Saturday, May 13, 2006

General Motors to End Hummer H1 Production

General Motors to End Hummer H1 Production
By DAVID RUNK, Associated Press Writer
Fri May 12, 6:47 PM ET

Get ready to say goodbye to the Hummer H1, the hulking, gas-guzzling status symbol that has attracted celebrities and off-road enthusiasts but has drawn the ire of environmentalists.

General Motors Corp. said Friday that the 2006 model year will be the last for the H1, which has been the foundation for the automaker's Hummer brand. Based on the military's Humvee, the about 12,000 put on the road since 1992 defined the Hummer name.

"It's a reflection of where we're going with the Hummer brand," Hummer general manager Martin Walsh said of the decision. "The Hummer DNA still resides in the Humvee. ... It will always be the core from where we come."

GM expects the last H1s to be built next month.

Walsh said Hummer plans to focus on models with broader appeal instead of the niche-market H1. Since taking over the Hummer name in 2000, GM has introduced the still hefty H2 and a midsize H3 sport utility vehicle.

The H1 gets about 10 miles per gallon, but Walsh said rising gas prices didn't factor into GM's decision. He noted that H1 buyers typically have been less sensitive about gas prices than most other drivers.

Auto analyst Erich Merkle with the Grand Rapids consulting company IRN Inc. said the decision fits with steps GM has taken to bring the Hummer brand to more mainstream drivers with the H2 and H3.

"They're going to continue moving Hummer in that direction," Merkle said. "It's a great brand. There is a lot that can be done with that in terms of leveraging its ruggedness and toughness."

Merkle added that the kind of drivers who buy the H1 don't worry about things like gas prices.

"It's really one of those over-the-top vehicles," Merkle said. "It doesn't really have much of a place in everyday society. You can't put it in the parking ramps. Parking spaces can't accommodate it."

The H1 attracted well-heeled drivers looking for a military-style vehicle with an intimidating stance. For the 2006 model year, the H1 was offered as a high-performance H1 Alpha that costs about $130,000 to $140,000. The 2004 model year H1 sold at a base price of about $106,000.

The vehicle first was marketed to the public as the Hummer in 1992 by AM General, which also makes the military version. Under a 1999 deal, GM bought marketing rights to the Hummer name and called the vehicle the Hummer H1.

Hummers often have been associated with celebrities who owned them, such as actor Arnold Schwarzenegger. He was AM General's first civilian customer, buying a custom-made conversion of the military model as well as civilian production models.

Schwarzenegger once owned a fleet of Hummers but now has just three. The California governor's aides say he rarely drives them anymore.

The Hummer's critics include the Sierra Club, which has faulted the vehicle for its bulk and poor gas mileage. Dan Becker, director of the Sierra Club's global warming program, welcomed the news, which comes as Congress tackles fuel economy standards and some drivers face $3 gas prices.

"The timing is pretty amazing," Becker said.

Last year, GM sold 374 H1s, down 16 percent from 447 in 2004.

GM is working to turn around its North American automotive operations and this week announced its first quarterly profit since 2004. Last year it announced plans to cut 30,000 jobs and close 12 facilities by 2008. It also has stockpiled parts in case workers at supplier Delphi Corp. go on strike.

AM General, which builds the H1, H2 and Humvee in Mishawaka, Ind., said it doesn't plan to cut any jobs as a result of the decision. It said workers there were expected to be shifted to military production.

With the war in Iraq, the end of H1 production comes at a time when military demand for Humvee has increased, said AM General spokesman Craig MacNab. Publicity surrounding the Humvee in the Persian Gulf War — and the drop in military demand afterward — helped lead to the civilian model.

"The military production is way up, the civilian production is way down," MacNab said. "You can't make a business case for making any investment in the civilian vehicle. ... It's a good time to stop."


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