Hummer heads to the scrap heap

    By Alex Taylor III

    It seemed like a good idea at the time.

    In 1998, AM General, which had been making the HumVee for military uses, sold the brand name to General Motors. GM saw it as a way to get hip quick and turn attention away from dying brands like Pontiac and Buick.

    “Few brands in the last ten years have made the impact and created the kind of focused marketing excitement as Hummer,” Ron Zarrella, president of GM North America, said at the time. “Our new agreement presents us with the opportunity to build on this foundation in a variety of ways to reach new customers.”

    The original H1, heavy, hulking, and all-but-undriveable, became a celebrity curiosity for a time, with owners like Arnold Schwarzenegger. GM expanded the product line with the smaller H2 and H3 models and envisioned a brand with the resonance and appeal of Harley Davidson (HOG).

    But a year after GM acquired Hummer, Toyota (TM) introduced the gas-electric Prius that, unlike the Hummer, exemplified modern technology and environmental concern. Hollywood celebrities quickly shifted their allegiance, showing up at the Academy Awards in their Priuses, while Hummer became a badge for a kind of know-nothing attitude toward issues like climate change and dependence on foreign oil. (See, for example, Fortune’s 2007 story: “What Would Satan Drive”)

    The brand quickly lost its appeal. Hummer sales peaked in 2006 at 71,524 before demand collapsed in the face of rising gasoline prices. Sales last year plunged to 9,046.

    An even smaller model called the H4 that might have rebuilt the brand’s prospects was on the drawing board at GM but never saw light of day. GM put Hummer up for sale in 2008.

    Two Indian automakers expressed interest, and there were rumors that it would be sold to a Russian company. But Hummer proved as difficult to sell as GM’s other distressed brands, Saab or Saturn, and no qualified buyer could be found. In the end it was a Chinese manufacturer who tried to complete a deal, but it failed to win Chinese government approval of the sale. Time had run out for Hummer.

    Toyota, by comparison, has made the Prius a big hit. Although there have been worries about its braking in the raft of current Toyota recalls, it has been so successful that the company is considering extending the Prius brand by adding more models.

    Presumably, none of them will be called H2 or H3.