Detroit veteran defends GM chief

Bob Lutz, General Motors’ vice-chairman and an icon of the Detroit car industry, mounted a vigorous defence on Monday of the beleaguered carmaker’s chief executive, Rick Wagoner, amid debate about Mr Wagoner’s future.

Mr Lutz told CNBC that his boss should not be made a “sacrificial lamb” of the emergency loans for GM and Chrysler being considered by Congress and the administration of President George W. Bush.

His comments follow widespread calls, including by some members of Congress, for the replacement of the ailing carmakers’ senior management and directors as a condition of the loans.

“You’ve got to consider new leadership,” Chris Dodd, chairman of the Senate banking committee, said over the weekend. “If you’re going to restructure, you’ve got to bring in a new team to do this. I think [Mr Wagoner] has to move on.”

Those calling for Mr Wagoner, 55, to step down have noted that Chrysler’s former chief executive John Riccardo was forced to fall on his sword as a condition of government loan guarantees in 1979.

GM’s board expressed confidence last week that the company was “fully capable” of implementing the restructuring plan “and that management will see the company through these most difficult and challenging times”.

Mr Lutz, who has worked for all three Detroit carmakers and led a renaissance in GM vehicles’ design and quality over the past six years, described Mr Wagoner as “without doubt the best CEO I’ve ever worked for. He has made enormous transformations at General Motors in his tenure”.

Fritz Henderson, GM’s chief operating officer, is most often mentioned as Mr Wagoner’s likely successor. Like Mr Wagoner, Mr Henderson, 50, is a GM veteran, having joined in 1984. Both men have financial backgrounds.

In its most impassioned plea yet for a bail-out, GM went further than ever on Monday in acknowledging mistakes over the past two decades that have contributed to its current plight.

“At times we’ve violated your trust by letting our quality fall below industry standards and our designs become lacklustre”, the carmaker said in an advertisement in Automotive News.

“We have proliferated our brands and dealer network to the point where we lost adequate focus on our core US market. We also biased our product mix toward pick-up trucks and SUVs. And, we made commitments to compensation plans that have proven to be unsustainable in today’s globally competitive industry.”

Critics of a bail-out contend that GM, Ford Motor and Chrysler should pay the same price as any other business for their missteps.

GM asserted that “we have paid dearly for these decisions, learned from them and are working hard to correct them by restructuring our US business to be viable for the long term”.

The Detroit carmakers’ shares surged on Monday in anticipation of Congress and the Bush administration agreeing on emergency funding. GM shares were up 15 per cent and Ford by 17 per cent in early afternoon trading on Monday.