GM Has a HUMMER Problem

June 3, 2008
2008 HUMMER H2

2008 HUMMER H2

This morning's shareholders' meeting with General Motors held a few surprises, with GM CEO Rick Wagoner announcing a new Chevrolet compact car to be produced in the U.S., and confirming that GM's board had funded production money for the Volt plug-in hybrid.

Mentioned almost off-hand, but to no one's surprise, was GM's "strategic review" of the HUMMER brand. "GM is undertaking a strategic review of the Hummer brand to determine its fit within the GM portfolio," the company said in its official release. "At this point, the company is considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand." At one point during this morning's call, Wagoner openly sought ideas on what to do with the troublesome brand, which relies completely on sales of big, heavy trucks.

The problem is, there is no solution in today's car world for HUMMER. A few years ago, I wrote a book about the brand, and how it perfectly captured the essence of the early part of the decade--and how, for better or worse, it was tied to the success of the war in Iraq and to cheap gas. Back in 2001, when GM launched its first H2 HUMMERs, it seemed like brilliant strategy to buy the rights to the brand, develop a couple of vehicles and find a way to repackage GM's full-size and mid-size truck pieces in a new way.

It was brilliant--for about a year and a half. The oddity of seeing HUMMER commercials on CNN followed shortly by reports from the war front itself might have been jarring for everyday truck shoppers, but the real breaking point was last year, when the price of gas passed $3 a gallon and filling up an H2 became a $75 proposition. At $4 a gallon, it's laughable to think about using the H2 as a commuter vehicle; even the 20-mpg H3 is a sacrifice for some drivers. The HUMMER was barely relevant to driving in 2001, and today it's almost totally disconnected from the world at large.

Now GM is making the first noises about offloading the brand--long after dealers who invested in showrooms in a unique HUMMER style, and drivers who bought into 10-mpg H2s, had to reconsider their folly. GM may have a problem trying to figure out what to do with the brand itself--whether to let it die, to make a whole range of smaller vehicles, or to let some enterprising Indian automaker snap it up for change--but it might have a bigger problem with truck owners and dealers who have been taken along for HUMMER's brief, meteoric ride. Those customers might not be so willing to follow Chevrolet into the compact-car market or to buy another big truck, and they're vital to GM's business. So are the dealers.

Former GM brand czar Ron Zarrella once told HUMMER's executive team that he thought it was a one-hit wonder, that HUMMER wasn't a brand, it was a single vehicle with limited appeal. In hindsight, that could be precisely right.

Since Wagoner's opened up the floor to find out what to do with his billion-dollar baby, I'm opening up the comments section to you: What do you think GM should do with HUMMER? Shrink it, redevelop it, or cut it off completely?

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