May 12 (Bloomberg) -- General Motors Corp. is scrapping the Hummer H1, its five-ton military-style truck that sells for as much as $140,000 and has been a target of environmentalists because it travels fewer than 10 miles per gallon of fuel.
Production will end in June because low sales don't justify the cost of a redesign, spokesman Nick Richards said today. U.S. sales this year through April fell to 98 from 104 a year ago. Annual sales peaked at 875 in 2000, the first year Detroit-based GM sold the H1, its biggest and most expensive model.
GM, the world's largest automaker, expanded the Hummer brand with the smaller, less-expensive H2 and H3 sport-utility vehicles. The H3, the first Hummer that GM builds itself instead of getting from military-vehicle maker AM General LLC, debuted last year and helped the brand's sales almost double in 2005 and nearly triple this year through April.
``I think every dealer you talk to will say GM made a very good decision because the H1 is big, it's expensive and it doesn't sell very well,'' said Carl Sewell, a Dallas-based GM dealer who has three Hummer outlets in Texas. ``The H1, we'll sell three or four a year.''
GM said fuel costs weren't a reason for the decision. The H1 uses diesel fuel, and the average U.S. retail price rose 30 percent in the past year to $2.90 a gallon, according to federal government figures. At that price, filling the H1's 27-gallon main tank and 24.5-gallon auxiliary tank costs almost $150.
U.S. sales of the H1 totaled 374 last year.
``It's a low-volume, exotic niche-market vehicle that because of its volume doesn't justify investment in new updates,'' Richards said. ``We'd rather invest in the marketing and development of future products that will continue to grow the brand.''
Jeff Edwards, sales director for Hummer, said GM is considering ways to further expand the brand. He said one possibility is pickup-truck versions. Hummer is GM's second- smallest brand, ahead of Saab.
GM later this year plans to add a more expensive version of the H3, which has a starting price of $29,500 and accounted for 16,582 of the 22,397 Hummers sold in the U.S. this year. The company builds the H3 in Shreveport, Louisiana, and in Russia and expects to start producing it in South Africa during this year's fourth quarter.
The H3 is the smallest Hummer, at 5,850 pounds, and is rated by the U.S. government at 16 miles per gallon in city driving and 20 mpg on the highway.
Too Heavy for Fuel Standards
The H1, at a gross weight of 10,300 pounds, and the H2, at 8,600 pounds, are too heavy to come under U.S. fuel-economy standards. The H2 will be covered by revised rules announced in March. GM estimates the H2 averages about 13 miles per gallon.
AM General builds the H1 and H2 for GM and also makes the Humvee, the military vehicle on which H1 is based. AM General is based in South Bend, Indiana, and produces the H1 and H2 in Mishawaka, Indiana. GM bought marketing rights for the Hummer name in 1999 from AM General.
``The H1 has never been a high-volume vehicle, but for those people who really love the off-road experience in a big rugged way, it was perfect,'' Sewell said.