GM's new 'car guy' sees a ray of hope for the company

NEW YORK (Fortune) -- There's a generational story that Mark Reuss, the new head of General Motors' North American operations, likes to tell.

Over the Christmas holidays, he drove his son north of Detroit to Flint to see what used to be known as Buick City. The massive manufacturing complex, which once employed 28,000 workers, represented an unsuccessful attempt to compete with the integrated production of Japanese manufacturers. As GM's volumes declined, it became obsolete; it was closed in 1999 and demolished in 2002.

As Reuss, 46, tells the story, his son, 13, asks him why Buick City failed. Reuss (pronounced "royce") ponders a few possibilities -- management and union squabbles, GM's failure to build cars that people wanted. Then he turns to his son and says, "This happened because we could not compete."

The story is especially poignant because Buick City is where Mark first went to work for GM -- and it was created by his father, Lloyd, when he held top jobs at Buick from 1975 to 1984. Lloyd eventually rose to become president of GM under CEO Robert Stempel. But he became a symbol of GM's arrogant and insular attitude in those days and he was demoted by the board of directors in 1992 and eventually pushed out of the company.

Today, the younger Reuss, is trying to demonstrate that bankruptcy has changed GM and it isn't his father's company any more. "We've stripped the business down to the chassis," he says, "and now we're re-building it into the company that we, and our customers, want and need us to be."

As head of GM's North American operations, Reuss becomes the highest ranking car guy in its core business and the spiritual successor to vice chairman Bob Lutz. That puts Reuss directly in the field of fire from chairman and CEO Ed Whitacre, who promoted Reuss in December as part of a management shakeup that saw the resignation of former CEO Fritz Henderson and is keeping a sharp eye on operations.

The promotion represented a huge jump in responsibility for Reuss, who just six months earlier was running GM's operations in Australia and New Zealand and then did a brief stint as head of global engineering.

Early on in his new job, Reuss has focused on discretely attracting sales from disgruntled Toyota owners (it is considered bad form in the industry to move too openly against a weakened rival) and pacifying Congressional supporters of GM dealers who were terminated under the bankruptcy process and are now seeking arbitration.

Longer term, Reuss is trying to make the newly slimmed-down GM better aware of the world around it by paying more attention to what customers actually want instead of what GM thinks they want, and giving independent critics like Consumer Reports their due by heeding their admonitions on quality.

Reuss knows first-hand how corrupt the GM old product-development system was. He was the vehicle line executive tasked with putting the widely-unpopular Pontiac Aztek into production. An example of market research run amok combined with ill-conceived economies in manufacturing, the Aztek was introduced for the 2001 model year and quickly dubbed one of the ugliest cars of all time.

For his part, Reuss wasn't involved in any of those Aztek decisions, and he once admitted that as soon as he saw the vehicle, he knew it would be poorly received. He learned from that experience. One of his goals in his new job is to make it easier for subordinates to criticize decisions made above their grade level.

Reuss and his father seem to have a comfortable relationship. In a video taped at the Detroit auto show in January, he reminisced easily about a 1963 Buick Skylark that his father helped restore so Mark could take it to his high school prom. But he seemed a little less relaxed as his father launched into a long anecdote about the 1979 Riviera and a shorter one about some steering-wheel cufflinks that Lloyd's wife made for him.

Popular among his peers as well as the automotive press, Reuss has solid credentials to back up his dynastic connections. He received a bachelor of engineering degree in mechanical engineering from Vanderbilt in 1986 and a master's degree in business administration from Duke in 1990. His driving skills are race-bred: He is a certified industry pool test driver on the North Course of the famed Nürburgring race track in Germany.

Reuss likes to say that he and his co-workers have an opportunity to build an entirely new GM from scratch. But car guys, it seems, don't fall far from the tree. To inject some pizzazz into Buick's tired lineup in the 1970s, Lloyd Reuss started building performance models with big engines known as Grand National racers. They failed to halt Buick's slide towards fewer and older buyers that wasn't arrested until customers in China revived the brand.

When the Aztek got in trouble, Mark Reuss, who by then had been moved over to GM's performance operation, decided to build a performance model with a big engine. Called the "Ultimate Aztek," with a 7.0 liter, 665-horsepower V-8 engine, only one was ever built and it couldn't save the vehicle, which was discontinued after the 2005 model year.

As Reuss would say, "those days are gone, and frankly, that company is gone." His new GM remains a work in progress.