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Hummer Failure: Why Hummer went out of business?

Hummer failure

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General Motors, the parent firm of Hummer, declared bankruptcy in 2009. A tragic end. So, What happened to Hummer? In this article, we will discuss the Hummer Failure.

Hummer was an American brand of trucks and SUVs, founded in 1992 and was headquartered in Detroit, Michigan.

The beginning of the Hummer:

The Hummers began their journey in 1983, when AM General, a heavy vehicle manufacturer, received a $1 billion contract from the Military to develop the High Mobility Multipurpose Wheeled Vehicle (Humvee).

The Humvee quickly became a military essential, with 72,000 manufactured by 1991.

The truck’s ability to transport troops and cargo over rough terrain made it particularly valuable in Middle Eastern conflict zones.

Later, AM General released a consumer variant of the truck under the name “Hummer” in 1992.

In the early 2000s, Hummer was one of the most popular vehicle brands due to its oversized design, high price tag, and celebrity ownership. In 2006, Hummer vehicle sales reached 71,524 in the US.

General Motors (GM) purchased the rights to produce and market the Hummer in 1999.

What happened to Hummer?

Their unignorable imperfections:

When the Hummer was first released, it missed several features that might have facilitated its entry into the civilian market.

To summarize, the vehicle was not very practical, and AM General did little to improve this element.

For instance, the Hummer initially came with a radio and an air conditioner.

The Hummer was a rough-around-the-edges vehicle that was primarily intended to serve as a military truck, as many car salespeople noted at the time.

Although the vehicles were expensive, they lacked sophistication. Additional issues with the Hummer included its absence of airbags, a small steering wheel, and huge hooks on the hood.

Such characteristics were unsuccessful in attracting customers.

Their bad impact on nature:

Moreover, environmental activists protested Hummers for being ‘pollution machines,’ which contributed to their downfall.

The Animal Liberation Front (ALF) and the Earth Liberation Front (ELF) were organizing the anti-Hummer protest.

The ELF press office issued a statement that became a rallying call against the SUV, labelling it the “worst of American excess and wastefulness.”

Following that, 20 Hummer H2 models were demolished, while another 20 were vandalized. The “I (heart) pollution” graffiti gained national notice after causing nearly $2.5 million in vehicle damage.

High costs and unavailability led to the failure of Hummer:

Due to the Iranian war, American consumers were impacted by very high gas prices in 2007.

Because of the high fuel costs, many Hummer owners abandoned their gas-guzzling SUVs in favour of more economical and fuel-efficient alternatives.

One of Hummer’s main problems was that its parts, particularly its tires, were nearly impossible to locate on the market.

Since the Hummer’s components were not widely available, no mechanic could repair it. Consumers were required to return their cars to the manufacturer (General Motors) for repair.

The repair also costs the customers a lot of money.

Since Hummers are so expensive, this was one of the major reasons they were rarely purchased. It was also expensive to maintain them.

How recession accelerated hummer failure:

General Motors was affected by the 2008 recession. The business declared bankruptcy and required government bailouts.

Furthermore, the Hummer H2 model never received a formal fuel economy rating from the Environmental Protection Agency (EPA) since it was too heavy.

At that time, regulations prohibited the testing of cars weighing more than 8,500 pounds.

Although their H3 model was the brand’s best-selling vehicle, H3 alone could not sustain the business.

The Hummer was formally phased out of production by 2010.

When did they stop making hummers?

Along with other brands such as Pontiac and Saturn, the Hummer brand was discontinued during GM’s bankruptcy procedures.

GM later attempted to sell the Hummer brand to Tengzhong, a Chinese manufacturer, in 2010.

However, the agreement was broken, and GM stopped producing and selling Hummers completely.

In a statement, the Chinese manufacturer Sichuan Tengzhong Heavy Industrial Machines stated that it had withdrawn its bid due to its inability to obtain Chinese government approval.

Nick Richards, a spokesman for Hummer, stated regarding Hummer’s wind-down,

“We just reached this decision today, so we’re just beginning the process. Typically, winding down a brand can take several months. If there are viable alternatives for part of the brand or all of the brand during the process, we’ll consider them.”

John Smith, GM Vice President of corporate planning and alliances, said in a statement,

“We have considered several possibilities for Hummer along the way, and we are disappointed that the deal with Tengzhong could not be completed. GM will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner.”

According to Daniel Becker, director of the Safe Climate Campaign at the Center for Auto Safety in Washington,

“Closing Hummer simultaneously improves the health of G.M., China and the planet. Hummer should rest in pieces.”

Learnings from Hummer Failure:

The Hummer failure story is a sign to innovators of how big companies can die out due to a lack of innovation.

In order to avoid such business failure, companies must use an idea management tool. 

An idea management tool enables an innovation culture, maximizes productivity in the organization, helps in overcoming barriers to innovation and much more. 

Take a free trial of our idea management system today!

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