In one of its smartest moves in recent years, General Motors is looking to dump Hummer, or "everything from a complete revamp of the product lineup to partial or complete sale of the brand," according to Rick Wagoner. The chairman and CEO also says the new Chevy compact will begin production in Lordstown, Ohio in mid-2010 (not 2009, as reported in my last post and at Automotive News), and that GM will close four big-truck plants. The era of the big truck/SUV clearly is over. And so, too, is the Hummer brand as an albatross, as perhaps the last vestige of Ron Zarrella-era GM malaise.
Who would buy Hummer?
It could go to Middle-Eastern or Russian investors, someone with money and oil. Think Mubadala Development Company, the state-owned Abu Dhabi firm that owns 5 percent of Ferrari, or the Kuwaiti investors who took Aston Martin off Ford Motor Company's hands with the help of David Richards. Hummers, like Land Rovers, remain good transportation for the wide, open desert or for the wild nether-regions of post-Soviet Russia as well as for parking in front of Moscow nightclubs. You can bet GM already has had some discussions with such investors.
Wagoner's full statement on Hummer Tuesday is this: "We are undertaking a strategic review of the Hummer brand, to determine its fit with GM's evolving product portfolio, and considering the changing market conditions I discussed earlier. At this point, we are considering all options for the Hummer brand ... everything from a complete revamp of the product lineup to partial or complete sale of the brand.
"We are communicating this information to our Hummer dealer network today, and will seek their input during the review. We will provide more details as we move through the process."
Hummer has 170 dealerships in the U.S., many of them coupled with Cadillac or other luxury brands, plus another 54 dealers in 37 countries. The U.S. dealerships have had to build special Quonset hut-style showrooms, so simply shuttering the brand and buying out those dealers would not be cheap. On the other hand, some dealers may be itching to unload the albatross, themselves. U.S. sales were 71,542 in '06 and 55,986 in '07. They will drop significantly this year.
How could GM revamp the product lineup? Filling those Quonset huts with badge-engineered Gary Fisher mountain bikes probably would be the best move these days (the bicycle industry this year is doing as well as the auto industry is doing poorly). Short of that, get rid of the fake helicopter hood-hooks, first, then go toe-to-toe with the Jeep Wrangler and sell small, five- and six-cylinder off-roaders.
Unloading it completely is the best route, even though the current market dictates a fire-sale price. At his press conference at the GM annual meeting in Wilmington, Delaware, Wagoner spoke about $4 per gallon gasoline. "These higher gasoline prices are changing consumer behavior, and rapidly ... significantly affecting the U.S. auto industry sales mix. We at GM don't think this is a spike or a temporary shift; we believe that is, by and large, permanent."
Speaking about the new 2011 Chevy compact, Wagoner says it "will be pure Chevrolet in design and performance ... it'll be better equipped than today's compact car ... achieve benchmark safety and quality levels ... and most importantly, have a 1.4-liter turbo engine that, when mated with a manual transmission, offers a 9-mile-per-gallon fuel economy improvement over Chevy's entry in this segment today." Wagoner says the GM board Monday "approved" the compact (certainly a formality for a car that's been under development for three years) and it represents the automaker's restructured, global platform strategy (it's on the same Delta platform as the next-generation Opel/Vauxhall/Saturn Astra).
A.) As I reported yesterday, I think you'll see this engine first appear in the 2009 Cobalt.
B.) It's great to hear the chairman and CEO of GM talk about manual transmissions, these days, isn't it?
Wagoner says the next-generation Aveo, also based on a global architecture (Gamma), goes on sale in the second half of '10. And the Cobalt/Cobalt replacement's 1.4-liter engine family is a "highly efficient, small-displacement engine module in the U.S." of 1.0- 1.4-liters, "tentatively" planned for production in the hard-hit former industrial power of Flint, Michigan. And there's always news about the Volt plug-in hybrid.
"We intend to show the production version of the Chevy Volt publicly in the near future, and we remain focused on our target of getting the Volt into Chevrolet showrooms by the end of 2010," Wagoner says. "We are preliminarily planning to produce the Volt at our Detroit/Hamtramck plant, subject to successful discussions with state and local governments."
Four local governments will not be pleased with this: GM will shut down Oshawa, Canada truck assembly (Chevy Silverado/GMC Sierra) likely in '09; Moraine, Ohio (Chevy TrailBlazer/GMC Envoy/Saab 9-7) at the end of the current model run in 2010 "or sooner if market demand dictates," and it will; Janesville, Wisconsin (Chevy Tahoe/Suburban/GMC Yukon and Chevy, GMC and Isuzu medium-duty trucks) end of '09 for the medium duties and '10 or sooner for the SUVs; and Toluca, Mexico (Chevy Kodiak medium-duty trucks) by the end of this year.