WSJ - GM Adds Incentives As Hummer Sales Decline

[Klaus]

GM Adds Incentives
As Hummer Sales Decline

By SHARON SILKE CARTY
DOW JONES NEWSWIRES
August 19, 2004; Page D2

Sales of the Hummer H2 -- General Motors Corp.'s incarnation of the more rugged military-style Hummer H1 -- are down nearly 22% year to date, forcing the company to pile on incentives on the $50,000 vehicle.

The time it takes dealers to move the vehicles off the lot has slowed considerably. Power Information Network, an affiliate of industry-tracker J.D. Power & Associates, said the number of days it takes dealers to sell Hummers doubled to 62 in the second quarter from a year earlier.

Customers in GM's Western region, which stretches from California to parts of Kansas and South Dakota, can receive $1,500 cash back and another $1,500 if they use GM to finance their 2004 or 2005 model H2. Customers in GM's South Central region, which includes Texas, can receive a similar deal, but only on 2004 models. Buyers in other regions are getting $1,000 cash back and a $1,000 bonus for using GMAC for their loan. GM employees have the option to lease Hummers for $499 a month, dealers said.

GM also is giving money to dealers as an incentive to move the trucks -- $3,000 on 2004 models and $2,000 on 2005 models, according to Edmunds.com. Buyers often can negotiate for part of that money.

Overall, demand for sport-utility vehicles has slowed recently, according to Power Information Network. In July, it took dealers 72 days to sell an SUV, compared with 60 days a year earlier, the group said in a recent report. Luxury SUV demand deteriorated the most, taking 50 days to sell, compared with 34 days a year ago. Incentives on SUVs rose 12% in July from June, almost twice the industry increase.

Despite the lower sales, the H2 still has its fans. When Jenn Gruber dropped her son's girlfriend off at cheerleading practice this month, she was a bit taken aback by all the attention the H2 received. "The kids, they all think it's the greatest thing," the Germansville, Pa., resident said of the white Hummer H2 she was driving. The junior-high cheerleaders gathered around the truck her husband bought last year, peeking in and asking to sit inside.

Art Spinella, president of CNW Marketing Research, said part of the reason demand has fallen off is because anyone who wanted a Hummer probably has bought one by now. "You saturate the potential market for vehicles like that pretty quickly," he said.

Mr. Spinella said the Hummer has a very young "aspiration age" -- meaning there are a lot of teenagers who think it would be very cool to own a Hummer. The truck scores well with older buyers -- in their late 40s and 50s -- who want to feel young. The problem is that there isn't enough interest from people in their 20s and 30s to keep sales going. "You can't sustain high volume if you don't have a pretty even aspiration curve when you're at the high end of the market," he said. "That's what happens when you see vehicles burn out quickly."

GM says the sales decline looks worse than it should because the company is facing tough comparisons with last year, when sales exceeded expectations. "We've said we would sell between 20,000 and 30,000 a year, and we're selling at a 25,000 annual rate right now," said Pete Ternes, a spokesman for GM. "It's not a vehicle for everybody anyway. We want to keep the aspirational aspect up there by keeping quantities limited."

The auto maker plans on bringing the brand a bit more to the masses. GM said this month it is planning to offer the H3 -- a midsize SUV -- in the first half of 2005. Although the company hasn't released pricing yet for the vehicle, some industry watchers estimate it will cost $30,000 to $35,000.

[Klaus]

GM Adds Incentives
As Hummer Sales Decline

By SHARON SILKE CARTY
DOW JONES NEWSWIRES
August 19, 2004; Page D2

Sales of the Hummer H2 -- General Motors Corp.'s incarnation of the more rugged military-style Hummer H1 -- are down nearly 22% year to date, forcing the company to pile on incentives on the $50,000 vehicle.

The time it takes dealers to move the vehicles off the lot has slowed considerably. Power Information Network, an affiliate of industry-tracker J.D. Power & Associates, said the number of days it takes dealers to sell Hummers doubled to 62 in the second quarter from a year earlier.

Customers in GM's Western region, which stretches from California to parts of Kansas and South Dakota, can receive $1,500 cash back and another $1,500 if they use GM to finance their 2004 or 2005 model H2. Customers in GM's South Central region, which includes Texas, can receive a similar deal, but only on 2004 models. Buyers in other regions are getting $1,000 cash back and a $1,000 bonus for using GMAC for their loan. GM employees have the option to lease Hummers for $499 a month, dealers said.

GM also is giving money to dealers as an incentive to move the trucks -- $3,000 on 2004 models and $2,000 on 2005 models, according to Edmunds.com. Buyers often can negotiate for part of that money.

Overall, demand for sport-utility vehicles has slowed recently, according to Power Information Network. In July, it took dealers 72 days to sell an SUV, compared with 60 days a year earlier, the group said in a recent report. Luxury SUV demand deteriorated the most, taking 50 days to sell, compared with 34 days a year ago. Incentives on SUVs rose 12% in July from June, almost twice the industry increase.

Despite the lower sales, the H2 still has its fans. When Jenn Gruber dropped her son's girlfriend off at cheerleading practice this month, she was a bit taken aback by all the attention the H2 received. "The kids, they all think it's the greatest thing," the Germansville, Pa., resident said of the white Hummer H2 she was driving. The junior-high cheerleaders gathered around the truck her husband bought last year, peeking in and asking to sit inside.

Art Spinella, president of CNW Marketing Research, said part of the reason demand has fallen off is because anyone who wanted a Hummer probably has bought one by now. "You saturate the potential market for vehicles like that pretty quickly," he said.

Mr. Spinella said the Hummer has a very young "aspiration age" -- meaning there are a lot of teenagers who think it would be very cool to own a Hummer. The truck scores well with older buyers -- in their late 40s and 50s -- who want to feel young. The problem is that there isn't enough interest from people in their 20s and 30s to keep sales going. "You can't sustain high volume if you don't have a pretty even aspiration curve when you're at the high end of the market," he said. "That's what happens when you see vehicles burn out quickly."

GM says the sales decline looks worse than it should because the company is facing tough comparisons with last year, when sales exceeded expectations. "We've said we would sell between 20,000 and 30,000 a year, and we're selling at a 25,000 annual rate right now," said Pete Ternes, a spokesman for GM. "It's not a vehicle for everybody anyway. We want to keep the aspirational aspect up there by keeping quantities limited."

The auto maker plans on bringing the brand a bit more to the masses. GM said this month it is planning to offer the H3 -- a midsize SUV -- in the first half of 2005. Although the company hasn't released pricing yet for the vehicle, some industry watchers estimate it will cost $30,000 to $35,000.

[Klaus]

GM Adds Incentives
As Hummer Sales Decline

By SHARON SILKE CARTY
DOW JONES NEWSWIRES
August 19, 2004; Page D2

Sales of the Hummer H2 -- General Motors Corp.'s incarnation of the more rugged military-style Hummer H1 -- are down nearly 22% year to date, forcing the company to pile on incentives on the $50,000 vehicle.

The time it takes dealers to move the vehicles off the lot has slowed considerably. Power Information Network, an affiliate of industry-tracker J.D. Power & Associates, said the number of days it takes dealers to sell Hummers doubled to 62 in the second quarter from a year earlier.

Customers in GM's Western region, which stretches from California to parts of Kansas and South Dakota, can receive $1,500 cash back and another $1,500 if they use GM to finance their 2004 or 2005 model H2. Customers in GM's South Central region, which includes Texas, can receive a similar deal, but only on 2004 models. Buyers in other regions are getting $1,000 cash back and a $1,000 bonus for using GMAC for their loan. GM employees have the option to lease Hummers for $499 a month, dealers said.

GM also is giving money to dealers as an incentive to move the trucks -- $3,000 on 2004 models and $2,000 on 2005 models, according to Edmunds.com. Buyers often can negotiate for part of that money.

Overall, demand for sport-utility vehicles has slowed recently, according to Power Information Network. In July, it took dealers 72 days to sell an SUV, compared with 60 days a year earlier, the group said in a recent report. Luxury SUV demand deteriorated the most, taking 50 days to sell, compared with 34 days a year ago. Incentives on SUVs rose 12% in July from June, almost twice the industry increase.

Despite the lower sales, the H2 still has its fans. When Jenn Gruber dropped her son's girlfriend off at cheerleading practice this month, she was a bit taken aback by all the attention the H2 received. "The kids, they all think it's the greatest thing," the Germansville, Pa., resident said of the white Hummer H2 she was driving. The junior-high cheerleaders gathered around the truck her husband bought last year, peeking in and asking to sit inside.

Art Spinella, president of CNW Marketing Research, said part of the reason demand has fallen off is because anyone who wanted a Hummer probably has bought one by now. "You saturate the potential market for vehicles like that pretty quickly," he said.

Mr. Spinella said the Hummer has a very young "aspiration age" -- meaning there are a lot of teenagers who think it would be very cool to own a Hummer. The truck scores well with older buyers -- in their late 40s and 50s -- who want to feel young. The problem is that there isn't enough interest from people in their 20s and 30s to keep sales going. "You can't sustain high volume if you don't have a pretty even aspiration curve when you're at the high end of the market," he said. "That's what happens when you see vehicles burn out quickly."

GM says the sales decline looks worse than it should because the company is facing tough comparisons with last year, when sales exceeded expectations. "We've said we would sell between 20,000 and 30,000 a year, and we're selling at a 25,000 annual rate right now," said Pete Ternes, a spokesman for GM. "It's not a vehicle for everybody anyway. We want to keep the aspirational aspect up there by keeping quantities limited."

The auto maker plans on bringing the brand a bit more to the masses. GM said this month it is planning to offer the H3 -- a midsize SUV -- in the first half of 2005. Although the company hasn't released pricing yet for the vehicle, some industry watchers estimate it will cost $30,000 to $35,000.