Humvee Gets Discharge Papers

The U.S. Army will not renew its contract to purchase Humvee military vehicles from AM General Corp. when supplier's contract expires in November. The decision was revealed in the Dept. of Defense's latest budget, which was announced earlier this week.

Mishawaka, Ind.-based AM General, which sold its non-military Hummer brand to General Motors Corp. in 1999, has provided even more rugged Humvee models to the army for 25 years. But the Army says the SUVs don't provide the necessary protection against the latest-generation of road-side bombs and improvised explosive devices being used against U.S. troops in Afghanistan and Iraq.

Several other companies, which have developed new models with special reinforced underfloors, are vying for the Army contract. AM General still has about 2,600 Humvees on order from the Army that it plans to complete by October. Although it has contracts with other branches of the U.S. military and with other countries, the Army constitutes more than 80% of the company's business.

In addition to the Humvee, AM General produces the Hummer H2 on a contract basis for GM. Last summer, GM inked a preliminary deal to sell Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery Corp. The deadline for the sale, which has met some opposition in China, has been extended until the end of the month.