Posted by: Dexter Roberts on June 3, 2009
This is how mixed up the global business world has become: who should arise to snap up General Motor’s once popular gas-guzzling monster, also known as the Hummer? A private Chinese company I suspect most people have never heard of—I hadn’t and I have been a fairly frequent visitor to the city of Chengdu, Sichuan where it is based, and frequently write about China’s auto industry.
One reason for that may be because the likely purchaser—Sichuan Tengzhong Heavy Industrial Machinery Co.—has been a producer of road, energy and construction equipment, rather than the off-road vehicle maker it apparently now hopes to become. According to an announcement on Tengzhong’s website, the company will acquire the Hummer brand as well as its senior management and operational team. The notice also says that Hummer’s headquarters will be kept in the U.S., and that: “in an earlier statement, GM said it expects the deal if successful to secure more than 3,000 US jobs. The final terms of the deal are subject to final negotiations.” Hmmm—sounds a bit like they are hedging there. It will be interesting to see what those final terms are and what ultimately happens to those jobs. Finally, the statement says Tengzhong intends to expand Hummer dealerships around the world.
As my colleague David Welch points out, it is unclear just how smart this purchase will prove: “How much growth, if any, there is for Hummer is uncertain,” he writes, pointing that Hummer sales fell 51% last year, to 27,485 vehicles, as fuel prices went up and that the military association hasn’t always helped. “The Hummer’s militaristic, anti-green image played a role in knocking it from its perch as one of the hottest brands earlier in the decade.”