GM Sells Hummer. Good Riddance.

Posted by: David Welch on October 08, 2009

General Motors it will unload its Hummer brand to China’s Sichuan Tengzhong Heavy Industrial Machinery. GM said on Oct. 9 that it agreed to sell the brand. The deal should be done by the end of the year. And good riddance.

Hummer started hot out of the gate when GM launched the H2 in 2002. Hummer enthusiasts loved the more suburban-appropriate SUV and the militaristic beast made GM a lot of money. But the company simply couldn’t afford to build more new models for the brand and didn’t have the cash to market what the brand had to sell. GM pumped up Hummer’s sales with the H3, but the first iteration of the truck was underpowered. By the time GM got a version with a bigger engine, Hummer had lost some of its buzz and fuel prices were on the rise. GM also arguably took Hummer too far downscale by putting the Hummer name on smaller vehicles when its core audience loved its audacious size, military image, and off-road capabilities.

The brand was another problem for GM. It came to be a lightning for environmentalists, who saw the SUV brand as further proof that Detroit didn’t get America’s new-found green attitude. The greening of America may be more hype than reality, but there’s no question that GM lost the technology and green mantle to Toyota after killing the EV1 electric car and then acquiring Hummer. Bloomberg News says that GM could get $150 million for the brand. Given GM’s cash needs, that money won’t go far. But getting Hummer out of the portfolio will help GM focus on its core brands. The company will also be better able to tell a green story with the Chevrolet Volt now that Hummer is on the way out.

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Reader Comments

Ervin O. Raab

October 8, 2009 07:28 PM

How much did GM make spend in the original investment to buy this dinosaur?

Looks like in the long run, the US Taxpayer took the negative return hit...right in the pocket book.

Where is Roger, now, with all the "visionaries" who drove GM right into the ground.

Ervin O. Raab

Ervin O. Raab

October 8, 2009 07:28 PM

How much did GM make spend in the original investment to buy this dinosaur?

Looks like in the long run, the US Taxpayer took the negative return hit...right in the pocket book.

Where is Roger, now, with all the "visionaries" who drove GM right into the ground.

Ervin O. Raab

Jambo

October 8, 2009 11:57 PM

It's a shame GM is in Detroit, or the big 3, for that matter. If they were in Silicon Valley, they would have been a lot more sensitive and aware of the latest changes. By being in Detroit, they insulated themselves and buried their head in the sand, pretending it was 1950, when GM ruled the planet. Now they pay dearly for their lack of vision. They still have a chance if they relocated to an innovative place like Silicon Valley. Instead, they will die in Detroit in less than 2-3 years.

steve

October 9, 2009 01:17 AM

GM has had extraordinary trouble selling their brands. Penske deal with Saturn feel thru, Saab still has not gone thru...Opel was such a mess, and the Chinese govt is making the Hummer deal hard.
GM will breathe such a sigh of relief when these distractions are finished and they can finally just focus on a few core brands.. with Chevy as the clear flagship.

Ballbuster

October 9, 2009 04:05 AM

Along with the sale of the Hummer brand to the Chinese, Government Motors(GM) should also sell off the relics of old GM: Cadillac, GMC, Chevy, and Buick. Since the clowns at GM don't know how to design and manufacture quality cars anymore, Fritz, Welburn, and Lutz should use the sales proceeds and open up a circus where their natural talents are best utilized. As to the early optimism of GM on the Hummer concept, how could GM management think the Hummer brand will succeed when their legacy brands such as Chevy, Pontiac, Oldsmobile, Buick, Cadillac, and even Saturn were walking zombies. Having embarrassed themselves in the performance of "The Greatest Disaster Auto Bankruptcy Show on Earth," GM's three clowns should now close up the tent and go home but only after refunding the $50billion to the taxpayers.

Ballbuster 2

October 9, 2009 09:39 AM

Look at the age of the "veteran" board members calling the shots for G.M. They are as out of touch as much as the U.S.Senate for Pete's sake!
As much as I would like to see them succeed,they still don't listen to the employees who actually DO the work.
Ashame..they had "change" when Saturn was launched-and starved it for product until it failed...just as G.M. has done-failed.

ps

October 9, 2009 09:51 AM

If there is one brand that tarnished GM's image it's Hummer. In spite of strides in carmaking, especially the execution and design of attractive and fuel efficient cars, when people thnk GM they think Hummer, Escalade, Suburban etc. and the death of the EV1. Toyota can make Tundras, Sequoias and other behemoths but their image is burnished by the Prius. The GM strategists must be the absolute worst visionaries ever.

GM (Greed for Money)

October 9, 2009 01:18 PM

The only reason GM bought Hummer is because they are a bunch of greedy money gobbling fools with no sense of social corporate responsibilty. At the time they purchased Hummer they were working on the EV1, however they did not wish to put the time and money into fixing the EV1's "problems" because the cars would not sell for as much as the Hummer obviously, and thus less money in their pocket. Well they have lost customers for life because of that issue and just because they are selling Hummer now does not and will never change their image.

Cryos

October 10, 2009 07:03 PM

GM (Greed for Money)
October 9, 2009 01:18 PM

The only reason GM bought Hummer is because they are a bunch of greedy money gobbling fools with no sense of social corporate responsibilty. At the time they purchased Hummer they were working on the EV1, however they did not wish to put the time and money into fixing the EV1's "problems" because the cars would not sell for as much as the Hummer obviously, and thus less money in their pocket. Well they have lost customers for life because of that issue and just because they are selling Hummer now does not and will never change their image.
=====================================
Your analysis is seriously lacking. Are you aware that GM, Ford and Chrysler were losing money on low end or small cars due to labor costs from the union? The only way they could make money was to sell luxury, sports or SUV vehicles.

These are the sort of facts absent from the msm. If GM loses money selling EV1s do you think it matters that they are "doing the right thing" while going bankrupt? They merely postponed the bankruptcy.

All the liberals cheering for the "new GM" who exactly is going to buy their cars? 80% of liberals drive Hondas or Toyotas (look at the percentages of Obama stickers on Hondas and Toyotas for example) and conservatives won't buy a government car.

Liberals tried to give the UAW a payback with GM and did however the workers pensions will go right down the dump. The government might try to coerce fleet sales of GMs to themselves but thats the best they will do.

The corrupt and politically motivated GM and Chrysler bankruptcies however will be a good windfall to Ford.

rockstar

October 12, 2009 04:50 PM

Say what you will but HUMMER stands for The American Muscle this country was built on!

ps

October 13, 2009 08:09 AM

Cryos- With the EV1 you have to look beyond cost. When Toyota first marketed the Prius, Detroit scoffed. The Prius has been a money loser. But what the Prius gave Toyota was a green image in addition to its quality image. In spite of recent quality issues and selling Tundras and other behemoths, their image is pretty much bullet-proof. Indirect effect is sometimes worth more than dollars and cents. The bean counters in Detroit that ran car companies are absolutely clueless, and likely MBAs too.

RSBaker

October 13, 2009 05:22 PM

A correction is in order GM offered the Civilian version of the Military HUMVEE called the Hummer H1 and then offered the Chevy Tahoe sized H2 & H2T and ultimatley the smaller H3 and H3T.

JSSavage

November 3, 2009 06:43 PM

It would be nice if your publication would get off of the enviro propaganda and actually dealt with FACTS! Hummer's problem was that the much larger GM could not fund it.

GM, like Ford, Chrysler, Toyota and Nissan are in deep financial trouble because of the building of financially unviable economy cars and so-called "green cars".

GM spent about $800 Mln on the LOSER EV-1 that ONLY found 252 people who wanted one! Honda found only 50 buyers for the contemporary EV Plus. Toyota is now some $38 Bln in debt with about $18 Bln in cash and expected to lose another $8.9 Bln by the end of their financial year (March 2010)! Thanks Prius! Smart has cost Daimler billions and is failing in the market place. GM and Honda can not get their Hybrids much above the 2,000 unit a month rate - some 2-3 percent of their sales. Where is all the demand for them?

Like BLMC, Hillman. Borgward, AMC (Alliance) and Kaiser (Henry J), GM and the rest are discovering there is no money in economy cars! The sad irony is that freed of GM, Hummer will probably prove successful!

ps

November 4, 2009 09:38 AM

You miss the point- It is true the EV1 was a money loser but GM's ham handed way of forcibly taking them and junking them while building Hummers and Escalades hammered their image, especially in the northeast and west coast, 2 areas that GM needs to recpature if they hope to improve their outlook. The Prius and Insight, espcially the Prius, has had a halo effect on Toyota and Honda. They can build Hummer equivalents if they want (Toyota's behemoths are close)and still get a free pass from the public based on their green image and quality image. I'm not saying the images are deserved but they are the perceptions in the minds of a large chiunk of the buyiing public, especially in the northeast and sunny cal.

JSSavage

November 4, 2009 09:02 PM

Actually, YOU miss the POINT! This is supposed to be a BUSINESS publication! EV-1 was a FINANCIAL disaster. Despite $10 grand per car of taxpayer's subsidies, the vehicles still did not sell and GM had to dispose of them when the leases of the few (252) they DID manage to "sell" came due! Where was the DEMAND? Honda found 50 people for the EV Plus, where was the DEMAND?

The first Insight was another failure. You are aware that financial losses are NOT a good thing, aren't you? The current Insight is only faring somewhat better. Total sales of Insights in June was some 2,079 units out of 100,420 units total! About 2 percent. This is a success for you?

Ford is touting the success of its Hybrids this year. By mid October (14th) they had sold some 26,016 hybrids out of a total of roughly 1,326,000 cars. That is a DAMNING indictment.

Smart sales down 70 percent in October to 661 units. Even worse than in September when it was down some 54 percent at 814 units. Economy cars in general down some 60 percent prior to "C4C".

Prius sales were down some 30 percent prior to "Cash 4 Clunkers" and they do not make money on the car. The "halo" effect is not going to help Toyota if they have to go through a financial restructuring - which I am hoping they will avoid. Worse yet, it is contributing directly to the possibility of one! I should say one thing here: No, Prius alone is not totally responsible for Toyota's deep financial problem, but it is a factor being ignored by people like you.

As a NATIVE Californian (who has lived here my whole life) I bust up laughing at your belief that Hummer hurt GM's image. You should see all the SUVs out here! Hummer has a positive image with most young white and hispanic males - its target group, who dislike the Prius.

The Escalade was GM's LATE response to the swift selling Lincoln Navigator - which I underestimated as well at the time. Ford made huge profits from it and the Explorer and as a result had some $33 Bln in the bank in late 1999 compared to about $24 Bln for GM and Toyota each. EV-1 was a mistake!

Hummer's REAL problem is that as a small company it does NOT need TWO models (H2 and H3) competing for the same buyer. H2 should be dropped.

As an automotive journalist and analyst who had a collection of 2-cylinder economy cars, I am hardly opposed to economy cars. However, unlike yourself, it is not a religion with me and I can read the figures. As a writer for BusinessWeek, you need to learn to do the same.

Thank you,

J S SAVAGE

ps

November 11, 2009 12:15 PM

JS Savage-
I also lived on the west coast for several years. I agree about the number of SUV's. But,US autos, especially recent models were few and far between. Detroit never hedged their bets and were caught off guard when oil started shooting thru the ceiling. I terms of the EV1, I did not say it was a success, I indicated that GM's ham handed approach to getting them off the road garnered tons of negative publicity. Also as an automotive analyst do you factor in the halo effect? It's doing Toyota great with the Prius. And as far as 2 cylinder cars, I'm not advocating Trabants on the streets. Bottom line is there is no inbetween with Hummer, people love 'em or hate 'em. I'm in the latter.
regards,PS
PS

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Want the straight scoop on the auto industry? Detroit bureau chief David Welch , Dexter Roberts and Ian Rowley bring daily scoop, keen observations and provocative perspective on the auto business from around the globe. Read their take on such weighty issues as Detroit’s attempt at a comeback, Toyota’s quest for dominance and the search for an efficient car.

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