GM Expands (and Greens?) Hummer Line

27 July 2004

Chicago Tribune / AP. First, the specifics. GM is adding to its Hummer lineup: a smaller, midsize H3, and a higher performance, more efficient version of the H1 called the Alpha.

GM has been talking about the H3 for months—a vehicle clearly targeted at DaimlerChrysler’s Jeep franchise, and a larger market than the one served by GM’s $100,000+ H1s and $50,000+ H2s.

The H3 uses a 220-horsepower, 3.5-liter inline five-cylinder engine, similar to the one in the mid-size Chevy Colorado. That vehicle carries an EPA mileage rating of 18mpg city / 23mpg highway. (GM apparently is building the H3 on the Colorado frame.)

The 2006 H1 Alpha, debuts in mid-2005 with a 300-horsepower, 6.6-liter turbo-diesel V-8 engine, presumably offering improved emissions performance and fuel economy over the original H1.

Why are we talking about this? GM seems to be taking the approach of trying to improve faltering Hummer sales by broadening the lineup and by stressing fuel efficiency and emissions reductions. That will seem counter-intuitive both to fans of the Hummer (who probably don’t spend a lot of time on those issues) and to foes (who see the Hummer as a fuel-guzzling, emissions-spewing, lumbering behemoth with no place on city streets). But here are some interesting comments from an interview in the San Diego Union-Tribune:

“We definitely have a concern about gas prices,” says Mike DiGiovanni, Hummer marketing general manager. “We are going to be looking at improving fuel economy.”

“I think it is silly to put your head in the sand,” DiGiovanni says. “You should address the issues head-on. So we are looking at improved gasoline engines, diesel engines and hybrids.”

More significant fuel economy changes are scheduled for the H2 around the 2007 or 2008 model year, when a diesel and possibly a hybrid-electric engine will be offered.

“We are not going to compromise being an authentic Hummer because that’s what our DNA is,” DiGiovanni says. “But we are going to try and make Hummers more fuel-efficient.”

A couple of takeaways from this for me:

• GM is increasingly concerned about its perception by the market with respect to fuel economy—not just with the Hummer, but with its entire lineup. That concern is clearly heightened by the sales results of the past two months. This could signal the beginning of a dash to scramble for position, in marketing if not in products, in case the oil price/availability picture continues to degrade.
• GM recognizes that Toyota has accelerated to the front of the pack with its positioning around the Prius. You’ll start to see “hybrid” appear more frequently in GM statements. Where does the new Silverado “hybrid” fit in this? Stay tuned.
• Many of GM’s improvements are incremental. Applied over millions of vehicles, those increments can add up to a lot—but it still may not be enough.
• Car product planners—and not just at GM—are working with a more leisurely timeline than we or they may have. I’m sure it does not seem leisurely to them, given the accelerated rollout of new models and the time it takes to do the appropriate development, design, production, and so on. But external market factors don’t necessarily track to the same Gantt chart. There is no discernible sense of urgency. Urgency—focused, in-control urgency, not hair-on-fire panic—is the pathway to market leadership and sector dominance. Whoever gets it and executes on it in both product design and marketing is going to be set up to win. At this point, Toyota is closest.

GM has a terrific opportunity in the Hummer area if they’d take it. The company is already building diesel-hybrid pickup prototypes for the Army; it should definitively announce that this is a platform for a future Hummer, assuming it wants to stick with that brand. That keeps the quasi-military cachet so important to the initial Hummer buyers, and combines it with one of the better solutions for fuel efficiency and emissions management. GM could take a leading position, rather than look like it is scrambling to catch up.