Impact of H2 on GM's numbers (very long)
01-27-2003, 09:40 AM
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Impact of H2 on GM's numbers (very long)
Southfield, Michigan, Jan. 27 (Bloomberg) -- Last year General Motors Corp. sold 4,826,394 vehicles in the United States -- 58 car and truck models and all at a discount to retail, some discounts amounting to $3,000 or more.
The single model that needed no discount was GM's Hummer H2. The H2 is a boxy militaristic SUV that starts at $50,000 and embodies features such as bulk and terrible gas mileage, which some environmental worrywarts and liberal pundits love to criticize.
Yet the 12-mile-per-gallon H2 has captured the imagination of a devoted band of consumers who are lining up to pay full retail price -- which starts at $49,190 and goes to $51,990 or more depending on the options -- for the privilege of making an eye-catching automotive statement for the neighbors.
Though the 18,861 H2s sold in 2002 represent only 0.4 percent of General Motors's U.S. vehicle sales in terms of units, the brand is making a disproportionate impact on its balance sheet. At an average wholesale price to dealers of about $47,000, Hummer contributed more than $900 million to the automaker's $114.4 billion of North American revenue in 2002.
H2's contribution to revenue could more than double to $2 billion this year, considering that 2002's sales only started at mid-year. The automaker guards as secret the amount of profit it makes on individual models.
'Wildly Different' Buyers
John Bruno Sr., president of Hummer's dealership in Manhattan, said the H2 is appealing to "wildly different'' types of customers: "You have textbook Chevrolet and Cadillac buyers; but with Hummer you can have a bank president and behind him, a construction worker and behind him a rap star.''
One customer is Lebron James, an 18-year-old high school basketball phenomenon. The commissioner of Ohio high school sports is trying to find out how he can afford to buy it.
What's remarkable about this hulking member of the automaker's lineup is less the H2 itself than the fact that sleepy old General Motors actually figured out that a hot brand, backed by a relatively modest investment and clever marketing, could be created from virtually thin air.
In 1998 Michael DiGiovanni, a General Motors market research expert, pitched the idea to senior executives of securing brand rights from AM General Corp., the privately owned manufacturer of the HUMMV used by the U.S. military. AM General also manufactures a $100,000 civilian HUMMV derivative, called the H1 -- that caught the world's attention when actor Arnold Schwarzenegger bought the first one.
Women Big Buyers
In bygone days GM executives might have laughed DiGiovanni out of their offices. This is, after all, the same automaker that at times seemed determined to alienate customers (other than those who rent at airports) with forgettable models of mediocre quality like the Oldsmobile Alero, Chevrolet Caprice and Cadillac Catera.
One of H2's surprises has been the proportion of women who are buying it, about 30 percent or about double the number projected.
General Motors believes acceptance by a particular type of woman buyer has been driven in part by Boston-based Modernista's hip approach and in-your-face ad copy. (I'm partial to the tagline: "Threaten Men in a Whole New Way.'')
People like the conservative pundit David Brooks, who despises anti-SUV critics with such passion that he has written an essay in which he promises to consider buying a future Hummer model -- as long as it's bigger than the 6,400-pound H2.
Rather than invest in a new factory and production tools, General Motors pays for the assembly of H2s from parts shipped to AM General's plant. Many of the parts have already been designed for use in Chevrolet Suburbans, Tahoes and full-size pickups, which saves on engineering investment.
The automaker next year will introduce an H2 SUT, a pickup version, followed eventually by an H3, a junior H2. The trick for General Motors will be to gather golden eggs without killing the Hummer brand by producing too many H2s. AM General's capacity is 40,000 H2s annually.
Even at dark moments General Motors has had supporters who believed it was only a matter of time before the world's largest manufacturer got its act together. If executives can find a way to transfer some of H2's magic across the rest of its models, the optimists might prove to be correct.
The single model that needed no discount was GM's Hummer H2. The H2 is a boxy militaristic SUV that starts at $50,000 and embodies features such as bulk and terrible gas mileage, which some environmental worrywarts and liberal pundits love to criticize.
Yet the 12-mile-per-gallon H2 has captured the imagination of a devoted band of consumers who are lining up to pay full retail price -- which starts at $49,190 and goes to $51,990 or more depending on the options -- for the privilege of making an eye-catching automotive statement for the neighbors.
Though the 18,861 H2s sold in 2002 represent only 0.4 percent of General Motors's U.S. vehicle sales in terms of units, the brand is making a disproportionate impact on its balance sheet. At an average wholesale price to dealers of about $47,000, Hummer contributed more than $900 million to the automaker's $114.4 billion of North American revenue in 2002.
H2's contribution to revenue could more than double to $2 billion this year, considering that 2002's sales only started at mid-year. The automaker guards as secret the amount of profit it makes on individual models.
'Wildly Different' Buyers
John Bruno Sr., president of Hummer's dealership in Manhattan, said the H2 is appealing to "wildly different'' types of customers: "You have textbook Chevrolet and Cadillac buyers; but with Hummer you can have a bank president and behind him, a construction worker and behind him a rap star.''
One customer is Lebron James, an 18-year-old high school basketball phenomenon. The commissioner of Ohio high school sports is trying to find out how he can afford to buy it.
What's remarkable about this hulking member of the automaker's lineup is less the H2 itself than the fact that sleepy old General Motors actually figured out that a hot brand, backed by a relatively modest investment and clever marketing, could be created from virtually thin air.
In 1998 Michael DiGiovanni, a General Motors market research expert, pitched the idea to senior executives of securing brand rights from AM General Corp., the privately owned manufacturer of the HUMMV used by the U.S. military. AM General also manufactures a $100,000 civilian HUMMV derivative, called the H1 -- that caught the world's attention when actor Arnold Schwarzenegger bought the first one.
Women Big Buyers
In bygone days GM executives might have laughed DiGiovanni out of their offices. This is, after all, the same automaker that at times seemed determined to alienate customers (other than those who rent at airports) with forgettable models of mediocre quality like the Oldsmobile Alero, Chevrolet Caprice and Cadillac Catera.
One of H2's surprises has been the proportion of women who are buying it, about 30 percent or about double the number projected.
General Motors believes acceptance by a particular type of woman buyer has been driven in part by Boston-based Modernista's hip approach and in-your-face ad copy. (I'm partial to the tagline: "Threaten Men in a Whole New Way.'')
People like the conservative pundit David Brooks, who despises anti-SUV critics with such passion that he has written an essay in which he promises to consider buying a future Hummer model -- as long as it's bigger than the 6,400-pound H2.
Rather than invest in a new factory and production tools, General Motors pays for the assembly of H2s from parts shipped to AM General's plant. Many of the parts have already been designed for use in Chevrolet Suburbans, Tahoes and full-size pickups, which saves on engineering investment.
The automaker next year will introduce an H2 SUT, a pickup version, followed eventually by an H3, a junior H2. The trick for General Motors will be to gather golden eggs without killing the Hummer brand by producing too many H2s. AM General's capacity is 40,000 H2s annually.
Even at dark moments General Motors has had supporters who believed it was only a matter of time before the world's largest manufacturer got its act together. If executives can find a way to transfer some of H2's magic across the rest of its models, the optimists might prove to be correct.
01-27-2003, 11:12 AM
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Articles like this one make me wish the price of gasoline would go up to about 5-bucks a gallon.
Then maybe we’d get some of those ugly hulking monsters off the road.
BIG SUV's :thumbsdn: :thumbsdn: :thumbsdn:
Shawn S
Then maybe we’d get some of those ugly hulking monsters off the road.
BIG SUV's :thumbsdn: :thumbsdn: :thumbsdn:
Shawn S
01-27-2003, 11:19 AM
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Originally posted by Shawn S
Articles like this one make me wish the price of gasoline would go up to about 5-bucks a gallon.
Then maybe we’d get some of those ugly hulking monsters off the road.
BIG SUV's :thumbsdn: :thumbsdn: :thumbsdn:
Shawn S
Articles like this one make me wish the price of gasoline would go up to about 5-bucks a gallon.
Then maybe we’d get some of those ugly hulking monsters off the road.
BIG SUV's :thumbsdn: :thumbsdn: :thumbsdn:
Shawn S
Automakers have fought very hard (and are winning
) against any type of legislation that would require SUV's and trucks to come under the same or similar regulatory coditions that passenger cars have to like saftey and gas mileage etc. As long as fuel costs as much as water we will continue to see this trend. Anything they (auto giants) do for the environment is lip service. I would love to buy one of these things..but i wouldn't do it if gas was 3 bucks a gallon like the rest of the world!!
01-27-2003, 11:38 AM
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robb m.
robb m.
woohoo H2 SUT...I need a truck, but crave a hummer, maybe this is the answer 
01-27-2003, 01:33 PM
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i see wayyyy too many on the road... and sadly being driven by 4' women and guys who most likely need that to compensate for their small genitals :o
i'm scared to be anywhere close to them... cant imagine what kinda damage that big crap would do to my car if it decided to change lanes w/o looking.
i'm scared to be anywhere close to them... cant imagine what kinda damage that big crap would do to my car if it decided to change lanes w/o looking.
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01-27-2003, 02:14 PM
#8
Moderator Alumnus
18,000 in 6 months!! sheesh. Wonder how many they will sell in 2003. Ya, it's annoying seeing them all over the place. Might just be a passing car fad. An expensive one at that... I'm suprised so many people can afford the 50k truck.
01-27-2003, 03:06 PM
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It shows us that these idiots are paying 50k for a truck that they can build for what 20k? It's a stretced Tahoe platform. GM and every company loves these idiots. Then they throw some knock-off 24" rims next. Well, I guess they are helping the economy.
01-28-2003, 01:30 AM
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Once again, those H2 buyers are all idiots. They actually get tax breaks for buying those monstrous 6000lb+ vehicles. I HATE SUVs. Did you guys ALSO know that those SUVs actually raise insurance costs for people in regular CARS like us? They get cheaper liability rates than us, and they cause 5x the damage....
(I'm reading this book on SUVs..."High and Mighty: SUVs: The World's Most Dangerous Vehicles and How They Got That Way"
I recommend it...it will give you more reason to go SUV-tippin'
(I'm reading this book on SUVs..."High and Mighty: SUVs: The World's Most Dangerous Vehicles and How They Got That Way"
I recommend it...it will give you more reason to go SUV-tippin'
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