Lutz speaks — ad agencies safe (for now), leasing at GM will resume

(July 2009) General Motors Vice Chairman Bob Lutz is back in the news. This week he has discussed leasing and advertising.

With the uproar over the Buick LaCrosse ad featuring the trendy West Coast director, Lutz — who now has the final say in advertising for GM — has left the ad agency people responsible for the ad quaking in their boots.

Lutz told Automotive News he plans to take a more hands-on approach to shaping GM's marketing and advertising but has no immediate plans to review its accounts or fire its ad agencies.

Can you spell relief — at least for now.

Lutz is meeting with some of GM's ad agencies this week and has asked them to come up with several creative ideas. While he declined to tell Automotive News the deadline he's given them, he acknowledged that GM needs to move fast — within the next three to six months — to improve public perception after it spent 39 days in federal bankruptcy protection.

Agencies that can't show results eventually will be reviewed, he said. "If, after strong senior-management direction, the agency, for some reason, repeatedly fails to come up with a product where the customer says, 'Yes! That's exactly what I want' and fails to move the needle, then obviously you start reviewing the agency," Lutz said. "But to come into a job and not look at the way the company has approached marketing and the way the company has directed its marketing and just fire agencies and keep your internal system in place -- the new agency will give you exactly the same advertising that your old agency did."

So what about the leasing program that was abandoned at GM because of mounting losses and tight credit.

General Motors will return to the leasing business focusing on luxury vehicles, but not on a broader basis, Lutz said.

"We will get back into leasing, but we are not going to use massive subsidized leasing to drive volume because it's volume without profitability," Lutz said in an interview with Automotive News. "We'd rather sell less at higher profit than sell more at lower profit."

Lutz said it still would make sense for GM to do more leasing on its luxury vehicles.

"The luxury end of the market is very heavy on leasing and as credit frees up, it would be very logical to get back into the portion of the market that we currently don't compete in, which is the lease market," Lutz said.

"If we lease, it is going to be a lease rate that truly reflects the value of the car or truly takes into account the true depreciation level of the car in the first two or three years."

According to reports Tuesday by The Wall Street Journal and Bloomberg News, GM and its lending affiliate GMAC are expected to resume leasing cars as early as Aug. 1 after a year-long hiatus from the leasing market.