Another GM selling the Hummer Brand Article - WSJ

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Wanna Buy Hummer From a Car Maker That's Down on Its Luck?

Posted by Heidi N. Moore
Oil is at $126 a barrel. Coincidently, that is roughly how much it costs a driver these days to fill up the gas tank of the General Motors-produced H2 Hummer sport-utility vehicle.


In short: Times are tough. Want to buy a gas-guzzler?
That is the oh-so-awkward pitch General Motors is going to have to make if it sells its Hummer division, an option the troubled auto maker is contemplating. GM is in a tight bind in year three (year three!) of its seemingly endless restructuring plan, announced in 2005. The carmaker is closing four North American truck-and-SUV-making plants in an attempt to cut $1 billion in costs. It's doubtful a sale of its Hummer arm will make a dent in that: Hummer sold a little less than 56,000 vehicles last year, according to AutoData, or only around 1% of GM's total of 3.8 million vehicle sales.


GM CEO Rick Wagoner said today that high oil prices aren't going away: "We at GM don't think this is a spike or a temporary shift. We think this is by and large permanent."


Thus, GM is essentially conceding it made a mistake by focusing its energy on big, energy-inefficient trucks and SUVs. And now it wants to find someone else to make the same one. Obviously, GM wants to sell the division because fewer people are buying big, gas-guzzling cars. But GM is going to have a tough time finding a buyer because?well?fewer people want to buy big, wasteful cars.


GM's problem with Hummer isn't operational, it's strategic, another example of GM being caught flat-footed by foreseeable trends. Analysts predicting ever higher oil prices just isn't a recent development. Last year, Hummer sales dropped 22%. Sales fell 46% just last month. And a GM vice chairman this year famously dismissed global warming as "a crock of sh**" This is a company that doesn't read the writing on the wall too well.


If GM keeps the Hummer division, it conceded it would have to capitulate by making much smaller vehicles. And the board of the parent company is looking to the future: it gave authorization for funding of production development and tooling of the plug-in hybrid Chevy Volt. It should be ready by late 2010.


That, of course, is only six years after Toyota introduced the gas-efficient Prius.