Archive for Wednesday, July 28, 2004

GM touts Alpha, its midsized Hummer

Analyst expects new series to reach larger customer base

July 28, 2004


— General Motors Corp.'s Hummer brand is scheduled to begin selling a midsize sport utility vehicle in the first half of 2005 and is planning a high-performance series of vehicles called Alpha.

Hummer, known for its hulking SUVs, hinted months ago it would add a midsize SUV to its lineup. GM provided specific details of the H3 for the first time Tuesday.

The automaker said the smaller SUV would feature a 3.5-liter, five-cylinder engine and offer the choice of a manual or automatic transmission. It also would have an electronically controlled four-wheel drive system, traction control and GM's vehicle stability enhancement system.

GM said the H3 would make its public debut at automotive shows beginning in the fourth quarter of this year.

The low-volume Alpha series will begin with the 2006 H1 Alpha, which is scheduled for launch in early 2005. The H1 Alpha will be equipped with GM's 6.6-liter Duramax turbo diesel engine, which GM said would provide more power, improved emissions performance and better fuel economy than the H1.

The H3 and H1 Alpha will join the H1 and H2 SUVs and H2 SUT, which went on sale in June and has features of both a large pickup and an SUV.

With a mix of muscle and sizzle, Hummers are considered a status symbol for many Americans and have attracted celebrities and athletes who aren't bothered by their steep sticker prices and gas mileage that barely rises above single digits. But the brand also has its critics, such as the Sierra Club, which faults the vehicle for its bulk and poor gas mileage.

The H1's price starts at $105,000 and the H2 and H2 SUT at roughly $50,000. GM gave no information on pricing for the two new vehicles, but CSM Worldwide analyst Mike Wall said he expected the price for the more-mainstream H3 to be between $30,000 and $35,000.

"The big challenge is going to be threading the needle with the right vehicle at the right price without diluting the brand and its image," Wall said.

After an 80 percent increase in sales from 2002 to 2003 -- 19,581 versus 35,259 -- Hummer business was off nearly 25 percent through June of this year. Wall said part of the problem was that "everybody in the pool they were drawing from already had their vehicle."

With the new H2 SUT and upcoming H3, he said, "they should be able to draw from a wider pool."

GM shares closed up 80 cents, or nearly 2 percent, at $43.46 on the New York Stock Exchange.

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