Forbes: Is Hummer a Hummer?

Melanie Wells reporting for Forbes submitted this story.

GM is turning the rugged HUMMER into a slick sport utility. How does it do that without emasculating the brand?

For more than a year marketers at General Motors Corp. have danced attendance on Frederick Chin, a clean-cut consulting partner at Ernst & Young in Los Angeles. Chin, 42, is passionate about H1 Hummers. He loves them so much that he has bought four (and kept two) of the $100,000 tough-guy trucks, the first civilian version of the U.S. Army's 3.5- ton vehicle. He calls them his "kids."

Chin doesn't own any other kind of GM cars and doesn't plan to buy any. But the automaker sees him as an "influencer," whose view can help boost or doom a product.GM is rolling out a much-anticipated, slightly scaled-down sport utility version, the 2003 Hummer H2, this month. Acting as a one-man focus group, Chin reviewed the H2 design several times at GM's request. And in recent weeks GM paid his way to South Bend, Ind., so he could take the truck for a spin on a test track. His verdict? "They could have done a lot worse."

High praise from a guy predisposed to think the Hummer H1 is already a shadow of the Army Humvee and that anything more civilian is a sissy car. ("Humvee" derives from a pompous military acronym for High Mobility Multi-Purpose Wheeled Vehicle.) And it should be somewhat reassuring for GM, which was criticized in 1999 by hard-core Hummerites when it bought the rights to the truck from AM General . (Once the Willys-Overland Co., AM General was sold by AMC Corp. in 1983.) The beef: A carmaker best known for its milquetoast cruisers for the masses would kill the brand's outta-my-way brawn.

GM isn't going after action heroes like Arnold Schwarzenegger, who has done more to raise the Hummer profile than anything since the 1991 Gulf war. Last summer, when it helped foot the bill for an ad campaign for the H1, it positioned the Hummer as a kinder, gentler truck. Shots of the H1 in the great outdoors made it look positively petite. Print ads for the H2 show it not in action but sitting still. People know it's tough; they don't know it looks good, says Lance Jensen, partner at Modernista, H2's Boston-based ad agency.

One of three commercials for the 316hp H2 that break later this summer on CSI: Miami will feature a well-dressed woman behind the wheel. The message: "The Hummer isn't about blowing things up," says the truck's ad director, Elisabeth Vanzura, who last orchestrated the Beetle's relaunch for Volkswagen.

Not that it's a complete wimp-out. At 81.2 inches wide it's just 5 inches narrower than the H1, and at 6,400 pounds only 700 pounds lighter. It also has cup holders, power windows and air bags. Still, half of the 24 print ads reinforce its beastly size. "When the asteroid hits and civilization crumbles," reads one, "you'll be ready."

How's this for acceleration: The H2 was engineered and launched in 16 months, quite a change from the three to four years it takes GM to roll out most vehicles. Under a seven-year contract, AM General will assemble the vehicle but base it on the chassis used for other GM trucks (like the Silverado) and use mostly GM parts. The H2 will be available at only 150 or so dealers (to start) who agree to build a special showroom and test track. And instead of handing the H2 assignment to one of its seven big usual agencies, GM asked upstart Modernista, which has created spots for Gap and MTV, to handle the project. Jensen and partner Gary Koepke are best known for creative use of music in commercials--remember the strange and popular "Da Da Da" VW spot a few years ago?--and ads that connect with young adults. "This is radically different for GM," says Vanzura.

And risky, too. AM General sells just 700 or so Hummers a year. GM intends to unload 19,000 in 2002, starting at $48,800. It expects to move 40,000 next year, about the same production run as Saab in the U.S., whose sticker price starts at 43% less. But by the time GM comes out in 2005 with the H3, a more diminutive and affordable version, it plans on selling up to 100,000 units a year. If it meets those goals, theH2 could swipe customers from DaimlerChrysler's Jeep and fatten the bottom line. GM could gross as much as $10,000 to $15,000, or 20% to 30%,on an H2, compared with $5,000 to $7,000 for garden-variety sport utilities.

Unless GM waters down the Hummer too much. Remember how Cimarron (R.I.P., 1988) and Catera (2001) diluted the Cadillac brand? "A lot of people thought we were going to mess this up," says Vanzura. Maybe she'll surprise them.

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