The Hummer Bummer

Posted by: David Welch on August 22, 2008

At a media event in Lordstown, Ohio, earlier this week, General Motors Chairman and CEO Rick Wagoner told reporters that the Hummer brand has some interested suitors. GM said earlier in the year that the company plans to sell it. The reasons are easy enough to see. GM can ill afford to feed its eight brands with new vehicles and marketing schemes. Hummer, with its line of militaristic gas guzzlers, is out of step with the times. So GM wants out.

But who will buy it? News reports already say that automakers in China and India have begged off. Who wants a gas hog brand when oil prices keep going up? But there’s another problem Hummer has. Its dealer network. At the beginning of the decade, when gasoline was cheap and big suvs were en vogue, Hummer was hotter than a $2 pistol. Dealers ponied up as much as $15 million to build the flashy Quonset hut-styled showrooms on expensive real estate for the new premium, badder-than-bad suv brand. They expected GM to build a full line of Hummers so that the dealers could pump up sales of expensive utes and fetch a fat return on their investment.

With Hummer sales off 40% in the U.S.—by far its biggest market—keeping those dealers happy will be some trick. Any buyer will have to invest hundreds of million, if not billions, to upgrade current models and come up with some new ones. Otherwise, they’ll be trying to sell Hummers through a network of angry retailers. Getting out of Hummer isn’t easy, either. If the brand’s buyer failed and wanted to walk away, they could be subject to lawsuits from dealers who invested in the franchise. GM coughed up more than $1 billion when it closed down Oldsmobile a few years ago. With a deterrent like that, it’ll take some big discounts to sell this franchise.

Reader Comments

robert d.

August 22, 2008 9:08 PM

Here in Vegas, I see new Hummers every every day, with their temporary plates. It's just amazing to think that they go 12 miles, and just spent 4 bucks. Can't imagine the trade-in value. Would be hard to find another dope wanting a used Hummer,too-then we're talking about Vegas-filled with tip dependent dumbbells...

ElectricVehicle

August 22, 2008 10:54 PM

GM deserves what it gets. If it didn't have the foresight to see the flash-in-pan value that Hummer really had, then they deserve to take the loss on the brand. This is from the same company that 'owned' the market with the electric vehicles in the late '90s but carnivorously reclaimed and destroyed the leading EV on the market. If GM had stayed with the technology they would still be the number 1 auto maker in the world.

HERBERT W JACOBSON

August 24, 2008 7:16 PM

IT'S TRUE THE HUMMER IS A BUMMER, AND HOPEFULY ALL THOSE EGO BUYERS , WILL REALIZE THE ERRORS OF THEIR SINS!!!!

Tanyaa

September 8, 2008 12:08 AM

Clay compares his 2006 Hummer H3 to the 2003 Ford Expedition, now owned by the city, that was driven by former Mayor Scott King. Taxpayers spent more than $9,000 a year for the car, city records show. The city is leasing Clay’s Hummer for $5,000 a year.
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Tanyaa
car auctions

Frederick

May 26, 2009 10:28 AM

Don't worry people will still buy it. I think there will always be a market for these gas guzzlers. I think the decline in sales is across the board, yes people are moving to smaller cheaper to run cars but there will always be the niche market.

Regards,
Frederick
http://1407autopark.com

John

December 23, 2009 12:56 AM

Hummer right a bummer Sexy H3 Looks clean. Can't go wrong with black rims on a white suv.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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