As GM faces $4 gas, it's bye bye Hummer

General Motors Corp. (NYSE: GM) is finally facing the reality of $4 gas. The automaker today announced is plans to close four plants and introduce smaller, more fuel-efficient cars. More importantly, the company is considering selling its gas-guzzling Hummer brand.

Bloomberg News quotes GM Chief Executive Rick Wagoner as saying that the plant closings will save $1 billion and cut North American truck capacity by 700,000 vehicles. About 10,000 jobs may be cut as the result of the closures. GM's board also approved the production of a new small Chevrolet car in a plant in Ohio in 2010 and the Chevy Volt electric vehicle in Detroit, according to the Associated Press.

Wagoner's turnaround plan for GM, which was started in 2005, has hit a brick wall. Sales of pick-ups and SUVs are plunging as gas prices are rising. GM has already shifted much of its health care costs to the UAW but more needs to be done to help the automaker remain competitive.


Among the first things that GM needs to do is to put the brakes on Hummer. The gargantuan behemoths pose a danger to other drivers unfortunate enough to wind up in an accident with them. Moreover, their gas mileage is terrible, averaging 14 miles in the city and 18 on the highway, according to FuelEconomy.gov. That seems to be at odds with the company's embrace of tougher CAFE standards and its commitment to being green. In fact, the company brags that it offers more vehicles that achieve 30 mpg, more flex-fuel vehicles that can run on E85 ethanol and a two-mode hybrid system found on GM's full-sized light trucks.

Times have changed since the Hummer was first introduced.

"After 9/11, Hummers became a cocky symbol of American greatness," writes Daniel Gross on Slate.com. "Driving the biggest, baddest, least-fuel-efficient car on the planet was tantamount to giving the finger to environmentalists, Arianna Huffington, and all those who suggested that the involvement of Saudi citizens in the attacks should lead us to rethink our dependence on foreign oil."

Americans have fallen out of love with the Hummer and fallen in-love with smaller, more fuel-efficient cars such as the Toyota Prius. GM had no choice but to respond to changing consumer tastes. Too bad it did so about two years too late.
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