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GM's hulking Hummer may be tossed aside


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Danny Johnston / AP
Hummer SUVs sit at a dealership in Benton, Ark. GM is studying the future of the brand, which has two models

Danny Johnston / AP Hummer SUVs sit at a dealership in Benton, Ark. GM is studying the future of the brand, which has two models

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Hailed and hated, the Hummer may meet its maker as buying behavior shifts to smaller, more fuel-efficient vehicles.

Disgusted by skyrocketing gas prices, many motorists are parking, selling or trading their gas hogs.

Sluggish sales have delivered a brutal blow to Ford, Chrysler and General Motors, commonly referred to as the Big Three, which in recent years have banked on truck and SUV sales.

GM announced Tuesday that it will close four truck and SUV plants in the United States, Canada and Mexico. The company also said it is studying the future of the Hummer brand, considering everything from a major repositioning to its partial or full sale.

Closing the four plants makes a lot of sense, said Tom Libby, senior director of industry analysis at Power Information Network, a division of J.D. Power and Associates. GM needs to keep production near true demand, he said. In the past, GM would have cut back on production and added incentives and discounts to move supply, which reduced residual value of the product and hurt the company in the long run, he said.

The Hummer is perhaps the brand most likely to get thrown overboard to keep GM afloat. But GM might have a tough time getting a good offer, considering that its product portfolio is "not appropriate" for the current market, Libby said.

"In May, the market made a major jump to smaller vehicles," Libby said, adding that the Hummer brand is handicapped by only having two models, both large. Although he's not forecasting that the brand will go away, he predicts more troubles for Hummer if gas prices stay high another six months.

Hummer sold 17,309 units from January to April 2007, compared with 12,232 units in the same period this year, according to J.D. Power and Associates. For 2007, 55,861 units were sold. New vehicles range in price from about $30,000 to $57,000.

In April, there were eight Hummer sales by dealers in Ventura County, making it the lowest-selling SUV, according to John Masterson, an automotive industry consultant in Ventura.

Sales of larger vehicles in the county are mimicking the national pattern, dropping by as much as 35 percent, while sales of smaller cars "are increasing considerably," he said.

The county's No. 1 selling car in April was the Toyota Camry, with 246 sales, followed by the Toyota Prius, with 244 sales.

The Hummer always has been a small player, even when truck sales were high and gas prices were low, Masterson said. "Getting rid of them is something GM should have thought of a few years ago," he said, because it only has two models.

If the marketplace continues to shift, he expects to see Hummer absorbed within the Chevrolet or Cadillac lines — a product of a major brand rather than a separate brand.

The midsize H3, developed to broaden Hummer's appeal and insulate it from rising fuel prices, has seen its sales fall even more than the larger H2. The original H1 has been discontinued.

An iconic symbol of American excess, the Hummer entered public awareness in the early 1990s, driven by the ballyhoo and praise of Arnold Schwarzenegger — long before he became governor of California. The first Hummer that GM developed hit the market when gasoline cost less than $1.50 a gallon. It sold far better than GM expected, but even then, the brand was polarizing.

Critics despised the H2's size and fuel consumption. Hummer fans were equally passionate, loving the SUV's exceptional off-road capability.

When Fernando Diaz bought a Hummer a few years ago, gas prices were not a big factor for him.

The Fillmore resident, a senior loan consultant with Westlake Village lender Proline Mortgage, was considering safety and space. It's roomy enough to hold two strollers, and he feels safe driving his two children around, he said. And he likes "the look."

He gets a lot of second glances and comments when he forks over more than $120 to fill up at the pump. "I'm not happy about gas prices, but it is what it is," he said. "What are you going to do, cry about it?"

Even as Ventura County's average price of regular unleaded gasoline hit a record $4.28 Wednesday, he has no regrets.

But others do, such as Steve Hernandez of Ojai. He's helping to sell his father's fully loaded, canary yellow H2 for $29,000.

Hernandez said the Hummer gets about 10.7 miles per gallon. When he was attending Ventura College, each trip cost him $20. He said his family probably will buy a Hybrid SUV after the Hummer is sold.

"I get a lot of complaints about gas mileage," said Paulo Guillen, a sales adviser for a Cerritos GM dealership that sells Hummers. Still, he says that when people trade in their Hummers, it's usually for a newer one.

GM changed the engine last year, and the 2008 models get about 10 percent better gas mileage, he said. An H3 gets about 14 mpg.

Hummer sales have nudged down from last year, a pattern that he's seen for almost all brands and models, both small and large, Guillen said. More than high gas prices, he blames the economy for the slowdown.

But people are still buying Hummers, he said, adding that he sold two Tuesday. Gas consumption is not its selling point, he said. Customers like the vehicle because it's unique and has the "wow" factor, he said.

Hummer of Thousand Oaks, the only Hummer dealer in Ventura County, declined to comment, referring all questions to GM.

— The Detroit Free Press and Associated Press contributed to this report.

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