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New leader steps in for GM operations

In another changing of the guard in the auto industry, brand management guru Ron Zarrella stepped down Tuesday as head of General Motors Corp.'s North American operations to become chairman and chief executive of Bausch & Lomb Inc.

Zarrella had been president and chief operating officer at the giant lensmaker until 1994, when he joined GM as group executive in charge of sales and marketing. He became president of GM's North American automotive business in 1998.

Former Chrysler Corp. vice chairman Robert Lutz, 69, who came out of retirement in September to join GM as vice chairman of product development, was named chairman of GM North America. Lutz, an ex-Marine who insists that cars evoke emotions in buyers, is charged with revitalizing GM's stodgy product lineup and shaking up its tradition-bound corporate culture.

Gary Cowger, 54, group vice president in charge of manufacturing, who has a reputation for having a good rapport with the United Auto Workers, was named president of GM North America.

Zarrella's departure comes two weeks after Jacques Nasser was forced out at Ford Motor Co., with chairman Bill Ford assuming Nasser's CEO role.

But Zarrella, 52, said he wasn't forced out.

"I wanted to be a CEO, and I'm not going to be the CEO here because the CEO is younger than I am _ and good," Zarrella said during a telephone news conference, referring to 47-year-old Rick Wagoner.

Under Zarrella's brand management program, each GM division was supposed to adopt a theme, such as value, performance or luxury, and each model was to reflect that theme in its styling, features and marketing message. Lutz, for his part, has been openly disdainful of brand management.

Critics said the system eliminated much of the visceral appeal of buying a car.

"The whole notion that you could sell cars the same way you sell health care products is ridiculous. With brand management, you only sell cars that people need, not cars that they want," said Art Spinella, general manager of CNW Marketing/Research, which tracks consumer trends for the industry.

"The brand has to become emotional, not cans of soup lined up on a shelf. GM recognized its vehicles weren't connecting with buyers on an emotional level, which is why Lutz was brought in."

Many thought Zarrella became vulnerable after the arrival of Lutz, who changed advanced product designs that Zarrella had signed off on. Lutz, for example, ordered a new front end on the '03 Pontiac Grand Prix.

"Actually, Bob Lutz made my decision harder because I learned so much from him," Zarrella said. "It was time for me to make the jump because I had a chance to run a company that I admire."

But Zarrella admitted Lutz's arrival bothered him at first.

"When Rick and I talked about Bob coming here, it was difficult for me to get over. But I developed a close relationship with Bob. When it came to product, I was deferential to him; when it came to business, he was deferential to me. I had more fun the last six weeks than I did the last seven years at GM," Zarrella said.

During his tenure at Chrysler, Lutz was known as a risk-taker who played a major role in the introduction of the popular Dodge Viper, Plymouth Prowler and Chrysler PT Cruiser models. He had been considered a likely successor to Lee Iacocca, but was bypassed in favor of Robert Eaton, who engineered Chrysler's merger with Daimler-Benz.

Zarrella, whose hiring was seen as a dramatic move for GM because he came without auto industry experience, was not accepted by many in GM because he was not "a car guy." In his remarks to the media, Zarrella made it clear that the label stung.

"In Detroit, the auto business is all-consuming; nothing else is important. The positive of that is the energy it creates; the negative is that we sit here and feel the rest of the world is waiting for the next new car. We tend to agonize over decisions because we think they'll have monumental impact, and then we look back and realize that we didn't act fast enough," he said.

Under Zarrella, GM hired marketing experts from companies such as Procter & Gamble Co. as brand managers in charge of selling vehicles.

"When he brought in a lot of outsiders, he passed over a lot of very capable people in the process. Putting new people into the highly technical, specialized world of the auto industry was like throwing them into a lake of piranhas. A fair number left shortly," said George Peterson, president of auto industry consultant AutoPacific.

Spinella was more blunt.

"Good riddance," he said. "Zarrella was clearly out of his realm and didn't understand the car business. The car guys slowly wore him down. Now he's gone back to where he feels safe."

GM's shares rose $2.60, or 6 percent, to $44.99.