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The Hummer and the Ash Heap

Written By Brian Hicks

Posted June 3, 2008




H1, H2, or H3, I can’t say that the Hummer brand ever did much for me.

Too boxy…….too big….and too much money.

Even still, they sold far more of them than I ever would have imagined. But with the price of oil skyrocketing, the Hummer’s days in the sun may be finally numbered.

In the face of higher gasoline prices, the Hummer along with other SUV’s are getting harder and harder for automakers to sell.

That’s a fundamental change in car buying attitudes that has caught the auto industry completely flat-footed.

But at least they recognize the trend.

Gasoline over $4 a gallon is "a structural change, not just a cyclical change," said Rick Wagoner, the chief executive officer of largest U.S. automaker—General Motors. He ought to know.

The big brand is struggling to return to a profit amid record gasoline prices and said it will close four truck plants as a result.

Those four plant closings will save the auto giant $1 billion a year and cut North American capacity by 700,000 for trucks.

Meanwhile, sales at General Motors continue to tumble, falling 30.2% in May with trucks falling 39%.

That has put the Hummer on the brink of extinction.

Here’s the skinny.

From CNN Money entitled: GM Considers Dumping Iconic, Gas-Guzzling Hummer Brand

"General Motors Corp. (GM) has backtracked from its long- standing support of its eight-brand portfolio, announcing plans for a strategic review and possible sale of the iconic Hummer brand.

GM, as part of a series of restructuring measures announced Tuesday, said "all options" are on the table when it comes to Hummer’s future. The latest restructuring moves come as gasoline prices top $4 a gallon in many parts of the U.S., sending sales of large vehicles tumbling and auto makers scrambling to adapt.

"At this point we are considering all options for the Hummer brand, everything from a complete revamp of the product line up to a complete sale of the brand," GM Chairman and Chief Executive Rick Wagoner said Tuesday in a conference call with reporters. Wagoner said Hummer dealers will be consulted on the brand’s future.

Removing Hummer from the mix could also bolster GM’s credentials among consumers who are increasingly concerned not only about the impact of high fuel prices on their pocketbooks, but about the environmental impact vehicles such as those produced by Hummer can have.

"In the current era of carbon dioxide emissions and fuel concerns, Hummer’s current product lineup is very much in question. GM would have to spend a considerable amount of money and time to change the brand," said Erich Merkle, vice president of auto industry forecasting for IRN Inc. based in Grand Rapids Inc.

The Hummer, which traces its military roots back to the 1980s, hit civilian streets in 1992 as a product manufactured by AM General Corp. GM bought the rights to the Hummer brand in 1999, taking control of marketing and further product development which has included the launch of the H1 and H2.

The vehicle quickly became a symbol of coolness, as movie star Arnold Schwarzenegger was spotted cruising through the California streets driving one of the eight Hummer vehicles he had bought.

But the coolness factor soon faded as consumers began bashing the boxy SUV for its "fuel inefficiency" of 9 to 15 miles per gallon. The vehicle, weighing at more than 6,000 pounds – although reduced to 5,000 pounds with the H3 – became a symbol of the U.S. consumer’s inability to think about gas and conservation. Even Schwarzenegger, who is now California’s Republican governor and a promoter of the environment, sold off his personal fleet.

The steep decline in Hummer brand sales this year came on the heels of a 22% drop in 2007. In April alone, Hummer sales fell 46%, as the rise in fuel prices gained momentum."


By the way, SUV and truck sales are also down at Ford Motor Co. The iconic brand said Tuesday its U.S. sales fell 15 percent in May as consumers continued to abandon pickups and sport utility vehicles in favor of smaller cars. Pickup and SUV sales dropped 24 percent. Even the best-selling vehicles in the U.S. for 31 years, Ford’s F-series trucks, plummeted 31 percent. Ouch.