An Interview With Mark Reuss, President, GM North America

On the sidelines of the 2011 New York International Auto Show, I had the opportunity to sit down for a brief interview with Mark Reuss, the president of GM North America.  Going into the interview, I knew a bit about Reuss’ background; he’s famously the son of former GM president Lloyd Reuss, and he’s an engineer by training (having led engineering efforts in GM’s large luxury vehicles and created the GM Performance Division that spawned the likes of the V-series Cadillacs).  He also served a stint in GM’s Asia-Pacific region, leading the company’s operations in Australia and New Zealand and serving as Holden’s managing director for about two years.

My conversation with him occurred just a few hours after he had revealed the 2013 Chevrolet Malibu and Malibu Eco to the US media.  Although, like all new-vehicle press conferences, the Malibu reveal was scripted and teleprompter-driven, Reuss was calm and at-ease when taking questions.  His easy conversational style, free of management-speak buzzwords like “synergy” and “efficiency,” was refreshing to hear from a senior person.  He came across as an intelligent guy who knows what needs to be done to move GM forward as the company heads toward General Motors Company’s second anniversary this summer.

GM’s trip through bankruptcy, though politically unpopular, caused a fundamental change in the way the company does business.  Said Reuss

My whole career, every year, you were given an assignment to either restructure, reorganize, reduce, or exit.  And so we were a structural cost-based company – to sustain our manufacturing footprint with structural cost reductions.  So, if you have that and you have too many brands, you really can’t make very good products.

And so now we’re a revenue generation based company.  That’s a pretty profound statement when you think about that on a daily basis of when I go to work, and what I work on.  It’s pretty refreshing.

Reuss acknowledged, however, that all is not completely rosy at this point with GM.

There’s hatred of this company, and I’m very realistic about that.  There’s people that don’t agree with the assistance the government gave to us.  There’s people who don’t trust the company because of prior customer experiences with the company.  I see it every day.

I give him a lot of credit, though, for addressing the company’s “haters” head-on.  He continues

As many of those things [letters, hate mail] that get sent to me, I deal with it.  If someone takes the time to write to me, I will deal with it.  I’ll write them back, I’ll call them up.  I’ll try and solve the problem or the reason why they hate us.  If I can’t do it, then I can’t do it, but it’s not unintended.

One general observation I’ve noted previously on the first day of the auto show in New York; indeed, of other auto shows as well, was that the press conferences lacked the drama and showmanship that we’ve seen in years past.  According to Reuss, that is intentional, at least at GM.  Reading between the lines, it’s not that they can’t afford to stage “parlor tricks” (his words), it’s that they want to focus on the core fundamentals of the car.  The cars, in large part, will speak for themselves.  There’s no longer a need for an outsize personality like Bob Lutz to hype a new car.

This low-key attitude, which flies in the face of auto-show traditions over the past decade or two, is reflective perhaps of the new realities of the global economy, where every dollar is precious; every resource is something to be conserved.  I suppose that the days of longhorn cattle copulating in the streets of Detroit during the Ram pickup launch are but a distant memory.

Reuss went on to confirm that another GM bad habit was being put to rest:  the exposure of production cars, or near-production cars, two years ahead of their on-sale date.  He cited the 2013 Malibu as an example of the situation going forward; the car will be at dealers in less than a year, in both of the versions shown in New York.  When I asked if he was referring to the likes of the Camaro concept, which debuted in January 2006, he confirmed that showing a car in early 2006 that turns into a 2010 model-year vehicle was problematic.  “It’s this goofy integrity game we play with the public and the media,” he said.  “We’re just not gonna do that anymore.”

He’s a car guy at heart; he cited the Cadillac CTS-V coupe as his favorite car developed under his watch (and drives one himself), but all of the talk about fuel economy and low-key launches left me concerned whether the Malibu – currently available with an optional 3.6 liter V6 – would see a sport variant that improves upon the base car’s 2.5 liter four cylinder.  Mark Reuss’ response was

We may, we may not.  I think we have to get out there with the base car and the Eco model.  We did the same thing with the Cruze.  What we don’t want to do is go out there and overpopulate something, and overdo it.  We have not had a lot of credibility, particularly at the small car part of the market.

Rather than a performance Malibu or performance Cruze, the plan is to let the Sonic subcompact carry the performance banner on the mainstream end of the lineup.  This is why the Cruze Eco’s 42 mile per gallon EPA highway rating is likely to surpass the smaller, lighter Sonic’s “around 40” number.  The final drive ratios are different, and the cars are intended to serve different markets.

We’re not gonna do everything in every one of these car lines and segments for everybody.  That’s what we used to do.  There’s a ton of engineering for incremental sales.  You gotta be careful with that.

I think we also have an opportunity relative to Ford because, if you look at the Ford Fiesta and the Ford Focus versus Sonic and Cruze and Chevrolet, Fiesta and Focus are big and bigger.  Very similar design language, very similar positioning.  I think that’s really dangerous.  I’d rather separate Sonic and Cruze and Malibu on a base car approach positioning basis.  That’s why we’re launching this car with the Eco model first.  That’s a big, big difference.

So, does the GM approach toward its small and midsize cars leave an opportunity to extend the lineup a few years down the road to maintain interest?

Totally.  You can always do those.  But that’s not the core of what we need to make the business out of, nor should it be.

Could that last quote mean that Mark Reuss the manager has killed Mark Reuss the car guy?  It’s probably more complex than that.  Reuss is still fairly young, at 47 years old, and is a potential future GM CEO.  His boss, Dan Akerson, is 62 years old and won’t work at the company forever.  (If he follows the pattern set by Wagoner, Henderson, and Whitacre, he won’t work at the company two years).  Shareholders couldn’t care less how exciting a potential halo car might be, but want the company to generate as much revenue as possible, at the lowest cost possible, and so they want a future CEO who makes the right business decisions, not ones based on emotion.

On an emotional level though, my perception of Reuss the manager is not to say that he isn’t pleased with the outcome of his efforts to continue local vehicle production in Australia.  GM Holden’s production had been focused almost exclusively on popular large cars such as the Commodore and Statesman. When fuel prices rose precipitously, demand for those types of cars fell.  The demise of Pontiac (and therefore the Australia-soured G8 with it) meant that Holden production was in serious jeopardy.

One part of the plan to save Holden production was to ink an export deal to ship Chevrolet Caprice PPVs (Police Patrol Vehicles) to the US for law enforcement use.  For US-based folks, the Caprice is basically a longer wheelbase version of the car they might recognize as the G8, but is really a Holden Statesman.

The second part of the plan was to secure local Cruze production in Australia.  In prior years, C-segment cars had been sourced from either South Korea (for inexpensive, inferior Daewoo-based products) or from Europe (for expensive, slow-selling ones).  Local Cruze production now means better cars and more attractive pricing; it’s easier to sell a lot of Cruzes than it is to sell a lot of rear wheel drive V8 and V6 cars.

When he first answered the “which GM car developed under your leadership are you most proud of” question, his first answer was the CTS-V coupe.  But then he quickly threw in that he was proud to have secured local Cruze production, because he clearly feels an attachment to Australia from his time managing Holden.

Will Reuss’ position at the top of GM North America’s org chart, coupled with his affinity for Holden, mean that we may someday see a spiritual successor to the G8 with a Chevrolet badge, a large rear wheel drive performance sedan?  He couldn’t discuss future product, of course, but did note

It’s always a possibility.  We look at that stuff like every week, we really do.  The world changes so quickly that you never wanna be blind to how fast that changes and how you react to it.

So three months ago, before gas prices spiked, might such a car have had better odds of seeing the light of day?

Exactly.  That’s my point.  You’re seeing the world change again.  We’re gonna still have a lot of those big episodes around the world.

GM’s position as a global company carries with it unique risks, not the least of which are supply-chain concerns.  These concerns were highlighted in recent weeks by Japanese automakers, who have all either halted or dramatically slowed production due to the earthquake and tsunami that hit northern Japan.  GM’s only impact to date was that it had to close its Shreveport, Louisiana midsize truck plant for a week in late March.  At the time, the company wouldn’t say what part was causing the shortage.  However, Mark Reuss shared a bit more detail about what part it was and why Shreveport was closed:

We shut down our Shreveport mid-truck plant for a week because we reallocated ECMs to CAMI so that we could keep our Terrain and Equinox production going.  We brought the plant up a week later.

GM seemingly can’t build enough Equinox and Terrain crossovers to satisfy demand, despite taking over the entire CAMI plant from former partner Suzuki, shipping unfinished bodies to the company’s Oshawa plant for final assembly, and finally announcing the upcoming Mexico-built Chevrolet Captiva for fleets only to allow the company to direct as much Equinox/Terrain production to retail customers.

Contrast that with the Colorado/Canyon midsize pickup twins.  The unloved duo is going out of production as soon as their plant is shuttered, and may or may not be replaced.  Inventories are typically fairly high for the trucks, and they aren’t strong sellers.  It makes perfect sense to divert parts from less-popular vehicles to those in high demand.

As the interview drew to a close, Reuss was asked what message he wanted to convey from GM coming out of the New York show.

We are going to be a serious, full-line automaker, and I think the evidence is in the Cruze on the road, and I think the future evidence is in the Malibu, and in the Eco piece of the Malibu, where we return with integrity, high value, style, and great operating cost.  I’m not sure we’ve had that for a long time with Chevrolet in the United States…I think these cars that we’re bringing out are really, really good, and this is just the next step.

So what did we learn from Mark Reuss?  GM will be taking a more disciplined approach toward new-vehicle introductions, with less pomp (and not as early) and a focus on the specific message that the company wants to communicate about a particular car.  We got no real news on the prospects of a large rear wheel drive performance sedan (though it’s perhaps less likely now than before the Libya crisis, thanks to oil and gasoline prices), and we may or may not see sporty variants of the Cruze and Malibu – but will see sport-oriented Sonics.

Reuss is clearly pleased about now having the opportunity to focus on building cars that people will buy, rather than keeping the plants humming as much as possible to support crushing structural costs that sunk Old GM.  He struck me as a guy who likes to come to work every day, and a guy who’s not afraid to respond to criticism (or “hate,” in his words), making a genuine effort to do the right thing.  One gets the sense after speaking with him that GM would have been in a much healthier state over the past few decades if it had more managers with Mark Reuss’ attitude toward addressing problems and dealing with customers.