Product-wise, GM is a little like a movie studio that hasn't produced a blockbuster in better than 20 years, or the oil company that hasn't tapped a gusher in a couple of decades. Even the United Auto Workers took a shot at the uninspired products GM asks it to build.
So Wagoner asked vice chairman Robert Lutz to sketch out GM's plans for the future. Lutz, in reply to the needling from Davis, who suggested he might be "too old" for the task of fixing GM's product offerings, insisted GM was already pushing ahead with bold plans for major changes in the company's model line.
"We see a huge opportunity here for us to capture the essence of the American automobile in its glory days. The Japanese can't follow us there any more than they could follow Harley-Davidson. We believe there is a lot of gold in those hills and we intend to mine it," said Lutz.
However, Lutz acknowledged, grudgingly, that Ford and Chrysler had already beaten GM to the space with the new Mustang and the 300C and new Charger.
Lutz also said GM was adapting to the idea it is not only in the transportation business but also the "arts and entertainment" business. "You can't run the business by the left-side analytical part of your brain. You've got to have a lot of the right-side creativity. We are in the art and entertainment business. In the next two or three years, you're going to see product that takes a back seat to nobody," Lutz added.
Product is king, belatedly "We do not see this issue being fixed by cutting costs alone. We know we have to work on the revenue side," added Wagoner as he sketched out GM's turnaround plan.
"If we had a chance to rerun the last five years," Wagoner later told reporters, "we probably would have done a little more thinking about making sure that each product was distinctive and had a chance to be successful. There probably would have been a little less expansion of the model line. We also didn't build brands in the way we wanted to over the long term," Wagoner said.
Gerald Meyers, the former chief executive of the American Motors Corp. and University of Michigan business school, told The Washington Post that fixing product development remains one of GM's most important challenges, as the lukewarm reception to the company's newest vehicles such as the Buick LaCrosse suggests.
"That's the big gorilla sitting in the corner of the room," said Meyers. "Just look at the Aztek; it was hokey, nonsensical, ugly. There are not enough adjectives to describe that vehicle. It...was indicative of the failed product development system that has been nurtured over there for so long," Meyers added.
Meanwhile, Wagoner said during the annual meeting GM is devoting more resources to product development. GM expects to spend about $1 billion more annually on product development going forward, he said.
Wagoner, however, also cautioned the company's fortunes also will depend on the future strength of the U.S. economy. The steady growth of the U.S. economy during the 1990s was critical to GM's recovery after the company nearly went bankrupt back in 1992. "If the U.S. market booms, if gas prices go down, if sales of large SUVs come back, our return to profitability will be quicker. If the U.S. enters a downturn or gas prices go much higher and there are other outside factors that we have to react to, it's going to be a tougher task," Wagoner said.