An Urgent Letter to Alex Taylor III

Fortune Magazine deserves an ASME elephant for the journalism of senior auto writer Alex Taylor III. He’s the only writer-reporter-analyst left, other than my good friend David Kiley at Business Week, who knows where the bodies are buried in Detroit.

So when Taylor writes a cover story, “It’s Clutch Time for Fritz Henderson and GM” (Oct. 12, 2009 issue), we all should sit up and take notice. The question is whether even Taylor has been in Detroit too long. His “Special Report” is balanced, well written and full of hope. Henderson is obviously a breath of fresh air in the executive suite. He can manage an online press conference, answering 30 reporter’s questions in 45 minutes. Wow!

But even though GM has slimmed down considerably through the last year, has lost many of its onerous structural and legacy costs, and has been able to cut back on brands, factories and non-performing dealers, the question still remains: is it capable of making great cars that Americans want to buy?

Sure, it’s clutch time. Certainly that isn’t news. It’s been clutch time at least from the day nine years ago when Rick Wagoner took over the company and began saying that, with just a little bit of this or that, GM would be just fine. (Remember when Wagoner had dinner with Carlos Ghosn of Renault-Nissan and said later that GM could snap back without foreign help?).

Meanwhile Henderson has surrounded himself almost entirely with GM old-timers. Sure he’s capable of saying no to them. I’m glad to hear that he turned vetoed Bob Lutz’s plan to rename a Pontiac G8 as a Chevrolet Caprice. But can he teach GM to tell the truth?

His first mistake may have been naming the charismatic, 77-year-old Lutz his chief of marketing. Lutz is the ultimate car guy; he was brought in several years ago with plenty of authority to put some pizzazz into GM’s styling, and, to my thinking, he failed. [The Malibu was a hit before he got there.] Lutz said he planned to shake up GM’s advertising—and last week he fired Modernista!, Boston, as Cadillac’s agency. But it will be another six months before we see what Lutz can do to give the Chevy, Buick, Cadillac and GMC brands better definition and punch.

Never mind doing great advertising. For starters, can Lutz just make GM’s marketing credible. But he is such a gung-ho type he may be able to take that first baby step. Take the latest campaign to be produced on Lutz’s watch: chairman Ed Whitacre’s money-back guarantee TV spot.

None of us had heard much about Whitacre before he came over last spring at the U.S. government’s invitation from AT&T to take command of the GM board.

In this spot, he strikes a Lee Iacocca-like pose, challenging people to buy GM cars and trucks for 60 days to see if they like them. “Like a lot of you I had misgivings about GM cars,” he says before assuring us that “car-for-car” they’re better than the competition.

Huh?

Such a statement isn’t even close to true. Alex Taylor, who strangely didn’t comment on the Whitacre ad, writes, even Korean-import Hyundai “outpaces ever GM brand in quality and outsells every GM brand except Chevy.”

I’m glad that Chairman Whitacre is offering to let us test drive a GM car and, if we’re not entirely satisfied, to return it for a full refund. What he fails to mention are the conditions—notably that you have to drive a GM car for a minimum 30 days before you are eligible for a buy-back.

Worse, isn’t it a little early to be challenging Americans to test drive GM cars? Aren’t there better reasons—like their price and value, warranty, some of their more competitive features—to consider buying a GM car? And what is GM doing wasting money on ads for GM anyway? No one drives a GM car. The closest you can get to that is a Jimmy—a GMC truck. So why isn’t GM spending its media dollars that on its individual car brands sitting on the dealers’ lots?

The point is that a company which can’t even get its communications right is unlikely to be trusted to get its design and manufacturing quality right. Even during the transition period from the Wagoner to the Henderson eras, there are a lot of GM cars to be sold. GM should start learning to tell the truth about them now and slowly, carefully rebuild its relationship with the American consumer.

Alex Taylor – you’re our last best hope. Don’t let Fritz take you on any more test drives. Don’t spend too much time in the GM executive lunchroom being amazed by the change in the hidebound customs of its Renaissance Plaza headquarters. GM under Fritz has a chance to get it right. But it’s a long odds game. And we’re counting on you, Alex, to make sure to keep honest book on the lot of them. Especially because, as taxpayers, we own a huge piece of GM and want our money back.