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October 21, 2004

USA: Smaller Hummer intended to make brand “more approachable”

The manager of General Motors Corp.'s hulking Hummer lineup has told the Associated Press (AP) she hopes to make the brand "more approachable" with a new midsize sport utility vehicle scheduled to go on sale next spring.

By bcusack

The manager of General Motors Corp.’s hulking Hummer lineup has told The Associated Press (AP) she hopes to make the brand “more approachable” with a new midsize sport utility vehicle scheduled to go on sale next spring.

The Hummer H3 is slated to make its international debut next Wednesday at the California International Auto Show in Anaheim.

By entering the midsize SUV segment, Hummer makes itself a player in a vehicle category that accounts for 1.7 million sales annually, Hummer general manager Susan Docherty told AP.

For now, she said, the brand’s bread-and-butter vehicle, the larger H2, competes in a segment with about 160,000 annual sales.

“Up to this point, as a brand, we’ve been about $US50,000-plus trucks,” said Docherty, who helped launch the luxury Escalade SUV at Cadillac before joining Hummer. “In the mid-size utility segment, customers want a smaller package, something that’s more fuel efficient, something that’s easier to park and that’s a little bit more approachable – thus the H3.”

AP said GM has not announced pricing for the H3, but some analysts say it’s likely to be between $30,000 and $35,000.

The H3 will join the H1 and H2 SUVs and H2 SUT, which went on sale in June and has features of both a large pickup and an SUV, AP noted. The H1’s price starts at about $105,000 and the H2 and H2 SUT at roughly $50,000.

According to The Associated Press , Hummer also has plans for a low-volume, high-performance series of vehicles dubbed Alpha. It will begin with the 2006 H1 Alpha, which is scheduled for launch in early 2005.

Docherty reportedly said the H3 will get about 20 miles per gallon on the highway – far better than the other vehicles in the lineup. She acknowledged that $2-a-gallon petrol wasn’t ideal for selling larger vehicles, but she said most people who buy Hummers are less sensitive about petrol prices than people shopping for smaller cars or trucks.

AP noted that Hummers are considered a status symbol for many Americans and have attracted celebrities and athletes who aren’t bothered by the steep prices and poor fuel economy. The H2 was introduced in 2002, and even a growing SUV backlash and increasing concern about US dependence on foreign oil did little to stem enthusiasm – and sales.

But business of late has fallen off, AP added, something Docherty said was not unexpected in the third year of the product cycle. For the first nine months of 2004, Hummer sold 20,284 vehicles in the United States, down nearly 21% from the 25,453 sold in the same period a year ago.

Art Spinella, president of CNW Marketing Research in Bandon, Ore., told The Associated Press part of the problem for Hummer is many of the limited number of buyers who want one already own one.

He reportedly said the H3 is likely to have a positive reception when it hits showrooms next year, but it could see demand drop off considerably after six months or so, after everyone waiting for the H3 buys one.

“There are a fair number of people who will look at a smaller Hummer,” Spinella told AP. “But that segment saturates very quickly. Then you might have to offer massive incentives to make the pool big enough to at least hit some sort of sales target.”

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