Photo released of new GM Hummer H3
Reuters via GM
The 2006 Hummer H3, called "the baby Hummer" by auto insiders, will be 16.9 inches shorter in length, six inches shorter in height and 6.5 inches narrower than the H2.
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updated 11/5/2004 9:56:16 AM ET 2004-11-05T14:56:16
AUTOMOTIVE ANALYSIS

The first line of Hummer's press release on its newest and smallest model, the 2006 H3 sport utility, speaks to the issues the brand faces by referring to the new vehicle as a "smaller, more fuel-efficient package."

Talk about trying to sell a car based on what it isn't. The H3, which was developed under the supervision of parent company General Motors and introduced last week at the California International Auto Show in Anaheim, may be nicknamed "the baby Hummer" by auto industry insiders, but the vehicle is only small in comparison to other Hummers.

Labeling a Hummer "fuel-efficient" is even more puzzling. After all, The Sierra Club started a Web site just to mock Hummer: hummerdinger.com. The site contains parodies of news items, like those from The Onion, including a headline that reads, "EPA Announces New Model Year Fuel Economy: The Good, The Bad and The Hummer" and a poll that suggests Jackson Browne's "Running on Empty" should be the official soundtrack of Hummer.

Why Hummer is trying to rewrite its brand image makes sense, particularly at a time when oil is selling for over $50 a barrel. In the first nine months of this year, American sales of its two current model lines, the H1 and H2, declined by 20 percent compared to the same period last year. One reader predicts that Hummer will be "the next Merkur, or Eagle (two defunct brands)."

"They have a one-note product line," he writes. "Their fashion statement looks are so-o-o-o 2001, and the dealers do not want to spring for separate showrooms and service facilities."

The H3 is a financial gamble for General Motors. While the original Hummer manufacturer, AM General, builds the H1 and H2 in Indiana, GM will have the United Auto Workers build the H3 at Shreveport, La. When H2 sales started lagging, GM simply told AM General to decrease production — AM General's problem, not GM's. (AM General still has the contract to build the Humvee, the High Mobility Multipurpose Wheeled Vehicle that has been used by the U.S. military since 1985, which was the vehicle that inspired the civilian H1, H2 and H3.)

But for its own manufacturing plants, GM's contract with the UAW calls for workers to be paid 90 percent salary plus 100 percent benefits when the factories are idle. Because of this, GM prefers to increase marketing and profit-hampering rebates when dealers' lots are overflowing with UAW-built cars they can't sell. The last thing GM will do is decrease production, so bloated inventories may be in the forecast for the H3.

When the H3 arrives in dealerships next spring, it may look more reasonably sized than the H2 (it is 16.9 inches shorter in length, six inches shorter in height and 6.5 inches narrower) but it will also look a lot like the other Hummers and probably have the same hard-to-maneuver feel from the driver's seat.

The H3 will use a 3.5-liter, 220-hp five-cylinder engine that, Hummer said in a statement, will provide for a peak fuel economy of up to 20 miles per gallon. The vehicle will be the first Hummer to offer the choice of a manual or automatic transmission.

The question is, of course, whether a smaller Hummer will sell. The original attraction of the H1 and H2 was their raw, overpowering size. To make a Hummer that is more like any other over-large SUV undermines the brand's appeal. Unless gas prices tumble, which seems unlikely any time soon, what GM really needs to do in order to save the Hummer is to find a way to make it truly fuel-efficient. Maybe they should have come up with a Hummer hybrid instead?

Forbes fact
One advanced move for the H3 is the inclusion of a spare tire that is mounted on the tailgate — a Hummer first. Whoever rides in the rear jump seat of the H2 has to sit next to a spare tire that weighs almost 100 pounds and eats up space where another passenger could fit.

© 2012 Forbes.com

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