Future of HUMMER, the H4(HX)...

[RazM]

DETROIT, MICHIGAN. JANUARY 12, 2009.
At the North American International Auto Show, I had the opportunity to chat one-on-one with James E. Taylor, Chief Executive Officer of HUMMER.
Jim Taylor has been with General Motors since 1980, working at Saturn, Opel, Worldwide Purchasing and GM Truck. His most recent position was as General Manager for the Cadillac brand. In mid-October of 2008, Mr. Taylor took over as the CEO of HUMMER. He's been charged with the present operation of the brand, and with formulating its future strategy.
Mr. Taylor and I stood beside an H3T and talked about what might happen with HUMMER in the near future.

about: I'm a fan of the HUMMER brand. My favorite is H3 Alpha. I hope it can stay in the market.

JAMES E. TAYLOR: Staying in the market -- we can get to the key topic fast, which is what everybody's wondering about, especially from a customer standpoint. And the dealers, too. My role in life right now is to make sure that happens and to go out and canvass the investment market and find a new mother that wants to invest in the future. You can't just sell what you've got, you've got to be hiring, and reinventing the next gens of whatever -- H3s, H2s...
In the world that we're heading toward the big challenge for all HUMMERs and all SUVs is to try to comply with the world that Washington has elected to describe, non-negotiably, in 2011, '12 and on out to '17, is going to make it extremely difficult for all SUV manufacturers to comply. It's almost like they've worked themselves backwards to pre-decide that customers should not be permitted to buy SUVs. It's a bit of an Orwellian state we're headed towards.
So, the answer's going to be a lot of technology and a lot of powertrain improvements that allow lower-displacement, higher fuel economy, probably turbocharged engines that allow you to get into that high 20s, low 30s in terms of fuel economy -- that's a bit of a stretch from where SUVs travel today. I'm not talking about HUMMER. All SUVs. So, in that space, we've got a product plan that we have in mind for an investor as they buy the company to say, okay, immediately execute to be able to be not just customer-friendly in that kind of time frame, it's to be legal and compliant and saleable.
The world of SUVs, the face of the SUV world is going to change dramatically in the next four or five years. People who don't pay attention to this industry will wake up in four or five years and look around and go, "Hey! What happened to my truck?" Oh, you should have been paying attention five years ago when your Congressmen were voting on a future state that sounded good but is really going to premeditatively decide the fate of large trucks. So, that's our challenge, to stay in front of that and to make sure that we come up with the kind of powertrain solutions that are going to allow us to get into that space.

about: I assume that you're looking globally as well, beyond North America...

JT: Yes, absolutely. Even this year, a third of our volume is global. People think of HUMMER as an American brand, but as the US economy shrank faster this year than the rest of the world, it was heading even higher than 30% of our volume. We're looking sales-wise more than the US, but also from powertrains. Right now we're gearing up for a diesel for the rest of the world that we've finished the engineering to implement. Okay, if that became a play, is that something that we should bring here, too?
China's another market, and they're into displacement taxes. In Europe, it's carbon. In the US, it's CAFE (Corporate Average Fuel Economy). So it's not going to happen, but it sure would be nice if the world agreed: We're going to go after a better environment, and less oil. What's the way to go at that? So far, everybody's going at it in a different way. So to sell around the world, you have to find all those different solutions.

about: Your chief competitor in the US has downsized, and gone to a car-based SUV. You haven't made that move.

JT: I give them a lot of credit. They've done a grand job with price point, cheaper, less-expensive. We've tried to remain a little more premium. Chassis solutions, interiors, materials -- a little more premium. All those are product decisions that you have to make. To their credit, they've got a lot more volume, so they've widened their envelope and appeal to a much broader market. As a brand -- it's a fabulous brand. Just Jeep. The word "Jeep," and the reputation they have -- they've done a great job of that.

about: Well, they had a bit of a head start on you.

JT: Yeah, they did. They good news is, they have a broad appeal and a high volume. Now, the bad news is, if you're a brand -- they have a really broad appeal. So if you start saying, well, what is a Jeep? Used to be, a while ago, you knew how to answer that question. If you asked, what's a HUMMER? It'd probably be pretty close to dead on when you answer the question.
In HUMMER's case, HUMMER is still HUMMER. We haven't stretched it outside to be all things to all people and to appeal to a really broad market. It's stayed very focused, and it delivers. As competition gets higher and higher and higher and there's more supply side, the guys that win are the guys that have brands that are real ones. That deliver what they say they're going to do. So that's the good thing about HUMMER. That's an attractive proposition for some investor that wants to buy a little car company that's successful and has a good brand. That's our hope.

[RazM]

about: Any regional specificity on where the interest is coming from? Is it the East?

JT: No specificity. The answer is yes, it's not an American company. The good news is, with this broad footprint, and what's going on the rest of the world, I come back to the product and what it does. Developing countries are "developing" for a reason; the road infrastructures and the driving conditions aren't pretty everywhere. You're not just talking about driving around downtown LA. These vehicles lend themselves perfectly to those opening-up markets of India, China, Russia, all of those kinds of places. Therefore, the investment people in those countries are interested too. Some investors are just bankers. They are looking to buy a pure return on investment. But other investors have a desire for the investment they're making to make sense for the country that they live in. Luckily, because of the appeal of HUMMER worldwide, the investment community that's looking at it is also worldwide.

about: Has GM placed any time constraints on you?

JT: Yes. Well, Washington has put some constraints on us. As part of this loan process, as part of documenting our future state. To grossly oversimplify what's going on in Washington, they need proof that we have a sustainable business model. End of story.

about: You mean GM.

JT: GM. As part of that, this mountain of loan documents that have to go to them, you're just defending your business case going forward, to show that you're a viable financial entity. If you were any bank loan officer, you'd want to make sure that you get your money back. So it's completely logical that they'd want that in place. So as part of that -- it's public information -- February, March is when the government's going to make its decisions as to how much more they're going to give us and whether they'll let us keep what we've got. So, likewise, GM is submitting its master business plan of what its approach is going to be. HUMMER is a piece of that puzzle. They'll say, okay, here's what we're doing with HUMMER. So, the time constraint that's placed on me is we have to play our cards out in this first quarter to say we have serious buying partners who are interested in buying the brand, or not. That's our deadline.

about: And if the answer is "or not," is it a restructuring within GM or do you think the brand goes away?

JT: We've been adamant about calling it a "strategic evaluation" in order to keep those doors open. Whether to have to shrink it inside the GM system and continue to manage it here, because we have the dealer network; or, a wind-down. To be overly honest, those are all possibilities. Unfortunately.

about: Has this put all product development on hold?

JT: Yes. We're in a cash flow necessity. When you get into a state where you're looking at the big, bad "B" word, you have to conserve your cash and do only what's absolutely 200% clear is going to occur, and nothing that's in limbo. So product development on this has had to be frozen until we come out on the back of this with either the investor picking it up where we left off, or with GM picking it back up.

about: Any hints on where you left off?

JT: At the time we left off -- hopefully, this is public, but if it isn't, it doesn't matter, I guess -- is with the Hx concept that we had last year really felt right as the new H4. It felt right as a HUMMER from a design and performance standpoint. It opened up more where Jeep travels at a lower price point and a real youthful market. So we had taken that product acceptance as kind of a "go" internally. We're very careful about when we say a car is really a car, because you have to go through some sort of prove-outs and engineering, and then get the capital backing from our board as opposed to outside investors when you're an outside company. And then announce, like we do here, at an auto show. We were acting as if it was going to be a full-bore program. We had a lot of that work done, and we had to put it on hold.

about: So an investor could potentially take advantage of that?

JT: And pick up right where we left off. That's what we're proposing. That's what's in the offer. If you want, you're not starting all over with "I wonder what I should do with HUMMER product." We had upgrades to all of these (H3 and H2) as is, and we had a pretty major effort on the H4.

about: That seems like the no-brainer...

JT: Yes, it is. This isn't sexy stuff like talking about product, and going up mountains and all the stuff that HUMMERs do, but on a business end, it's a pretty serious subject. You pretty much have to get into that H4 space -- smaller, lighter, more fuel-efficient -- to make it in this new CAFE world that's coming at us.
It's going to abilities for niche vehicles like the H2 that are still able to survive, but if you're over a certain volume threshold, the world is just going to dictate that you have extremely high fuel economy in the upper 20s by the time you get out in that time frame. That almost necessitates the H4.
I'm optimistic. I won't make any commitments, because all these internal things and all the stuff in Washington. But if you just asked me today, do I think we'll find a buyer -- well, I think we will. The brand is very well-received by a small group of people. But for those who like it, they love it. They're passionate about it. I still think there's a volume future. Sometimes when brands go away, there stopped being a customer base, and out of necessity you have to make a cold, hard decision. But there's a strong customer base for this product.
If there's a disappointed HUMMER owner, it's because they weren't looking for a HUMMER. They bought the wrong car. If you're looking for a vehicle that does what this does, you're not going to be disappointed.

[Mark805]

Originally Posted by RazM

If there's a disappointed HUMMER owner, it's because they weren't looking for a HUMMER. They bought the wrong car. If you're looking for a vehicle that does what this does, you're not going to be disappointed.

This is about as true a statement as i have seen.

[hummeraddict]

Originally Posted by RazM

about: Any regional specificity on where the interest is coming from? Is it the East?

JT: No specificity. The answer is yes, it's not an American company. The good news is, with this broad footprint, and what's going on the rest of the world, I come back to the product and what it does. Developing countries are "developing" for a reason; the road infrastructures and the driving conditions aren't pretty everywhere. You're not just talking about driving around downtown LA. These vehicles lend themselves perfectly to those opening-up markets of India, China, Russia, all of those kinds of places. Therefore, the investment people in those countries are interested too. Some investors are just bankers. They are looking to buy a pure return on investment. But other investors have a desire for the investment they're making to make sense for the country that they live in. Luckily, because of the appeal of HUMMER worldwide, the investment community that's looking at it is also worldwide.

about: Has GM placed any time constraints on you?

JT: Yes. Well, Washington has put some constraints on us. As part of this loan process, as part of documenting our future state. To grossly oversimplify what's going on in Washington, they need proof that we have a sustainable business model. End of story.

about: You mean GM.

JT: GM. As part of that, this mountain of loan documents that have to go to them, you're just defending your business case going forward, to show that you're a viable financial entity. If you were any bank loan officer, you'd want to make sure that you get your money back. So it's completely logical that they'd want that in place. So as part of that -- it's public information -- February, March is when the government's going to make its decisions as to how much more they're going to give us and whether they'll let us keep what we've got. So, likewise, GM is submitting its master business plan of what its approach is going to be. HUMMER is a piece of that puzzle. They'll say, okay, here's what we're doing with HUMMER. So, the time constraint that's placed on me is we have to play our cards out in this first quarter to say we have serious buying partners who are interested in buying the brand, or not. That's our deadline.

about: And if the answer is "or not," is it a restructuring within GM or do you think the brand goes away?

JT: We've been adamant about calling it a "strategic evaluation" in order to keep those doors open. Whether to have to shrink it inside the GM system and continue to manage it here, because we have the dealer network; or, a wind-down. To be overly honest, those are all possibilities. Unfortunately.

about: Has this put all product development on hold?

JT: Yes. We're in a cash flow necessity. When you get into a state where you're looking at the big, bad "B" word, you have to conserve your cash and do only what's absolutely 200% clear is going to occur, and nothing that's in limbo. So product development on this has had to be frozen until we come out on the back of this with either the investor picking it up where we left off, or with GM picking it back up.

about: Any hints on where you left off?

JT: At the time we left off -- hopefully, this is public, but if it isn't, it doesn't matter, I guess -- is with the Hx concept that we had last year really felt right as the new H4. It felt right as a HUMMER from a design and performance standpoint. It opened up more where Jeep travels at a lower price point and a real youthful market. So we had taken that product acceptance as kind of a "go" internally. We're very careful about when we say a car is really a car, because you have to go through some sort of prove-outs and engineering, and then get the capital backing from our board as opposed to outside investors when you're an outside company. And then announce, like we do here, at an auto show. We were acting as if it was going to be a full-bore program. We had a lot of that work done, and we had to put it on hold.

about: So an investor could potentially take advantage of that?

JT: And pick up right where we left off. That's what we're proposing. That's what's in the offer. If you want, you're not starting all over with "I wonder what I should do with HUMMER product." We had upgrades to all of these (H3 and H2) as is, and we had a pretty major effort on the H4.

about: That seems like the no-brainer...

JT: Yes, it is. This isn't sexy stuff like talking about product, and going up mountains and all the stuff that HUMMERs do, but on a business end, it's a pretty serious subject. You pretty much have to get into that H4 space -- smaller, lighter, more fuel-efficient -- to make it in this new CAFE world that's coming at us.
It's going to abilities for niche vehicles like the H2 that are still able to survive, but if you're over a certain volume threshold, the world is just going to dictate that you have extremely high fuel economy in the upper 20s by the time you get out in that time frame. That almost necessitates the H4.
I'm optimistic. I won't make any commitments, because all these internal things and all the stuff in Washington. But if you just asked me today, do I think we'll find a buyer -- well, I think we will. The brand is very well-received by a small group of people. But for those who like it, they love it. They're passionate about it. I still think there's a volume future. Sometimes when brands go away, there stopped being a customer base, and out of necessity you have to make a cold, hard decision. But there's a strong customer base for this product.
If there's a disappointed HUMMER owner, it's because they weren't looking for a HUMMER. They bought the wrong car. If you're looking for a vehicle that does what this does, you're not going to be disappointed.

Thanks for this article. it sounds promising. seems like only the government could bury HUMMER now.

[Badace]

Communist America. How about offsetting Gay ass Prius Gas mileage with the H2's? 49 Prius, 12 H2. That averages at 30.5 each. How bout making the brand average 30 mpg? Then Hummer can develop a gay ass car too. Or maybe a cool Hummer Motorcycle that gets 50 mpg. Either way, this is supposed to be home of the free but more and more it feels like Home of the Brave and Home of the Weak minded liberals who thinks (Thinks, more like dictates ) they can make us do what they say.

[H3 Builder]

I hear that after GM sale is final, the H4 should be the next model for Hummer.

[HummerHippy]

Originally Posted by H3 Builder

I hear that after GM sale is final, the H4 should be the next model for Hummer.

And hopefully built in Shreveport, LA.

[Mark805]

personally i dont care where they put the parts together.... Just sell my ass one

[H3 Builder]

Originally Posted by Mark805

personally i dont care where they put the parts together.... Just sell my ass one

I hear August of 2011 made in Mexico.

[Luv2Camp]

I hear Am General may be back in the picture if the Chinese deal falls apart