge of the product. And hey, we did have to make some changes to meet US requirements, we had to do that in a way that doesn't break the bank. A great team effort.

The GTO/Monaro was basically a stealth program in Australia - they kept it a secret from both the media and Holden management. Is that the sort of behaviour you'd like to see in other GM divisions? Are you able to encourage that kind of innovation? Or is that the kind of thing you don't want to see?

A. I don't think stealth is the key to winning. I think having great products is the key to winning. Realistically, we've got a great situation [with Monaro] and let's ride this thing. And basically that was driven by an approach for the Australian market. Holden runs that. We don't sit here and say 'hey do this, do that'. But if I (USA) were developing a product which I hope to sell in your market (Australia), I'd probably talk to you about because if you can give your input I'm more likely to hit the right mark.

We were to a certain extent lucky that there's a lot of similarities in the Australian market and US market. But you get issues of different safety and crash regulations, and the fact that it worked OK this time, we got a little bit lucky. Other times we've tried to take products from one part of the world and you just can't make it work. To the contrary what I'd like to have people do is toss ideas on the table early and kicking them around and I think If we do that we'll make more of this stuff happen and I think Bob's got a great talent for that, and a great respect for some very good product leaders that we have in certain parts of the world.

What are you going to do to ensure GM's product focus stays in place when Bob Lutz leaves?

A. So your theory is that when Bob leaves is when this risk arises? If that's the case I'll just let my successor deal with that (chuckle). I acknowledge your point but I think that it's the kind of thing that feeds on itself in a positive sense. Some of us who've been around a long time, and hopefully will be around a long time, have seen the ups and downs of this and I think it's going to get plenty of top leadership support, which is important.

I think the real key to it are to get the talent, to develop the talent and to have the right succession planning so you get enough car expertise and talent at senior levels. I think Bob would tell you that we've got a lot of great talent, not just in the USA but around the world - including Australia - and we're going to have a chance to move some people and develop some people. I think Bob will tell you one of the things that did not play out as he expected when he left his prior automotive employ (Chrysler) is that he thought he had things set to keep going. He feels like the second he left, the train went off the track for a variety of reasons, and he doesn't want to repeat that at General Motors.

Does the world need a V16 car (Cadillac Sixteen)?

A. If it gets 20 miles per gallon that might be not a bad solution. It'd be better than some of the V8s that some of our competitors put in their cars today. It drives image. It drives excitement in our business. And I think that we're a full line player and we need to appeal to all segments of the market. We haven't decided if we're going to deliver (build) that engine, but if we do I think would provide a lot of stimulus and a lot of sensitivity to the fuel economy issue. So it may even bring out technologies that would help all those V8s that are going to keep being introduced in places like the US and Australia, and the Middle East, by getting them better fuel economy.

Do US consumers look to the past rather than the future. Are they more interested in retro design cues rather than technology?

A. Interesting question. The US is a massive market and I think you really need to segment it. There are clearly some people who love retro. You can't build a long term business on that [because] you get some people who are obsessed with technology. Probably they are a lower percentage of the car buying public than in Europe or Australia. So I think for the mass market in the US the best technologies are the ones that improve the vehicle in a way that is reasonably transparent to the consumer. Some people get obsessed and want to be the first technology adopters, but ask the vast majority of US users what type of engine they have and they don't know if it's overhead cam or overhead valve, and they don't really care. So in that sense the US customer is on a scale of technology versus fashion and design conscious, more perhaps on the design and fashion side than the purely technology group.

Is California an exception to that rule?

A. California has got some unique characteristics. Would it be technology that distinguishes them? I don't think to a great extent that would be true. Maybe because you have a greater preponderance of people who operate at high income levels, and who usually have some correlation to technological interests. Maybe to some extent, but I don't think that's the primary feature, though. I think the primary feature is that Californians want to be different, so I think we start from there. And then you build it into different kinds of things.

Are you concerned by the image portrayed to the rest of the world by a 2.3 tonne, 1000hp, 20mpg car in this environmentally and safety sensitive time?

A. First of all, if you bring in the price, it's going to be very, very...(interrupts himself) We're sensitive to the image of the world, but we play in every market in the world. And we play according to the rules. Basically we play on the basis that we are an enterprise that's got to make profit to survive and so we've gotta do what consumers want. We will this year I think be the first European manufacturer to introduce a diesel that meets the Euro 4 requirements, ahead of the game. In Europe we play right where the market is. In the USA we play right where the market is.

If somebody wants to come in here and only offer small cars with hybrid engines and sell those, it's fine. It doesn't make for much of a business. The point is we have to take the technology we have and use it in the kind of products that people want to buy. Let me take a German perspective for example. If the government wants to reduce CO2 then they raise fuel prices and everybody buys smaller vehicles, and more efficient engines, and the math also works for consumers. It doesn't work that way in the USA, and we have to play by the rules of the consumer and that makes the challenge here tougher, but it doesn't mean we can walk away from the market.

Judging by the reaction last night (at Sixteen launch) that vehicle is over the top even by North American standards. Audacious, ostentation, its size, power...

A. I think people liked it a lot, I think they thought it was great. A lot of people told me that compared to what the German and British manufacturers are doing, they said 'hey we like what you're doing better. That product looks better'. It's a luxury game, not everybody is going to play it, not everybody can play it. It's only right for certain brands. Frankly no decision to produce the Sixteen, but that's about Cadillac talking about being the standard of the world and we've been on a journey for the last several years which some of you have seen, where we gradually began a process of repositioning Cadillac and reworking Cadillac's image. We thought this was the right time to say 'our intention is to take Cadillac upscale'.

We are not doing what others have done, which is take their luxury brand downscale, our strategy is the opposite way. What better way to say it than that. We can play at those stratospheric levels, where others are now playing. In that sense I think if you are one who believes everyone should drive the small car with the small engine and get 70mpg, the Sixteen is not going to appeal to you. And we won't sell it to you. But it is about creating an image of Cadillac that technologically and product-wise Cadillac has design and powertrain capability that in our view is unmatched in the world.

Does your strategy for Cadillac include the rest of the world?

A. Our primary focus with Cadillac has been to get strong in our home market first, so it's going to be built from the US out. I will say that as compared to 2-3 years ago more of our counterparts in different countries come in and say 'why don't you offer Cadillac in our country?' so I would suspect we will see over time, this 'domestic out' strategy begin to grow. But the first focus is getting it right here.

Will right hand drive version be a part of major product development for future Cadillacs?

A. Over time. For most of the markets where we see significant opportunity for Cadillac it's not a huge issue for us. It's integral to our plan, yes.

When's GM going to get serious about fuel efficiency with its mass produced engines, rather than a sprinkling of hybrid engines and fuel cell cars at motor shows?

A. We're serious every day. Look at the performance of our engines in their categories and they're good. They stack up very well. I think your question could be more accurately phrased 'when are US consumers going to want to buy and pay the difference for - or switch their buying patterns to - less consuming engines?' and I think that's probably not likely to happen. US citizens are somewhat like Australians. They like bigger cars, they're comfortable with that. So we have to answer this with technology, and for anyone to suggest the company that has improved its fuel economy most over the 25 years in the US, to suggest we don't take that seriously just hasn't looked at the facts. We're the only company around that has doubled fuel economy in the last 25 years. And at the same time we've produced a relatively greater mix of large vehicles, so you shouldn't be confused as to who knows how to play this game. The confusion that arises I think, particularly from those who come from outside the US is; what is the issue on government policy? Why don't you have high fuel prices? You're talking to the wrong guy. Go to Washington. I can tell you what the answer is. You propose high fuel prices in the US you are voted out tomorrow. That is not going to happen in the US, so we've got to fix it with technology.