If GM Sells The Hummer, What Next?
Tuesday was GM’s annual shareholders’ meeting and the news from GM Chairman and CEO G. Richard Wagoner Jr. wasn’t pretty: $3.3 billion lost in the first quarter of 2008, the closing of four truck manufacturing plants and the potential sale of the Hummer brand.
How did all this happen? For the past decade GM has relied heavily on trucks and SUVs as the breadwinners for the company and has all but ignored passenger vehicles because they were less profitable. The rapid increase in prices at the pump have forced consumers to switch back over to more gas-friendly vehicles. The change in consumer demand has hit GM hard in the pocketbook and has forced the American auto manufacturer to rethink it’s position in the industry.
GM’s Chevrolet Volt cannot possibly come any sooner. The 2010 expected release of the electric vehicle should prove to be the necessary change that could lift GMs profits - given the vehicle performs as well or better than current Toyota and Honda competitor vehicles. Even if GM can put together a new fleet of passenger vehicles, the road will be long and rough as J.D. Power anticipates less than 15 million new vehicles to be sold in the US. Another big obstacle for the American giant: trying to win back consumers who have already made the switch to Japanese vehicles.
