Owning a Hummer was a gas. Really
While celebrities still flaunt the gas-guzzling beasts, sales figures show the iconic monster American SUV is in decline, writes BRENDAN KENNEDY.
It emerged as a symbol of American military might in the First Gulf War as CNN beamed images of the Hummer into North American homes, toppling the enemy and rambling over rough terrain in Operation: Desert Storm. Arnold Schwarzenegger, the Terminator himself, was one of its earliest champions. Gas cost about a buck a gallon in the United States. That was nearly 20 years ago.
Today, the Hummer faces a very different setting: The U.S. is back in Iraq, this time stuck in a seemingly intractable war; Mr. Schwarzenegger is the governor of the state with the most stringent fuel-efficiency standards in North America, and gas prices have risen to more than $4 U.S. a gallon.
Although celebrities such as soccer star David Beckham, hip-hop artist 50 Cent and Ottawa Senators goaltender Ray Emery still proudly boast of their gas-guzzling beasts, sales figures show the Hummer is clearly in decline.
And a recent announcement by General Motors suggests its future with the company is in doubt.
General Motors said it would be reviewing the Hummer brand “to determine its fit within the GM portfolio.”
At the same time, GM announced the closure of four of its SUV- and truck-producing plants — including its Canadian plant in Oshawa, Ont. — noting the company’s shift in focus to smaller vehicles.
The downsizing trend has also made its way to Canada.
In the last four months, Canada’s Leasebusters.com has found a 25- to 26-per-cent increase in the number of people looking to get out of their large vehicle leases, which includes all full-size pickup trucks and sportutility vehicles. That number climbs to 30 per cent if you include midsized trucks and SUVs.
President and general manager Jim Matthews said more people are being reactive to gas prices and considering smaller vehicles, and that cash incentives are now usually required to entice people to take on a large-vehicle lease.
“The worst of it is that there’s no stabilization in sight,” he said.
But the Hummer has always been more than just a big SUV. It’s an iconic symbol of U.S. affluence and excess, of its hyper-masculine, chestbeating bravado.
Recently, the U.S. has suffered the mortgage crisis, a shrinking economy and a declining dollar; is the death of the Hummer next?
Professor Daniel Howard, chair of the marketing department at the Southern Methodist University’s Cox School of Business in Dallas, Texas, thinks so.
Mr. Howard said GM’s announcement signifies the end of an era.
“The Hummer represented the gas-guzzling fast lane life of many affluent enthusiasts,” he said. “It is a sobering reminder the automotive world Americans once knew and took for granted is rapidly coming to an end.”
The Hummer’s possible death is a signal of the restructuring of the North American automotive industry, he said.
“And it’s not pretty at the moment, it’s not pretty at all.”
Chief executive officer and founder of the Florida-based LeaseTrader.com, Sergio Stiberman, said his company has seen a 24-per-cent increase in the last 12 months in the number of people trying to downsize their vehicles, looking to escape their large SUVs in exchange for much smaller cars.
“The economy is not what it once was,” Mr. Stiberman said. “And you also have the housing issue. Everybody finances their vehicle, so the vehicle becomes the largest expense in a household second to the house or the mortgage.”
Stats from Autotrader.com also show that fewer people are doing searches on Hummer H3s (the smallest and most commercially viable of the Hummer brand) since 2005, and the number of homeless H3s stuck in the lot has been steadily climbing.
The Hummer dealership in Ottawa wouldn’t speak to the Citizen about its sales figures for the brand, but Scott Cook, general sales manager at the Hummer dealership in Saskatoon, said he has definitely noticed a downward trend in sales for his larger vehicles, particularly Hummers.
“You bet,” he said, when asked if he felt the Canadian auto industry was following the trends in the U.S. But Hummer dealers in booming Alberta said their sales are steady.
George Hoffer is professor of Automotive Economics at Virginia Commonwealth University in Richmond, Virginia.
Mr. Hoffer said the Hummer shouldn’t be looked at in isolation, but instead as the ultimate expression and climax of the SUV.
“Every 10 years we’ve had a car that was designed to make someone look good,” he said. “The one that took hold in the mid-’90s was the SUV and the personal pickup truck.”
He calls the Hummer the “last swan” of this “bubble” vehicle, a name Mr. Hoffer has used to describe status vehicles meant for conspicuous consumption.
“The SUV was really nothing more than the sixth or seventh bubble vehicle the American auto industry has had since the late ’50s.”
He said the U.S. auto industry has been so reluctant to abandon the SUV because they have been so profitable. Since the SUV became such a powerful status symbol, Mr. Hoffer said, manufacturers were able to charge a high premium. Since the profit margin was so large, they could also comfortably give out massive incentives to the dealers, which were then passed on to consumers.
“(Consumer interest) was waning, but there was such a profit margin in these vehicles that for two years, despite high gas prices, the industry could keep sales up by throwing thousands of dollars on the hoods of these vehicles and make them compelling buys, which they were,” he said.
But as Mr. Hoffer states, “An attractive vehicle even a year ago is no longer attractive at $4 a gallon.”
Representatives of GM Canada declined to be interviewed for this story, but stated in an e-mailed re- sponse that the decision to review the Hummer brand is part of GM’s overall strategy to “provide more fuel green options” and there was nothing to add to the company’s original press release.
Marty Padgett wrote the book on Hummer. He’s the author of Hummer: How the Little Truck Company Hit the Big Time, Thanks to Saddam, Schwarzenegger and GM. In the book, Mr. Padgett calls the Hummer the wheeled equivalent to the Statue of Liberty.
Mr. Padgett says it is inevitable GM would re-evaluate the Hummer.
“They’re quite aggressively positioning the company as a ‘green’ leader,” he said in an e-mail. “Hummer doesn’t fit in with that at all, and Hummer sales have been falling for two or three years now.”
Mr. Padgett said Hummer has always been a cult vehicle, with limited mass-market appeal.
“And when the cult is satisfied, who’s left to bring into the cult?”
While true off-roaders will remain loyal, he said, expensive gas will keep Hummer from attracting new customers.
“There’s a cultural shift happening, and the tide is turning against fuel-inefficient vehicles.”
Mr. Padgett said GM is putting its new investment money behind the Chevy Volt Plug-in hybrid, which he says will be its “halo car” for the next decade.
Although he doesn’t necessarily see this as the absolute death of the Hummer — he stressed how expensive it can be for a company to shut down a division — Mr. Padgett suggested that its mainstream commercial life is likely near its end.
“Only $1 (U.S.) gas could resurrect it,” he said.
And Mr. Padgett dismissed the idea of the Hummer hanging around simply because of its iconic status.
“Icons have a short time in the sun,” he said.