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By blurring the distinction between competing car lines, GM was violating a cardinal rule of Alfred P. Sloan Jr., the management genius who rescued the company from near bankruptcy in the early 1920s and ran it until 1956. In 1921, Sloan recommended that GM rationalize its products by manufacturing "a line of cars in each price area, from the lowest price up to one for a strictly high-grade quantity production car." After eliminating moribund models like the Scripps-Booth, and phasing out another, the Oakland, Sloan created the five-division lineup that has survived for nearly 60 years.
Under Smith's plan, Chevrolet and Pontiac would be combined into a small-car group, which would sell nothing larger than intermediate-size models such the Chevrolet Celebrity and Pontiac A6000. Production of big cars would be restricted to Buick, Oldsmobile and Cadillac. GM would continue to market cars under the present five names. Each part of the bifurcated company would still be larger than either Ford or Chrysler. Word around Detroit last week was that Chevrolet General Manager Robert Stempel, 50, will take over the small-car group, while Buick Boss Lloyd Reuss, 47, will head the large-car group.
Other changes at GM pushed through by Smith are no less revolutionary. His small-car strategy is the most diversified of any U.S. automaker's. He has launched the company's Saturn Project to develop a 45-m.p.g. model by 1987. In addition, GM has created alliances with four Japanese automakers. It has made large investments in both Isuzu and Suzuki, and expects to import 300,000 of their cars. Its agreement with Toyota to produce 250,000 cars annually in Fremont, Calif., was approved last month by the Federal Trade Commission. And GM has also quietly arranged for Nissan, Toyota's archrival, to build cars for its Australian subsidiary.
This last linkup boosted Smith's already high standing in Japan. "Many, many Japanese auto tycoons are trying to emulate Smith-san," says Nobuyoshi Yoshida, Japan's leading automotive journalist, who praises Smith for his flexibility, his keen accountant's eye and his pragmatic deal-making ability. Adds Yoshida: "Japanese businessmen would feel guilty doing business with such rivals as Nissan and Toyota at the same time."
Sure-handed in business dealings, Smith sometimes seems all thumbs when it comes to dealing with the public. He has antagonized shareholders by trying to limit their questions to management at annual meetings. He infuriated the United Auto Workers in 1982 when he became involved in pay negotiations. After Smith repeatedly complained that workers were overpaid and cost cutting was needed to regain a competitive position, GM announced a richer bonus plan for top executives on the very day that the union signed a contract accepting wage concessions. Admitted Smith afterward: "I'd rather it hadn't happened."
Still, Smith has plenty of time to smooth out his public personality. If, as expected, he stays on the job until the company's usual retirement age of 65, he will have put in 9½ years as chairman.
That would give him the longest tenure as GM boss since the legendary Alfred Sloan. — By Alexander L. Taylor III. Reported by Paul A. Witteman/ Detroit