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Hummer dealer: 'It's not over yet'

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Hummer dealer: 'It's not over yet'

Some retailers hold out hope for buyer, struggle with costs

Chrissie Thompson

Automotive News -- March 1, 2010 - 12:01 am ET

Dealer Carl Sewell had a Plan B ready for his three Texas Hummer stores.

So when General Motors Co.'s sale of Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery Co. collapsed last week, Sewell said, he took it in stride.

"I was comfortable with it taking either path," he said.

With Hummer apparently winding down, Sewell's stand-alone Hummer store in Dallas will most likely become a Subaru outlet, he said. His Cadillac-Saab-Hummer store in San Antonio will drop Hummer. And Sewell said he hopes to have another franchise for his stand-alone Hummer store in Plano soon.

"We are always in the market looking for additional franchises," he said.

But while Sewell is prepared to move on, other dealers are holding out for a last-minute buyer to step in. Many of the 153 U.S. Hummer dealerships are still struggling with high costs of large, expensive dealerships built during Hummer's heyday about five years ago.

Dealer Will Churchill said he's waiting to see whether other Hummer bidders materialize before he decides the fate of the $3 million stand-alone store he opened in June 2005 in Fort Worth, Texas.

"It's not over yet," he said. "Everyone wants to put a tombstone on it. They've got two or three weeks to entertain offers. I think you will get something out of it."

If a Hummer sale looks remote by the end of March, Churchill said, he'll start acting as if Hummer is winding down. He has already cut costs by moving his Hummer operations into the Buick-GMC store he has 20 yards away.

With Hummer sales last summer down about 60 percent from 2008 levels, stand-alone Hummer dealer Jim Lynch opened a gun shop in his Chesterfield, Mo., store.

The guns have brought between $140,000 and $180,000 a month in revenue, Lynch said. In contrast, he said, his operating costs are "astronomical." The mortgage and property taxes alone come to more than $60,000 a month on the $7.5 million building he opened in 2005.

"I'm not sure it will pay for this huge building we have, but we'll just go through the wind-down and see where we end up after that," Lynch said.

Hummer's sale collapse means that the 655 H3s that GM's plant in Shreveport, La., made in January will be the last built, GM spokesman Otie McKinley said. Production stopped because of a 200-plus day supply, he said, compared with a goal of 60 days' worth. Former Hummer owner AM General's factory in Mishawaka, Ind., stopped building Hummers in February 2009.

Hummer's 67 percent sales decline last year was the steepest of any volume brand in the United States.

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