Hummer dealers are bracing for bad news as General Motors Corp. reviews its business case for the iconic SUV brand.
New Jersey-based GM dealer David Ferraez says he was getting ready to break ground on a brand new Hummer facility earlier this year when GM called him and advised him to wait. “They told several other dealers to wait also,” he says.
“GM acted honorably with stopping us from investing more in the franchise when they knew they were going to review the brand's status.”
That's a far cry from 2000, when GM allowed and even required Oldsmobile dealers to continue investing heavily in the brand after it knew its survival was unlikely.
Hammered by skyrocketing gas prices, Hummer sales have declined in 2008 more than any other GM brand.
May deliveries plummeted 62% vs. year-ago, according to Ward's data.
Through the first five months of the year, Hummer sales were 36% below like-2007.
GM will “continue to work with our dealers on the appropriate mix of advertising and incentives and dealer programs to keep them going (and) build franchise value, which we think is a critical part of this review,” says Mark LaNeve, vice president-North America sales, service and marketing. “We'll continue to play through, like we are on the truck products, while we're conducting this review.”Obervers say the dilemma is that Hummer has a passionate following and strong brand identity. But with rising gasoline prices and the resulting market trend away from SUVs, H3s and H2s are vanishing from consumer wish lists.
Ferraez says GM executives told a dealer council this week the auto maker is exploring ways to reposition Hummer with smaller vehicles that run on alternative fuels, instead of a stable of 4-wheeled, V-8-powered monsters.
News reports suggest potential buyers are lining up. They include India-based Mahindra & Mahindra Ltd. and Tata Motors Ltd., plus a wealthy Russian businessman. The brand could fetch $750 million, estimates say.
But dealers hope Hummer stays with GM. “The demand for Hummer is still there,” Ferraez says. “I would love for it to stay because it still has a place.”
Interestingly, Ferraez sold a fully loaded Hummer H2 for full sticker price a few hours after GM Chairman and CEO Rick Wagoner's comments about the brand to shareholders.
“(The customer) said he heard the Hummer brand might be going away,” Ferraez says. “He wanted to get it before they were gone.”
Says Dave Grundstrom, president of San Diego-based Marvin K. Brown Auto Center: “We think Hummer is a valuable brand with a huge following. There's certainly a need from a consumer standpoint.”
Grundstrom's store sells more than 200 Hummers annually. He says the review will enable GM to look at the brand “from a global perspective,” and therefore, it's a positive development.
“The old GM would react to this in nine months, but now they are leaner and meaner.”
with Cliff Banks
