The Incredible Shrinking Hummer

Hummer, more than any other auto brand, is a lightning rod for social and environmental issues, a love it or leave brand.

The square-shouldered vehicles attract promoters like California Governor Arnold Schwarzenegger and critics among environmentalists and oil independence activists.

Owners must be impervious to, or actually enjoy, the torrent of criticism:

"Wasssamatter? Hummer won't fit in the garage? Get a bigger house, loser!"

This polarizing, attention getting brand has more websites dedicated to knocking it than any other.

There is even a website built around the idea of flipping the bird at Hummer drivers.

Much of the anger is mis-directed.

The gas guzzling original Hummer H1, now discontinued, sold only about 12,000 units since it's introduction in 1992.

General Motors builds the H2 on a Chevy Colorado pickup chassis, and H3 on a Chevy Tahoe frame.

While the armored car styling and large metal recovery hooks on the front and back bumpers still say conspicuous consumption, these are just GM SUVs.

The relatively low powered, 5-cylinder, 4,900 pound H3 Hummers, representing about three-quarters of the brand's current sales, get roughly 15 mpg. This mileage beats many in this class.

Like other frame-rail SUVs, the brand is downsizing.

Hummer has begun to focus on broadening mainstream appeal beyond of the niche-market it came from.

Many thought the buyer demographics were too narrow to support a brand in the first place. Male (75%), early to mid-40s, rugged individualist in philosophy, and unconcerned about war-for-fuel or high gas prices: a shrinking pie.

But with the higher margins on Hummers as compared to Tahoes and Colorados, a profitable pie for GM.

Hummer is GM's 3rd strongest brand, right behind Chevy and Cadillac.

So the corporate strategy is to broaden Hummers' target demographic while softening the image and the underlying technology. Ads began targeting upscale urban women a couple TV seasons back.

Hummer is going global, recruiting importers and distributors in Europe and other markets. Production has begun at a plant in South Africa.

Overseas markets account for 10 percent of sales, and this share will keep rising. To succeed in foreign markets where gasoline is much more expensive, Hummer must downsize.

GM has confirmed that an even smaller Hummer, the H4, is in the works: a Jeep Wrangler competitor.

But the company will not pour money into product development, they have too many cash bleeding properties needing help.

When they do invest, I'd look for a crossover at the low end of the lineup.

Sales of Hummers have risen dramatically as the smaller H3 has moved to the fore.

Off the Road Again

Humvees's military heritage, real off-road capability, was brought to the civilian marketplace in 1992. GM bought the brand in 1999, and today's offerings retain relatively good off road capability.

When the old soccer mom minivan market has been taken over by soft SUVs, true 4 by 4's are an endangered species. All wheel drive is increasingly seen as an on-road option.

General Motors believes it can slowly change Hummer's image and improve fuel economy without diluting the iconic brand's two principal attributes, aggressive styling and off-road performance.

Plans for ethanol and clean-diesel powerplants are in the works.

Sorry folks, but true off-road four wheeling capability is inconsistent with fuel economy. High ground clearance, exposed heavy duty running gear, and vertical front profiles with astronomical coefficients of drag are doomed to extinction.

This will be caused not by environmental protest, but by economic reality.

Hummer Quality

I consider the Hummers' quality to be inconsistent with the price, which drifts toward $65K for an optioned H2.

JD Power's 2007 Initial Quality Study awarded the brand only 24 of 40 stars, an average showing.

Consumer Reports does not recommend either of the Hummers, giving them low scores for predicted reliability.

Competing high profile luxury SUVs such as the Lexus LX460 and Cadillac Escalade offer better quality.

Dealer Network

It's hard to miss the Quonset hut styled dealerships, some with Hummer vehicles "parked" on the roof.

The typical dealership is hardly humming, moving only about 40 vehicles a month, but high margins keep dealers happy.

Hummer needs more than two products (H2 and H3), to be a stand alone brand and support dealerships. H3 sales are carrying the brand.

To build a Hummer franchise, many dealers invested as much as $10 million for the distinctive quonset hut showrooms and out-back test tracks. Dealers need new models to see a return on their investments.

For 2008, Hummer H3 SUT, a new crew cab truck is planned.

H3 supply is low, around 43 days inventory.

Stocks of the heavier H2 run about twice that, borderline high. This vehicle once had a waiting list and additional dealer markup to $10K. Demand has leveled off, and the Indiana plant has laid off 10% of the workforce.

Old Soldiers Never Die, They just fade Away

Because Hummers engineering is based on existing GM platforms and drivetrains, and they have great margins, GM will continue to adapt Hummer.

Here is an example of platform sharing which is not badge engineering, that at least deserves two cheers.

But now that Congress is serious about raising corporate average fuel economy (CAFE) standards, Detroit has a fuel economy problem.

Even Hummer enthusiast Arnold Schwarzenegger, now competing in the global political arena, has moved center and made noises that sound like an environmentalist.

Hummer will evolve to survive, which means reduced off-road capability and performance, and a softer clientèle and image.

Hasta la Vista, Baby

News-Blog Updates for Hummer

11/09/07 Hummer Ads Refocus Image: Jim Dandy to the Rescue