Dealers report difficulty keeping $50,000 vehicle in stock

[maybe some day...]

Dealers report difficulty keeping $50,000 vehicle in stock
By Janis Mara
BUSINESS WRITER - Oakland Tribune

Sunday, June 01, 2003 - THEY'RE SQUARE, they guzzle gas, they cost $50,000 and no one ever accused them of being beautiful. They're Hummer H2s, and they're flying out of auto showrooms faster than they fly down the highway.

Jumping on the bandwagon, a new Hummer dealership opened in mid-May. Hummer of Pleasanton is owned by the same company that owns Saturn of Pleasanton.

Currently operating in a temporary site on Rosewood Drive, "We pre-sold a number of Hummers -- close to 20," said Thom Reinstein, the marketing director for Hummer of Pleasanton.

The dealership opened with 70 cars on the lot, "the largest inventory in the East Bay," according to Reinstein.

He said there are about 55 H2s on the lot, with about 15 having sold.

Reinstein said the dealership's permanent site across the freeway "will be an absolute showplace. It will have a test track and a Hummer suspended from the ceiling."

So what's the appeal of the H2?

"First, it's an enormously capable vehicle," said Dan McGinn, president and CEO of the trend-tracking McGinn Group in Arlington, Va. McGinn, whose company provides public opinion research and trend analysis to Fortune 100 companies, himself owns a Hummer H2.

Sales of the vehicle, GM's commercial version of the Army HMMWV used in the Gulf War, went from zero to sixty -- or, to be specific, from zero to 27,710 units sold -- between June 2002 and March 2003, despite its 12.4 miles per gallon fuel consumption.

"The media tend to focus on the size of it or its appearance or its gas mileage," said McGinn.

"The size and the look are appealing but the capability is certainly appealing too."

According to McGinn, the vehicle has outstanding off-road capabilities, an assessment echoed by Consumer Reports.

"This vehicle has the ability to ford 20 inches of water. So you can drive in very difficult straits," McGinn said. "Because of the road clearance on the vehicle and the skidding plates underneath it, this vehicle can traverse a very rocky, very difficult terrain that the average SUV certainly could not."

Asked whether he ever drives his H2 off-road, McGinn hesitated, then said, "I have some property in the mountains. Yes."

It's arguable as to how many of the well-heeled fans of the Hummer H2 ever take it off-road; a Consumer

Reports engineer said off-roaders are a tiny minority of owners, and one local dealer flatly stated, "Nobody's ever going to take this off-road."

And, while it may handle well off-road, the H2's 81-inch width (excluding mirrors), 189-inch length and 8,600-pound weight make it somewhat of an urban liability. How does McGinn deal with the issue of parking?

"It's the challenge you have to understand for a vehicle this size in an urban environment," he said. "I don't drive mine into a downtown urban area that often."

"It's just being realistic about the space. It's maneuverable because it's wheel-based," said McGinn, noting that the vehicle is shorter than most trucks.

Extra wide

However, as any SUV owner who has torn off a side mirror pulling into a garage can attest, it's not just the length, but the width, that makes parking difficult.

At 81.2 inches, the H2 is wider than most any other SUV; for example, the Tahoe Suburban measures in at 78.9 inches.

"If you need to tow heavy loads or go off-roading, it's good," said Douglas Love, a spokesman for Consumer Reports. "But there are questions about how practical the H2 is for those of us who need a vehicle to get to work or take our kids to school in the morning."

"Consumer Reports tries to steer people toward the car-based SUVs such as the Lexus RX300, Acura MDX, Toyota Highlander and Toyota RAV4, which all tend to have better gas mileage," said Love, who emphasized that Consumer Reports has not officially tested the Hummer H2.

The issue of mileage is central for the H2.

A widely cited automobile quality survey by J.D. Power & Associates found that the H2 had the worst score of all automotive brands surveyed, with 225 problems per 100 vehicles. High on the list were complaints about its gas consumption.

"The one I drove briefly showed 10.75 miles per gallon average," said Love. "There's no doubt that the H2 is a big and bulky vehicle and people who buy them should be prepared to spend a fair amount on gas."

Because the H2 is too heavy to be subject to federal mileage regulations, its fuel rating isn't posted on the window sales sticker like most other cars.

Fuel economy issues

Of course, it could be seen as disingenuous for a purchaser to complain about the car's low mileage.

"You just have to look at it to know it's not going to have great gas mileage. The chassis is over 6,000 pounds," said Jan Yakubisin, Hummer sales manager and product specialist for Fitzpatrick Chevrolet Buick Hummer in Concord.

"Very few times did anyone ask the gas mileage" when checking out the car, she said. "If you have to ask what the mileage is, maybe the car isn't for you. It's a luxury vehicle."

As Yakubisin indicated, neither the dipping economy nor the soaring cost of fuel have deterred the fans of this quasi-military vehicle -- despite the poor gas mileage, the lack of rebates or zero-percent financing or other dealer incentives.

"Everybody wants one," said Yakubisin.

Her dealership has sold about 300 H2s since July, she said, and can't keep them in stock.

Gotta have it

The item is so hot, people don't care about details such as color. "They just have to have a Hummer."

The 54-year-old, family owned Fitzpatrick auto dealership had a 3-month waiting list when the car first came out.

If it's not off-road capability, what's the real reason for the car's popularity?

"It's a vehicle with enormously appealing style," said McGinn. "There is no need to apologize for this, it should be celebrated. It makes a powerful, confident statement."

Likening the H2 to the Dodge Viper, a vintage sports car that has practically achieved cult status, McGinn said, "The Hummer has generated a buzz equal to that of the Viper. If you drive up in a Viper people go crazy when they see it. The Hummer generates the same type of response."

McGinn's second point may sum up the real reasons behind the car's appeal, which seem to resemble the motivation behind Hula Hoops or Cabbage Patch dolls, except with an approximately $49,950 price difference.

World events conspired to create the fad. For more than 50 years, perhaps the quintessentially American vehicle was the Jeep, the preeminent military transportation vehicle in World War II. When the Gulf War exploded in 1991, the HMMWV took its place. (The military acronym for the vehicle is High Mobility Multipurpose Wheeled Vehicle, pronounced "Humvee," hence the "Hummer" appellation for the commercial version.)

Schwarzenegger legend

Legend has it that when Arnold Schwarzenegger saw the vehicle, the macho man had to have one, and approached AM General, the company that made the HMMWV.

In 1992, AM General released a commercial version, the Hummer H1, urged on by Schwarzenegger, according to Fitzpatrick's Yakubisin.

"The original Hummer, the H1, cost more than $100,000. Then GM approached AM General about working on a more widely accessible model," Yakubisin said.

And the H2 was born in 2002, designed by both companies and with parts completely supplied by GM, she said.

The H2 has a 6.0 liter engine, the same one that's in the Escalade and many of GM's three-quarter-ton pickup trucks.

It's a medium-duty type engine, according to Yakubisin.

To be exact, the car has a GM GenIII 6.0L V8 engine and a GM enhanced 4L60HD transmission. (And, for the record, the fuel range on an H2 is an estimated 310 miles on its 32-gallon tank.)

The second Gulf War further fueled the fad, according to a Consumer Reports engineer.

"It's macho. It's chic," said Gabriel Shenhar, a senior test engineer with Consumer Reports. "It puts you in this dream land, you are on an excursion somewhere in an exotic place, and especially in these times, it makes you feel patriotic.

"But in terms of living with it day in and day out, it's not the most practical vehicle. It's a Cabbage Patch Doll car."

Janis Mara can be reached at (510) 293-2465 or jmara@angnewspapers.com .