No-interest financing has lost its muscle as far as General Motors Corp.’s Hummers are concerned.
Hummer buyers are increasingly opting for GM’s cash rebates on the vehicles — or forgoing the purchase altogether, dealers told Auto Finance News.
“Hummer has a perception of being a gas-hog and not environmentally friendly, so it has two things going against it,” said Scott Zislin, business manager at Coral Cadillac Hummer. Sales are down 25% to 30% for the Pompano Beach, Fla., dealership.
Nationwide, though, the decline is more dramatic. Year-over-year Hummer sales were down 59.3% in June, to 2,072 vehicles, according to Automotive News data. Through the first half of 2008, sales were off by 40.4%.
GM’s most recent incentives, slated to end on July 31, consisted of either 0% financing for six years or the more popular $8,000 cash rebate. As for lease deals, offerings are sparse. “I would like to see them come out with some, but I don’t expect them to this late in the model year,” Zislin said, blaming the lack of lease incentives on the dealership’s drop in sales volume. Coral Hummer’s business relies heavily on leasing, he explained, adding that “even at 0%, the payment is still more affordable to lease than to buy — there’s a lower down payment and a lower monthly payment.”
Meanwhile, at Jim Riehl’s Friendly Hummer, some customers who have historically leased vehicles are opting, instead, to buy them, said sales manager Dave Sandow. Lease volume at the Clinton, Mich., dealership has plunged to 60% from 95% to 98%, he said, which may be the result of GMAC’s lease-to-purchase program. The program, instituted a few months ago, tacks on another $2,000 cash rebate for existing lease customers who opt to finance their new vehicles.
In all, the dealership’s volume is down by 50%. Part of the decline, though, can be traced to reduced inventory, the result of a nearly three-month-long strike of American Axle workers, Sandow said. Also, the upheaval at GM has disrupted Friendly Hummer’s sales, since the bulk of the dealership’s customers are GM employees, he added.
In some cases, the sales decline has been mitigated. If volume drops by 5% this year at Beck & Masten Pontiac-GMC Truck Hummer Inc., Finance Director Benjamin Richert would be surprised, he said. The Houston dealership benefits from a relatively strong Texas economy, he added.
Meanwhile, Hummer dealers nationwide continue to try to persuade potential buyers that Hummers’ gas mileage is better than it’s portrayed. “The H2 is not economical [with gas mileage], but the H3 is as good as any Jeep, any Toyota,” Zislin said.
Besides, the difference in gas prices probably translates to a few hundred dollars a year for most drivers. “No one was crying when gas was $3 a gallon, and they’re freaking out when it’s $3.95 a gallon,” Richert said.
—Marcie Belles