One of nation’s largest Hummer stores to shut its doors

Tuesday, September 09, 2008

From a blog post by John D. Stoll on the site of the Wall Street Journal:

General Motors’s quest to sell its Hummer division may get a bit tougher after Tuesday.

That is when Dan Towbin–whose dealerships grabbed national attention as the backdrop for an A&E television series called “King of Cars“–will close his Hummer dealership, one of the brand’s largest stores in the U.S. and the only one in Las Vegas. It is at least the eighth Hummer dealer closing this year, nearly a 5% decline in the brand’s U.S. dealer base.

As GM tries to sell the Hummer brand, dealership closings are one of a handful of black marks the auto maker carries into negotiations with potential buyers. Critics have suggested it will be hard for GM to sell Hummer, and there is little good news for the brand–at least in the core U.S. market–to counter that skepticism.

This closing is notable because of where it is taking place and who is pulling the plug. It is, after all, one thing for enviro-friendly people in San Francisco–another city that recently lost a key Hummer dealership–to shun the brand. It is entirely different when Sin City decides the vehicles are too excessive. Towbin said Las Vegas is a custom fit for Hummer. “It’s all about bling and it’s in the desert,” he said.

And Towbin is an uber-Hummer enthusiast. He credits a Hummer with saving his life, and he counts a Hummer as his daily driver. “I feel very aligned with the brand,” he said. “Neither General Motors nor I wanted to go this way.”

But to move Hummers off the lot in August, buyers in the U.S. received an average of $8,861 in various incentives for each vehicle sold, according to Edmunds.com. Prices start at roughly $31,000 for the base H3 model run to $64,000 for the luxury H2 model. (Towbin says he was offering $6,000 in incentives, not including GM’s employee-pricing discount, hurting profit margins.) By contrast, BMW’s Mini spent $80 for each vehicle sold, Toyota’s Scion spent $131. Hummer discounts represent 22.6% of the price of the vehicle–the highest in the industry, Edmunds.com says. And still Hummer sales are down 47% this year, the largest decline of any brand, according to Autodata Corp.