By on June 3, 2008

hummer-h2-accident001.jpgThe Detroit News is reporting GM CEO Rick Wagoner's new new turnaround plan. As expected, The General is cutting back SUV and truck production in a BIG way: "phasing out" Oshawa, Ontario (2009); Moraine, Ohio (2010 or sooner); Janesville (end of 2009) and Toluca, Mexico (end of this year). At the same time, GM's ramping-up production– adding a third shift– at Lake Orion (Pontiac G6 and Malibu sedans) and Lordstown (Chevy Cobalt and Pontiac G5). And here's a surprise: Wagoner said GM is "exploring all options, including the possible sale of its Hummer brand." To whom? In other product news, GM said it was abandoning plans to build an entry-level Cadillac and will instead create an S-Class killer to replace it's ancient, arthritic STS. Just kidding. The company will build a new Chevy compact car at Lordstown (as reported yesterday). The DetN also reports that GM promises a "world car" replacement for the Chevy Aveo to go on sale in the U.S. in the second half of… 2010. Full Death Watch analysis to come, after the real news: GM's May sales results.

[GM press release here.

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37 Comments on “GM Turnaround Plan: Hummer for Sale and Production Cutbacks...”


  • avatar
    Trevor

    I may be the lone voice on this, but I don’t think selling Hummer or even voicing that they’re considering that option is wise.

    There are customer who are going to want one of those vehicles no matter what, it’s just a matter of matching production to demand…I know, I know, not exactly a GM strong suit.

    Also, even voicing that they’re considering this is totally screwing the dealers.

  • avatar

    Trevor :

    Also, even voicing that they’re considering this is totally screwing the dealers.

    Agreed. Especially as Hummer has the best customer retention numbers of all GM brands. And anyway, why not keep it hush-hush until a buyer’s found. Is this supposed to show us GM’s resolve to abandon gas guzzlers?

  • avatar
    Orian

    Hummer as a brand is not exactly a good buy unless it is dirt cheap. The H1 is no more, the H2 is the only thing really not as easily identifiable as being built off another of GM’s platforms like the H3 is.

    I really don’t see customers lining up to buy a Hummer or buy the brand. Time will tell though – I’m sure a Chinese company may want it.

  • avatar
    rodster205

    A friend of mine was a salesman at a Cadillac-Hummer store in March and April of this year. He said the dealership sold 85 vehicles in those two months, total between the two brands. He then moved to the Honda dealer down the road. In those same two months they had sold 450 Hondas.

    Note: This was the only Caddy/Hummer dealer and the only Honda dealer in a Metro area around 300K people. So it can’t be blamed on competition from other local Caddy/Hummer dealers.

  • avatar
    brettc

    I can’t wait to see what the replacement for the Aveo is going to be. I’m sure it’ll be craptastic.

    There was an article in the local paper recently about the Hummer dealer in my area. Apparently when times were better, they were selling 20 Hummers per month, now they’re selling about 10. The Hummer lot has a ton of H2s, and also a whole row of white Chevy Uplanders sitting there waiting for a buyer that will probably never come.

  • avatar
    psarhjinian

    Damn…

    I live very close to Oshawa, and this is going to hurt. Its unfortunate because Oshawa is (by a longshot) GM’s highest-quality plant; but it’s also their highest-cost plant, especially now that the US dollar has tanked in relation to Canada’s

    I really wanted to support the local economy when I went car shopping, too, but it’s really hard to buy local when the only products made there–the W-Bodies (Impala/Allure/Grand Prix) and the GMT900s–are exactly the products I don’t want to buy. Even supporting St. Catharines Powertrain means engines (Vortec eights, high-feature sixes) that end up in products I’m not willing to buy.

    Selling Hummer is such red herring it’s shameful. Hummer is the easiest brand to sell: few franchises, small product line and a badge worth more than the engineering. Even Saab would be more painful. That this is a “drastic option” is kind of funny.

  • avatar
    gamper

    Ditching the Hummer brand is long overdue IMO. The H2 is effectively a symbol of excessive fuel consumption if there ever was one. The brand reflects negatively on GM in a time when the automakers need to be seen as green and fuel efficient above all else.

    From what I understand, Hummers are quite popular overseas, particularly in China, Russia, Middle East. I think there is still a place for the brand, but not as a mass market vehicle. I see Hummer becoming very specialized, low volume, if it lives on. A Range Rover on Steroids would be a good direction to take with the brand.

  • avatar
    Steven Lang

    Looks like the remarketing industry is still on the ball. The only thing that didn’t transpire from this announcement is the potential sale/closedown of Saab.

  • avatar
    Stingray

    Are you sure the ancient arthritic sedan is the STS?. I think it’s the DTS.

    If they slash truck porduction so heavily… it’s open market for Toyota.

  • avatar
    mikey

    OUCH!…..though another four letter word comes to mind.
    10000 hourly jobs gone 0 salary thats not suprising.

    2500 here in Oshawa another 1500 or so at the feeders.

    The B word being tossed around,and not just by RF.

    Yup! I can see a couple of bevys going down afterwork tonight.

  • avatar
    mikey

    psarhjinian:Its your money my friend you spend it how you see fit.Just keep in mind,that GM is the life blood in this area.

  • avatar
    NickR

    mikey, I was hoping to hear from you. I knew you worked in Oshawa. Must be a tough morning around there, a lot f glum faces. Do you work on the W line or the truck line…in other words, are you one of the people going to get shafted? Hope not. I guess the good news is that the Impala seems to have legs, saleswise. Best of luck.

  • avatar
    KatiePuckrik

    Mikey,

    I’m really sorry to hear this. I hope you’re not one of those affected.

    For what’s it’s worth, I think this is all “too little, too late”. GM are forever harping on about the great cars and plans they have for the future….without dealing with the present.

    At a cash burn rate of $1 billion per month, plus falling sales, I really doubt GM will go the distance.

    Another reason why I think this is too little, too late is because depsite these heavy cuts, Red Ink Rick, STILL won’t issue a turnround timetable!

    Make you wonder if he’s making this plan up on hoof……?

  • avatar
    daro31

    I have to wonder were all of the vehicles they are still going to be producing for the 2 years it takes to shut all those plants down are going to go. They are piling up on the lots now even with the AA strike having cut 390,000 units out of the supply. Even with that loss don’t they still have over a hundred day supply of some of those vehicles?

  • avatar
    KixStart

    daro31, Yes, they do have over 100 days of some things. I think they have 188 days of Yukons at last report.

    I’ve got a general question that I hope someone can answer… I noticed this in the press release:

    “The Chevy Volt took a major step toward the showroom with formal approval by the GM board of funding for production of the extended-range electric vehicle. This approval, which includes funding for production development and tooling, indicates that GM leadership believes that the technology for the Volt, including its lithium-ion batteries, will be ready for volume production on schedule.”

    From this milestone, does anyone happen to know, what’s the typical time to market for a GM vehicle?

  • avatar
    Orian

    KixStart,

    I don’t know what the typical time for a GM vehicle is, but if the Camaro is any indication, a long time.

  • avatar
    mel23

    Jerry York’s plan is looking a lot smarter even to Wagoner it seems. When will we hear about at least thinking about dumping Saturn?

    The one certainty in all this is the death of suppliers to the truck plants. They go from the ICU to the morgue I’m afraid. Adding a 3rd shift at various car plants will certainly produce more of these cars, but can they be sold at profit? Laying off the workers at the truck plants will save some money compared to not laying them off, but, assuming these vehicles were profitable, the net will be greater losses for GM.

    So Wagoner buys some more time while this iteration of his turnaround plan proves a failure.

  • avatar
    menno

    Hi Mikey, condolensces and I hope things work out.

    Perhaps a miracle will happen and a company will look at the quality workforce and record of what went on in Oshawa, and will buy up the plant.

    But honestly, I have to think instead that the only GM factory on the close-it-down-list which is saleable is the Toluca, Mexico plant (depending upon it’s age).

    I know Hyundai was looking for a Mexican plant, but possibly not now, since they’ve dumped the pickup from their new Georgia USA plant and are going to move their Kia Spectra and probably Hyundai Elantra production there.

    Maybe FIAT would be interested in Toluca? That would be kind of ironic, given the cash that GM dumped into FIAT to “break off the engagement” a few years ago.

    Another high irony would be the fact that the last tiny vestage of Studebaker, Kaiser and American Motors are tied up in the real Hummer factory in Mishawaka, Indiana. (The factory built Studebaker duece-and-a-half trucks for the US Army during the Vietnam era, was bought by Kaiser, and sold to American Motors with Jeep; then AMC allowed it to be separated from the parent company as a wholly owned subsidiary called AM General, added some bus and motor home chassis production in the early 1970’s, then when Renault bought into AMC, AMC had to sell off AM General since foreign companies could not own US military suppliers).

    The only thing GM has for sale is the Hummer BRAND and dealers.

    I’ve got $87.80 on my person right now, Rick, that’s my final offer for Hummer. Contact me via Robert Farago.

  • avatar
    Bancho

    They should nuke the Aveo and get on the phone to Suzuki and talk about getting the Swift over here…stat! If people are willing to pay retarded prices for spent Metros I’m sure they’d be willing to drop a reasonable amount of coin on a modern, competitive economy car that’s actually kinda fun to drive and has up to date safety equipment.

  • avatar
    psarhjinian

    Mikey,

    I’d really hoped that GM was going to pick something _other_ than the Camaro to build at Oshawa. I have family that works at the truck plant and I really hoped that Oshawa’s stellar quality and workmanship would earn them a shot at building something important and widely adopted. When I heard we were getting the Camaro I winced because, good as it is, I knew it was a small-volume halo car that wasn’t going to keep people working once the shine had worn off (and being so overexposed, that shine won’t last long at all).

    I’m having real trouble seeing GM relocating production of the G8, and with the Grand Prix going away and the market for the GMTs drying up, it will be tough times ahead.

    I’m originally from St. Catharines and saw what happened as Glendale Ave. was scaled back. I don’t envy your situation at all. Heck, I work for a company that supplies Oshawa and dramatic cuts aren’t going to help us one bit.

    Right now, I’m going to be replacing the Saab in a few years and the likely local candidate will be either the Oakville-based Flex or Edge. I’m a firm believer in supporting local industry, but it’s the “Buying Bananas in Canada” paradox: if you want a banana, you’re not getting one locally grown in Canada.

    Good luck, eh?

  • avatar
    mikey

    Thanks folks Yeah this one hits home I work for,not at the truck plant.If Buzz hasn’t traded them away I have bumping rights.The guy I displace goes to the line. Its not a good way to make friends,but you gotta do what you gotta do.It comes down to him or me.

    If I learned anything in the last 18 months,its to not plan too far ahead.The news changes daily.

    Thanks everybody and thanks Robert and Frank for deleting all the gloaters.

    Michael

  • avatar
    mel23

    No doubt about it, this is a terrible day for GM, but the one thing to look forward to is the positive spin some poor soul will have to come up with in the announcement for May sales.

  • avatar

    I think ditching Hummer is a mistake. They just need a proper line-up and proper expectations for it.

  • avatar
    troonbop

    ““Potentially there may be some repayments,” GM Canada president Arturo Elias acknowledged to reporters during a conference call Tuesday.”

    Apparently GM may have to refund some taxpayers’ donations, although I’m not holding my breath. There’s a silver lining; i’m not getting totally screwed by the autoworkers.

  • avatar
    threeer

    Mikey,

    Nobody should be gloating about the loss of so many jobs. I’m tied to the automotive industry, as well. However, nobody should be overly surprised, either. I’m making contingency plans so I’m not shown the door one of these days without a back-up plan. Kinda the frog in a slowly heating pot analogy. Anybody working for the 2.8 should be prepared for anything these days, including a sudden loss of employment. Best of luck to you and all of the crew over there. You surely don’t deserve the crap that your senior management has dealt you.

  • avatar
    solo84

    Ditching Hummer is the first step in the right direction. With fuel now at $4 a gallon (yeah, yeah, I know it’s $10 in europe…), and headed north there will be no market for Hummer. I see GMC driving toward the reaper in a less than a few years, taking Buick North America and Pontiac with it.

    I still remember GM trying to persuade consumers that they didn’t need a smaller car, just a smarter engine.

    ummm…yeah…about that…

  • avatar
    gawdodirt

    Not ALL the gloaters. Spirit is still here…

    So the total picture hasn’t really begun to sink in , yet.

    It’s like the people on the Titanic laughing at the one’s in the lifeboat with the hole.

    This affects more than meets the eye . For now, it’s just sad.

    The feeder industries will feel the pinch a bit later. Restaurants in the cities of the closures will go broke. Clothing and grocery stores next. Foreclosures will follow.

  • avatar
    Pch101

    GM turnaround plans are always based upon the same operating principles.

    -Discontinue making the vehicles that aren’t selling. Replace those with other vehicles that aren’t going to sell.

    -Develop “killers” that can’t kill anyone.

    -Lose more customers.

    -Blame the little people for everything, and fire some of them.

    -Find someone else to blame for the problems. Well, other than the managers, of course.

    The result is always the same. More mistakes, initiated at the top, with the consequences suffered by the stockholders and those stuck at the bottom. They would try to bottle it and sell it if they could, but they wouldn’t be able to sell that, either.

  • avatar
    gawdodirt

    The Subaru BAJA comes to mind as a seller that didn’t sell. The Solara was still born too. So all manufacturers have their “ugly cousins.” How do you really pick a winner?
    And who does the picking? Non car people, that’s who. Board of directors with limos.

    Management structures in the U.S.:
    It started out as a pyramid. Then went to an inverted pyramid.

    Now it a coffee table.

    And they’re starting to cut off the legs.

  • avatar
    jaje

    Initial reports of GM Sales decline of 27.5% (only 18k units from strike were to that effect).

  • avatar

    I’m in the camp that believes HUMMER has real value to GM. Just like Jeep with Chrysler.

    HUMMER is one of those truly unique automotive brands and probably the only one GM makes that has any real value outside of GM to other automakers or selling it back to AM General.

    HUMMER has the most profit per unit sold, the best customer retention numbers, and is one of the most desirable brands GM produces.

    However it seems that GM never realised that HUMMER is a niche brand and that’s part of it’s appeal. It shouldn’t be mainstreamed or dumbed down or mass-produced. It should be selling premium, truly capable trucks and four-wheel drive vehicles. This niche will continue to sell to those who want it regardless of fuel prices.

    I think the planned H4 Wrangler-competitor and diesel offerings could go a long way to keeping the brand viable but whether GM has the market savvy or resources to do so is questionable.

    Perhaps if they weren’t producing 7 other worthless brands and selling cookie-cutter trucks, SUVs and pod-shaped crossovers through them then they wouldn’t have to worry about how to handle HUMMER.

  • avatar
    CarnotCycle

    This is just another case of the Harvard silver-spoon schmuck screwing it up again. Gutting some of their best production infrastructure and ditching a very viable brand sounds quite Rick-ish.

    The Hummer thing is especially agregious. I’m no fan of Hummer-mobiles. Outside of the actual mil-spec Hum-V, all they sell is a Suburban with a box on top and a (eew) Chevy Colorado with a box on top. They look like cartoonish versions of the mil-spec and frankly aren’t anything else. The fact they sold so well for so long indicates the kind of brand equity that exists with Hummer.

    There is a good opportunity for an accomplished (at least in perception) off-road centric brand to crank out a truly interesting model that actually is a no-compromise off-roader that gets really good mileage. Diesel power, hybrid, exotic rear-difs and crankcases to get the gear ratios right for road or off-road, I don’t know what the tech in such a critter would be. But I do know there is a heck of a niche market waiting for a vehicle like that. I can even see the ads: “Save some trees by taking your family to see some trees – in the forest!” type schtick.

    But that takes vision, engineering, work, math you can’t massage, planning for like, you know, THREE OR MORE business quarters in the future…that kind of thing. Nothing there that looks like Rick’s strong suit, so its time to punch-out! What a moron. Biggest difference GM could make by cutting something would be to ensure his Gulfstream jet develops “technical difficulties” over the Pacific while on one of his sell-out China tours.

    Contrast this moron’s panic attack reaction to something everyone saw coming eighteen months ago with Mulally at Ford sticking to his guns with the F-150 because he knows there is more to this business than next quarter’s excuse paragraph in the financial disclosure statement. Ford is looking better everyday as a brand that will be here in a decade. GM, maybe not. How things change in one year!

  • avatar
    Jordan Tenenbaum

    Isn’t the DTS the ancient and arthritic one?

  • avatar
    cos999

    MIKEY’s insights are a must read for me. The most recent was a sobering one:

    “If Buzz hasn’t traded them away I have bumping rights. The guy I displace goes to the line. Its not a good way to make friends,but you gotta do what you gotta do.It comes down to him or me.”

    Wow…..

    Any organization that rewards employees for seniority and not skill/production is doomed to fail over the long term. Steel, airlines, now transportation. What is next up, civil servant and teachers unions? Hopefully GM senior management gets their turn next.

    Welcome to a brave new world. You get paid what you are worth.

  • avatar
    50merc

    To make an informed call about selling Hummer, we’d need to know the finances. If Hummer is a fiscal disaster like Saturn, then liquidating the brand might be the logical thing to do. But if Hummer in the right hands could be viable, then a buyer might materialize. In addition to the Urban Rambo types, there may be a considerable market for Hummers among such people as forest rangers and Middle Eastern sheiks.

  • avatar

    We now have it on good authority: Hummer’s dead. As in shuttered. No sale. No nothing. Gone.

  • avatar
    50merc

    If they can bring themselves to kill Hummer, how in the world can they rationalize keeping Saturn on life support? Even the refreshed lineup has posted miserable sales.


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