The Bilingual Gringo
06-04-08, 05:07 PM
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaUaK7ZYogGE&refer=home
General Motors Corp. said today it may drop its Hummer unit, as surging gasoline prices turn buyers away from the hulking sport-utility vehicles that generated profit for the automaker and criticism from environmentalists.
Hummer vehicles may be redesigned, or all or part of the division may be sold, GM said today. The company didn't say when it would make a decision.
The announcement adds to evidence of an end to the days of booming sales of fuel-thirsty SUVs as gasoline approaches $4 a gallon. U.S. sales for SUVs are down 10 percent this year, after rising 3.7 percent in 2007, spurring Detroit-based GM and Ford Motor Co. to pare production of what had been some of their most profitable lines of vehicles.
"With the gas prices where they are and the stigma of having such a large vehicle, I think most U.S. consumers would feel they are better off not having a Hummer,'' said Jesse Toprak, an analyst with Edmunds.com in Santa Monica, California. "Unless GM can make a much smaller version of the Hummer, I don't think it can be much more than a niche vehicle here.''
Hummer's H3 gets 14 miles per gallon in city driving, the same as a Chevrolet Tahoe SUV. By comparison, Toyota Motor Corp.'s Prius gets 48 mpg in city driving.
Deliveries for the smallest cars have jumped 33 percent this year.
Peak Sales
The surge in fuel costs represents "a structural change, not just a cyclical change,'' GM Chief Executive Officer Rick Wagoner told reporters today.
When GM acquired rights to the brand from privately held A.M. General LLC in late 1999 for an undisclosed sum, industry SUV sales were regularly rising more than 14 percent annually and gasoline prices were less than a third of today's prices.
Hummer sales peaked in 2006 at 71,524 units, before dropping 22 percent last year, according to Autodata Corp. Sales of the SUVs, which start at about $31,000 for the smaller H3 model, fell 36 percent this year in the first five months and were down 60 percent in May alone, according to a GM statement today.
In its first two years under GM, Hummer sold only the $140,000 H1, the five-ton SUV patterned after an all-terrain military vehicle and popularized by actor Arnold Schwarzenegger. The H1 and its successor, the smaller H2, both were too heavy to come under U.S. fuel-economy standards, GM spokesman Nick Richards said in an interview.
As governor of California, Schwarzenegger later began driving a Hummer that ran on hydrogen and another using biofuel as he focused his agenda on environmental measures.
Fuel-Consumption Issues
The automaker drew fire when it began marketing model Hummers as free toy giveaways in McDonald's Corp. children's meals in 2006. Groups including the Sierra Club said the promotion failed to teach children environmental responsibility.
Owners such as Vijay Verma, a member of the Carolina Hummer Owners Group and an H1 owner, said they were disappointed by GM's announcement.
"GM has lost the primary focus of the Hummer vehicles, which was to provide effective recreational use,'' he said in an interview. "Yes, you have fuel consumption issues, but there are a lot more vehicles that do more against the environment.''
Hummer sales jumped from 768 in 2001 to 19,581 in 2002 after the introduction of the H2, which was about 2,000 pounds lighter than the H1.
The H2 measures about 204 inches (518 centimeters) in length, compared with 222 inches for a Chevrolet Suburban SUV, though the Hummer is 1,400 pounds heavier.
Overseas Demand
"The good old days'' of improving sales of the SUVs each month are gone, said Greg Meyer, general manager of Hummer of Cincinnati in Ohio. "With the selling environment as it is, it's definitely been tougher.''
He said he was surprised by GM's announcement, and said a change in management or in the vehicle lineup could "really be a problem for us and our loyal customers.''
While Hummer sales have faltered on GM's home turf, consumers in markets overseas such as Japan, where GM recently introduced the brand, helped to boost sales 61 percent in the first three months to 2,463 units.
"There's a huge potential for Hummer in emerging markets,'' said Toprak of Edmunds.com. "It's still a status symbol in many countries, so that would be an aspect GM would miss.''
GM has Hummer assembly plants in Indiana, Louisiana, South Africa and Russia.
The automaker halted production of the original Hummer in 2006 as sales trickled to fewer than 100 annually, from a peak of 875 units. The plant in Mishawaka, Indiana, now only makes H2s.
GM has estimated the H2 model gets about 13 mpg on average.
General Motors Corp. said today it may drop its Hummer unit, as surging gasoline prices turn buyers away from the hulking sport-utility vehicles that generated profit for the automaker and criticism from environmentalists.
Hummer vehicles may be redesigned, or all or part of the division may be sold, GM said today. The company didn't say when it would make a decision.
The announcement adds to evidence of an end to the days of booming sales of fuel-thirsty SUVs as gasoline approaches $4 a gallon. U.S. sales for SUVs are down 10 percent this year, after rising 3.7 percent in 2007, spurring Detroit-based GM and Ford Motor Co. to pare production of what had been some of their most profitable lines of vehicles.
"With the gas prices where they are and the stigma of having such a large vehicle, I think most U.S. consumers would feel they are better off not having a Hummer,'' said Jesse Toprak, an analyst with Edmunds.com in Santa Monica, California. "Unless GM can make a much smaller version of the Hummer, I don't think it can be much more than a niche vehicle here.''
Hummer's H3 gets 14 miles per gallon in city driving, the same as a Chevrolet Tahoe SUV. By comparison, Toyota Motor Corp.'s Prius gets 48 mpg in city driving.
Deliveries for the smallest cars have jumped 33 percent this year.
Peak Sales
The surge in fuel costs represents "a structural change, not just a cyclical change,'' GM Chief Executive Officer Rick Wagoner told reporters today.
When GM acquired rights to the brand from privately held A.M. General LLC in late 1999 for an undisclosed sum, industry SUV sales were regularly rising more than 14 percent annually and gasoline prices were less than a third of today's prices.
Hummer sales peaked in 2006 at 71,524 units, before dropping 22 percent last year, according to Autodata Corp. Sales of the SUVs, which start at about $31,000 for the smaller H3 model, fell 36 percent this year in the first five months and were down 60 percent in May alone, according to a GM statement today.
In its first two years under GM, Hummer sold only the $140,000 H1, the five-ton SUV patterned after an all-terrain military vehicle and popularized by actor Arnold Schwarzenegger. The H1 and its successor, the smaller H2, both were too heavy to come under U.S. fuel-economy standards, GM spokesman Nick Richards said in an interview.
As governor of California, Schwarzenegger later began driving a Hummer that ran on hydrogen and another using biofuel as he focused his agenda on environmental measures.
Fuel-Consumption Issues
The automaker drew fire when it began marketing model Hummers as free toy giveaways in McDonald's Corp. children's meals in 2006. Groups including the Sierra Club said the promotion failed to teach children environmental responsibility.
Owners such as Vijay Verma, a member of the Carolina Hummer Owners Group and an H1 owner, said they were disappointed by GM's announcement.
"GM has lost the primary focus of the Hummer vehicles, which was to provide effective recreational use,'' he said in an interview. "Yes, you have fuel consumption issues, but there are a lot more vehicles that do more against the environment.''
Hummer sales jumped from 768 in 2001 to 19,581 in 2002 after the introduction of the H2, which was about 2,000 pounds lighter than the H1.
The H2 measures about 204 inches (518 centimeters) in length, compared with 222 inches for a Chevrolet Suburban SUV, though the Hummer is 1,400 pounds heavier.
Overseas Demand
"The good old days'' of improving sales of the SUVs each month are gone, said Greg Meyer, general manager of Hummer of Cincinnati in Ohio. "With the selling environment as it is, it's definitely been tougher.''
He said he was surprised by GM's announcement, and said a change in management or in the vehicle lineup could "really be a problem for us and our loyal customers.''
While Hummer sales have faltered on GM's home turf, consumers in markets overseas such as Japan, where GM recently introduced the brand, helped to boost sales 61 percent in the first three months to 2,463 units.
"There's a huge potential for Hummer in emerging markets,'' said Toprak of Edmunds.com. "It's still a status symbol in many countries, so that would be an aspect GM would miss.''
GM has Hummer assembly plants in Indiana, Louisiana, South Africa and Russia.
The automaker halted production of the original Hummer in 2006 as sales trickled to fewer than 100 annually, from a peak of 875 units. The plant in Mishawaka, Indiana, now only makes H2s.
GM has estimated the H2 model gets about 13 mpg on average.