Longing for the days of Hummer?

DETROIT -- Dealer Joe Serra lost more than 1,000 customers a year when General Motors phased out Hummer about five years ago.

Some of them returned -- but only after Serra added a Jeep franchise, one brand that seems to offer the sort of capability and cachet that meets erstwhile Hummer customers' tastes.

"Thank God I was able to acquire Jeep and retain some of those Hummer people," says Serra, owner of Serra Automotive Inc., which has 34 dealerships in seven states and sold 1,462 Hummers from its Grand Blanc, Mich., store in 2006. "Jeep has it going on right now. It's like they've got that niche all to themselves."

Booming sales of pricey SUVs, tame gasoline prices and the torrid growth of Jeep have left some former Hummer dealers and brand loyalists to wonder what might have been. It also has rekindled chatter about whether GM should take another run at a Jeep Wrangler fighter.

GMC chief Duncan Aldred stirred the pot anew recently, telling Edmunds.com that an "active all-road, Wrangler-esque type of vehicle" could be a possibility for GMC's lineup.

IHS Automotive senior analyst Tom Libby thinks such an entry would have a ready-made audience.

"There is space in the marketplace for this combination of off-road capability and patriotism now occupied only by one brand: Jeep," Libby says. "GM ceded that space when Hummer went away."

Few might have predicted such an appetite for gasoline-thirsty, off-road SUVs in June 2008. At GM's annual shareholders' meeting that month, then-CEO Rick Wagoner announced a potential sale of Hummer, citing the "rapid rise in oil prices."

"We at GM don't think this is a spike or temporary shift," Wagoner said. "We believe that it is, by and large, permanent."

Hummer also had other problems. It had become a symbol of American excess and of GM's strategic missteps. After Wagoner's announcement, a Sierra Club spokesman was eager to write the brand's epitaph, saying it "embodied the worst impulses of the American auto industry."

And Hummer likely was far less profitable than GM's other truck lines, at a time when GM needed all the profits it could muster. The H2, its most popular nameplate, was built by AM General, likely carrying lower profit margins than GM's other trucks. The H3, launched in 2005, required a costly modification of the same platform that underpins the previous-generation Chevrolet Colorado and GMC Canyon.

"It would have taken a sizable investment to keep that going," AutoPacific Inc. analyst Dave Sullivan says.

GM isn't looking in the rearview mirror on its decision, spokesman Jim Cain says.

"I wouldn't trade our portfolio of trucks, SUVs and crossovers for anyone else's right now," Cain says. "With the products we have coming in the pipeline, our competitors should be worried."

There's little doubt, though, that Hummer's trail would have proved far less rocky than GM executives envisioned six years ago.

The "permanent" shift in gasoline prices that Wagoner warned of has turned out to be anything but. Gasoline prices have not returned to their 2008 peak and are hovering at a four-year low. Experts now predict long-term stability in gasoline prices amid the boom in U.S. natural gas production in recent years.

The long run of relative price stability has helped fuel a resurgence in big SUVs. Sales of premium SUVs surged 78 percent from 2009 to 2013, vs. 49 percent growth in overall industry sales, according to the Automotive News Data Center.

More striking are the spiraling prices that American consumers are willing to pay for them. Average transaction prices for large, luxury SUVs, Edmunds.com data show, surged 19 percent from 2009 through the first 10 months of this year, to $77,822. Overall industry prices rose 12 percent in that span.

The sharp rise of Jeep sales -- which have more than doubled since 2009 and already have broken the brand's record this year -- also gives heartburn to many of the roughly 170 former Hummer dealers who have watched some of their most loyal and affluent customers disappear. IHS Automotive data prepared for Automotive News show that Jeep is the brand that has made the most inroads into that marooned customer base in recent years.

In 2010, just 5 percent of Hummer owners traded in their SUV for a Jeep, putting Jeep eighth out of all brands. By 2013, Jeep had surged to the third most popular brand for Hummer castoffs, and through August this year, it was second, accounting for 12 percent of all Hummer trade-ins.

"Many of those Hummer owners have been returning to the market in recent years," Libby says. "Jeep has been benefiting tremendously."

Chevrolet consistently has been the top brand for migrating Hummer owners in recent years, the IHS data show. Ford, Toyota, GMC and Cadillac are among the others.

Dealer John Bergstrom, whose Bergstrom Automotive in Wisconsin owned four Hummer dealerships, thinks GM could keep those orphaned Hummer owners with an outdoors-minded SUV that's more refined than a Wrangler but more off-road-capable than the unibody Cherokee or Grand Cherokee. He envisions something with a smaller footprint, an eight- or nine-speed transmission and other fuel-saving technologies. 

"I don't think I'd try to refloat the Hummer name -- it could be a Chevrolet or a GMC -- but you need a vehicle for that niche," says Bergstrom. 

"GM has this built-in knowledge base from what they learned from Hummer. They know that market." 

Downsizing and alternative propulsion were in the plan when Hummer met its demise. GM had a Wrangler-sized competitor in the works, called the H4. There had been talk of hybrid versions. 

AutoPacific's Sullivan doubts that GM regrets killing Hummer. "I'd say GM's SUV portfolio is in pretty good shape," he says. But he agrees that there is an opportunity for GM -- GMC in particular -- to go after the off-road space now dominated by Jeep. 

"That's GM's premium truck brand. It could really use something unique that would set it apart," Sullivan says. "I could see some sort of Hummer idea being taken out of the mothballs to do that."