Roger Smith attempted to reinvent General Motors, aiming to create of the giant corporation a model of efficiency. In 1986 Chief Executive magazine named him man of the year for his free-spending fearlesness at the head of GM. But in fact he was to lead the company to record losses and set it on course for decline. “In hindsight,” the magazine's editorial gingerly admitted in August 1997, “Smith's reorganisation of GM proved a costly challenge for the aging powerhouse.”

In 1989 Smith was the subject of Michael Moore's first film, Roger & Me, a black comedy about the effects of the decision to close 11 GM plants and relocate factories to Mexico. Among other things, Moore took a plant worker, fired 12 times in his 22-year career with GM, to Ciudad Juárez in Mexico to ask for his job back.

Smith's bold intentions — “I will seek out change instead of having it thrust upon me” — struck a chord with American business leaders at the time. In 1980 the company's industrial infrastructure was still built on the ethos of freewheeling capitalism. GM's brands — Chevrolet, Pontiac, Cadillac, Oldsmobile and Buick — all managed their own estates and their presidents governed their fiefs according to local custom without interference from the top.

This had in the 1930s pushed the conglomerate far ahead of its rivals, but in the face of ferocious Japanese cost efficiencies, the model was out of date. Each management position was duplicated across each marque, bureaucracy had spiralled and costs were climbing because few components were shared by different cars. Smith found that any new idea, or component, took so long to get from the drawing board to the factory that it was sometimes obsolete on arrival.

In 1980 GM recorded an operating loss of $750 million, its first in 60 years. All signs indicated that this would get worse, as most American manufacturers had already surrendered the “compact” market to the Japanese. Now their mid-range vehicles, beset by design flaws and bad labour relations, looked poor value against Audi and Citroën, while massive state-sponsored automobile industries were starting up in South Korea and Brazil.

Smith was born in Columbus, Ohio, the son of a banker whose bank had collapsed in the Depression. The family moved to Detroit, where his father became an auto parts supplier. Smith graduated from the University of Michigan and served in the US Navy during the war. After finishing his MBA at the University of Michigan, he joined GM's accounting department.

His rise up the ranks was steady but unremarkable. He tended to speak in a high-pitched squeak when excited. Journalists liked him for his old-fashioned expressions, such as “holy toledo!”, “bingo!” and “not on your tintype!”, and he was considered a solid grafter who sacrificed family life for the good of the company. He became a member of the board of directors in 1974 and became president and CEO in 1981. Many expected more old-guard leadership from a man who seemed to be a glorified bureaucrat.

His stewardship gained an early reputation for ruthlessness when the Mayor of Detroit approved a new factory complex in the suburb of Poletown that required the forced removal of 4,200 residents. When, along with other new plants in Michigan and Missouri, Poletown opened without any of the fast-track technology GM had promised, the resulting criticism steeled Smith's resolve to overhaul and modernise. Although it had been signed off before he gained office, the Poletown debacle seemed in retrospect to set the mould for Smith's tenure.

One of his first actions was to create a worldwide truck and bus group, which became a manufacturing division the next year, producing all the brands' heavy vehicles in one place. His main project — a $7 billion reorganisation of the entire company, called GM10 — began in 1984.

At the heart of his revolution was computerised technology to match the “built by robots” Japanese cars. This set Smith on a collision course with the unions, against whom he took an uncompromising stance. Between 1981 and 1990 GM spent billions developing bespoke robotics with the Japanese firm Fujitsu Fanuc and entering an arrangement with the technology firm EDS, owned by the businessman Ross Perot. The technology, however, was not yet sufficiently advanced, and workers told the press that GM's robots were welding the doors shut and painting each other instead of the cars. Meanwhile, the relationship with EDS broke down and Smith was forced to buy off Perot.

On November 6, 1986, Smith announced that 11 plants would close. Michael Moore's home town, Flint, Michigan, where 30,000 jobs were lost, was consigned to desperate poverty. Perot humiliated Smith by stating that his buyout was an unnecessary waste when he had doomed so many Americans to unemployment, and vowed to keep the cash in escrow to give him the chance to reconsider. Meanwhile, GM's vice-president of finance, Alan Smith, revealed that, for the money spent on robotics GM could have removed the Japanese threat by buying Toyota and Nissan outright.

As Smith attempted to mollify the shareholders, the design-sharing put in place in 1984 meant that all GM car brands, which had before enjoyed distinctive styling and fiercely loyal customers, began to look identical. There was now little aesthetic difference, apart from the badge, between an Oldsmobile and a Pontiac, which hurt pride and morale throughout the company. By the end of the decade, GM was losing $2,000 on every car it sold just to stay competitive. In 1992 Fortune magazine branded the GM10 project “the biggest catastrophe in American industrial history”.

One reason for the disaster was the amount of attention and money given over to the $3.5 billion Saturn project. Saturn reflected Smith's refusal to give in to foreign superiority on compact vehicles, insisting “the Japanese can be beaten at their own game”. The wholly owned Saturn Corporation was to build a new compact vehicle, designed and built on Japanese lines without any corporate contamination from the parent company, in Spring Hill, Tennessee. It was to be sold for the same low, fixed price in all outlets by specialised Saturn dealers and, once working at optimum efficiency, was to be a benchmark for the rest of GM. Since then, Saturn has lost much of its autonomy and is only now starting to recoup its investment.

In his attempts to achieve profitability through a programme of plant closure and cost cutting, Smith was taken to task by the unions for his failure to address employee discontent and alleviate the plight of those who lost their jobs. While he was squandering billions of dollars in the pursuit of progress, he attempted to recoup the losses by moving American jobs to Mexico. By the end of Smith's tenure GM's share of its home market had fallen from 46 per cent to 35 per cent. He resigned, as intended, in 1990, the day after the first Saturn rolled out off the plant.

Smith is survived by his wife, Barbara, and by two sons.

Roger Smith, president and chief executive officer of General Motors, 1981-90, was born on July 12, 1925. He died on November 30, 2007, aged 82