The Significance of the Hummer's Death
What the passing of the monster SUV means for socionomics and China.
Recently, James Chanos, president of Kynikos Associates Ltd., said that the Chinese market bubble is "Dubai times a thousand."
Not long after, Marc Faber, publisher of the Gloom, Boom & Doom Report, said, "I think the Chinese economy will decelerate very substantially in 2010 and could even crash."
Perhaps someone in Beijing is listening. Yesterday, the Chinese government rejected regulatory approval necessary for Sichuan Tengzhong Heavy Industrial Machinery Co. to purchase GM's Hummer unit for a reported $100 million.
To socionomic experts, this is a telling sign. It means the final surviving bull market -- China's -- is about to go into hibernation.
Nico Isaac of Elliott Wave International pointed to a 2006 essay by Mark Galasiewski called "Social Mood and Automobile Stylings":
"Cars reflect the spirit of their times… During periods of rising social mood [as reflected by rising stock prices]" cars take on more "angular styles, boxier frames, wider windows. As the mood rises toward excess, consumers also demand more room, bigger engines, and more sophisticated stylings, prompting designers to push the limits of length, width and height."
Conversely, Isaac noted, "A falling mood will see cars built of 'simpler styling and smaller capacities' and for 'increasing efficiency.' "
Galasiewski made a specific correlation between the markets, social mood, and the Hummer:
The AM General Hummer , a civilian version of the US military's M998 High Mobility Multipurpose Wheeled Vehicle (HMMWV or "Hum-vee"), was the archetype of late 20th century consumer extravagance. Its heavy weight, high cost, and poor fuel efficiency epitomized excess, its military pedigree, tank-like paneling, and complex grille projected muscularity and vigor, and its boxy angularity exuded manly decisiveness. The 1991 Hummer quickly attracted the attention of such bull market icons as the CEO of Coca-Cola (KO) at the time (who purchased the first 15) and Arnold Schwarzenegger (who reportedly purchased the first two Limited Edition versions and now owns eight Hummers in all).
General Motors purchased Hummer in late 1999 -- which, Galasiewski wrote, was "just in time for the end of the major bull market. The 2000 peak in the stock market will probably mark the end of the SUV expansion era as well (for this cycle, at least). Production of the largest SUV ever, the Ford (F) Excursion, began in that same year."
A few years later, Ford halted production of the Excursion and in June 2006, the last Hummer H1 rolled off the assembly line and was replaced by two smaller models, the H2 and the H3.
Ford's head of marketing described the collapse of the SUV market as a "watershed moment."
In 2007, Chris Webb, General Motors' exterior color and trend designer, presciently foresaw the social mood to come -- which we're experiencing now -- when he told CNNMoney that, by the 2010 model year, he hoped to "be able to produce special car colors with no sheen to them whatsoever, as dull as a dusty kindergarten chalkboard."
A far cry from the electric colors of muscle cars popular in the late '60s and early '70s, like the Pontiac GTO, with a 455 cubic-inch V8 under the hood:
The Chevrolet Chevelle SS, powered by a 454 cubic-inch V8 big block:
And the Plymouth Barracuda, which ran the legendary Hemi 440:
And so, as we bid adieu to the Hummer, let's take a moment to mourn the passing of the Chinese economic expansion, which, if history serves as a guide, will soon be nothing more than a memory.
Check out the video below for Hoofy & Boo's report on the Hummer:
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter