5 Reasons Hummer Lost $3 Billion Business in 3 years

Did you know that Arnold Schwarzenegger is credited with lobbying for the civilian version of Hummer through his movie - Kindergarten Cop?

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High Mobility Multipurpose Wheeled Vehicle (HMMWV or Humvee) was the brainchild of AM General Corporation, who were hired by Military to develop rugged multipurpose vehicles in the early 1980s.
The Vehicle gained fame during the Gulf War in the early 1990s, symbolising strength and durability.
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In 1992, AM General introduced the Hummer H1, a civilian version of the Humvee, responding to market interest shown by the vehicle's military success. The vision was to offer consumers a rugged, off-road vehicle with unmatched capabilities and a distinctive, bold design.
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The company gained decent initial traction by selling 1000 Vehicles, before its marketing rights were acquired by General Motors in 1999.
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Did you know that the Hummer SUV is actually shorter in length than the Toyota Camry?

Brand Positioning:

• Rugged Off-Road Capability​
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• Distinctive Design and Road Presence​
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• Unique Brand Identity with mix of Adventure and Luxury

Financial Journey:

• In 2002, GM launched the Hummer H2, It immediately became a status symbol for celebrities and off-road enthusiasts. Annual sales climbed to 35,000 units, GM’s Revenue from Hummer was estimated at $1 billion.
• Sales peaked in 2006, with approximately 71,524 units sold globally.
• Expanded into international markets, including Europe and the Middle East, as revenue scaled to $3 Billion around the time.
• In 2007, Sales started dropping to 56,000 units, as customers became environment conscious and wanted to look for more efficient cars.

Market Got Rough post 2007:

• Rise in fuel costs made customers wary of operational costs of a car, Hummer vehicles, known for poor fuel efficiency (averaging 10-14 MPG), became costly to operate.
• Hummer started facing criticism for high emissions and fuel consumption.
• In 2009, to pre-empt the further crash in business, GM announced a deal to sell Hummer to Sichuan Tengzhong Heavy Industrial Machinery Company but the deal fell through and it triggered a series of events causing the downfall of the business.

Brand Legacy:

GM tried to sell the Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Company, to focus on more sustainable models but the deal fell through due to regulatory issues in China. Without a buyer and mounting costs, GM decided to wind down Hummer in 2010, leaving a gap in the market for a rugged and luxury vehicle.
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Hummer tried to make a comeback in the recent years with its EV model, but its demand has largely stayed muted.
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Did you know that the new Hummer EV was so massive that its battery was equivalent to the weight of an entire Honda Civic?

5 Lessons Startups can learn from Hummer’s loss of $3 Billion:

1. Adaptability: Startups should remain agile, adjusting offerings in response to economic shifts, consumer preferences, and external factors.
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2. Embrace Sustainability: Develop sustainable products and adopt Industry initiatives to align with economy’s goal for greener ecosystem.
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3. Diversify Product Offerings: Avoid over-reliance on a single product line and Expand portfolios to include products that cater to different market segments.
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4. Align Brand Identity: Ensure that brand messaging resonates positively with community trends by Building a brand image that reflects responsibility and ethics.
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5. Invest in Innovation: Continuously improve products to be more efficient and user-friendly. Best way would be to prioritise research and development to enhance product performance and meet regulatory standards.