That’s right, it’s the end or death of the H2 and especially the H1 (the worldwide ultimate gas guzzling SUV).  With gas prices showing staying power at around $4 per gallon consumers are being forced to rethink their choices in vehicles.  People are choosing smaller cars and crossovers compared to trucks and SUVs.  This is 100% due to the enormous pressure consumers in the U.S. are feeling at the pump and in their wallet as high gas prices near $4 per gallon are taking a serious dip into the average consumers’ finances.

This week GM has announced that due to declining sales of the entire Hummer product line (it isn’t even green to wear Hummer brand clothes or other products as it had been in the past).  The auto industry is getting hit hard by $4 per gallon gas prices.  You can easily tell this by looking at car salesperson positions – for the first time in history many car dealers are actually being forced to layoff car salespeople (Yes, car dealers have always had a reputation of firing unproductive salespeople when overall sales are good, but now they are forced with rapidly declining sales and increasing health insurance costs amongst other expenses). 

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This drop in vehicle sales isn’t just linked to GM, Toyota and others are all hurting big time.  Chrysler even just announced that sales have dropped 25% over the same period last year.  The problem is that both car manufacturers and consumers didn’t heed earlier warnings of higher gas prices.  The aftermath of Hurricane Katrina caused a big spike in gas prices that had everyone panicking and worrying about the world supply of oil running out.  Then it calmed down and gas prices came back down to the $2 to $3 range depending on which state one resides in (as some states are greedier and charge higher gas taxes on already financially strapped consumers).  Now it just keeps creeping up and even with the recent drop from $135 or so per barrel to $125 per barrel of oil, gas is still near the $4 per gallon mark and well over it in some states like California and Hawaii.

This increase in gas and fuel costs (as it affects diesel costs too) is widespread and effects nearly every industry out there as it greatly increases travel and transportation costs, manufacturing costs (all plastic items will go up as most are made with petroleum by products), etc…  Even produce, as marked by the recent agriculture boom or bubble, has skyrocketed largely in part to increased fuel and energy costs.  This is like a double or even triple whammy (if you also include the current housing bust or glut) and is really hitting consumers hard.  So when they fill up their large SUV that takes 35 gallons or so to fill up at the gas station and it ends up costing $120 to $140 or so to fill up they get desperate.

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In response to this increase in gas and fuel costs, consumers have already tried to cut corners where they could and now they are left with vehicle downsizing as the last resort.  GM announced that Hummer H2 sales are at an all time low (no wonder) and even H3 sales are dwindling as they only make a reported 15 mpg – and that’s Hummers smallest and most fuel efficient vehicle!  So, being that reasonable fuel prices are no where on the horizon, it is only fair to conclude that $4 gas per gallon prices are the virtual death of the ever popular big SUV’s, and most likely the GM Hummer brand.

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