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GM sells Hummer to China — the second mistake by those clueless new owners?

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"GM sells Hummer to China — the second mistake by those clueless new owners?"

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http://www.rogerwendell.com/images/fueleconomy/no_hummers.gifChina’s Sichuan Tengzhong Heavy Industrial Machinery Company has agreed to buy the brand from GM, the two companies said yesterday, for less than $500 million, according to a source familiar with the transaction, well off its peak value of a decade ago.

The 7,000-pound gas guzzlers are rolling out of an environment that became increasingly hostile toward them and into one whose go-go industrialism and lack of regard for the environment — until very recently — resembled that found in the United States a century ago.

So reports the WP in “Hummer’s Home: China, the New Land of Excess.”

Less than $500 million?  That’s a rounding error in the cash giveaways to the auto industry these days.  Why couldn’t we just swallow that cost to forever remove from the planet this unsustainable blight?

Who are these clueless new owners of GM anyway?  Oh.  Never mind!

Seriously, though, this is the second mistake GM/Obama/you-and-I are making:

As part of its downsizing, GM is trying to sell off brands that no longer fit the company’s — and the White House’s — vision of its future. Hummer is the first to go. Saab has three bidders and 16 parties have expressed interest in Saturn, GM said yesterday.

So 16 companies have expressed interest in Saturn.  What a non-surprise.  Saturn is obviously a still-attractive brand that makes precisely the kind of small cars (and hybrids) that are the inevitable winner in our peak oil and climate-driven near future.

But the big execs at GM always viewed Saturn as a skunk works, as an effort to show that the “GM way” doesn’t work, so they did everything possible to kill it, and now they will sell it off to some eager competitor.  When I wanted to buy an American car in the mid-1990s, I settled on a Saturn, which was a terrific car for me for 10 years.  Had GM not abandoned at the start of the Bush administration the hybrid vehicle development program the Clinton administration started with them in the early 1990s, Saturn might well have had a good hybrid by the time I was looking for a new car.  But they didn’t.  And so I bought a Toyota Prius.

Now Saturn has hybrids and a unique brand, which can easily be revived by a smart nimble car company.

As for Hummer, I suppose you could argue that if China plans to build obscenely big gas guzzlers, they could do so on their own with or without Hummer.  And you can certainly argue that once peak oil kicks in big-time over the next 5 to 10 years, and oil prices shoot over $5 a gallon, nobody is going to be terribly interested in Hummers, which suggests GM/Obama/you-and-I are smart [not dumb?] to get some money for it.

Perhaps, but as one of the owners of GM, I’d very much like to know what this “less than $500 million” price was.  If it was a lot less, then this sale is unjustifiable on any grounds.

I think the whole brand should have been shuttered.  And if the Chinese wanted to spend many billions of dollars building their own production capacity for gas guzzlers, let them.  But that’s no reason for us to act as Dr. Kevorkian in this unsustainably suicidal behavior.  My buyer’s remorse grows!

What do you think?

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18 Responses to GM sells Hummer to China — the second mistake by those clueless new owners?

  1. Peter Bellin says:

    I agree. I would have preferred to have the brand shuttered. I think it is terrible to see a move to again emulate our past errors, in a land with such a large population of potential car buyers. In todays LA Times, the article commented on the image of the Hummer (adventure) as the value.

    I see visions of Chinese urbanites using Hummers the same way many Americans do. Even at an improved efficiency, it will not achieve 40 MPG.

    I also agree about their selling the Saturn brand. It seems they are having a hard time breaking in a new way of thinking of the brand GM.

  2. Better Panic says:

    Another example of the love big corporations have for the future of us all. Why would one expect any different from CEOs that are far more concerned by their absolutely insane bonuses then they do for the company and the people that make it up.

    Better Panic

  3. Rick Covert says:

    Well good luck with that one China. Bon appetite.

    Hummer was always the car for the rich of us. The reason most Americans bought the car was that tax credit the practically paid for the cost of the car that Bush Energy Secretary Spencer Abraham glibly defended by saying we don’t tell what kind of car that buyers can purchase with the tax cut when he was interviewed on 60 minutes.

    You can see the exchange in “Who Killed the Electric Car.”

  4. Brendan says:

    Outside of this post, I’m not getting the impression that the Chinese company bought Hummer to export it to China. The other articles imply that GM would continue building the H3 (based on existing GM platforms) for the new Hummer through contracts through at least 2010. I get the impression that this will be a “hold over” to generate some income while the company re-establishes itself. Seems to me that this company was looking for a way to get into the American market more than a way to build urban assault vehicles for China. To inherit the talent at Hummer is probably well worth whatever pittance they paid for the company, even if they go a totally different direction with their vehicle offerings. One of the biggest challenges the Chinese face getting into the American market is having the background knowledge to meet all of our emissions, safety and other regulations, which are much more strict than theirs. Gas guzzlers and sub-compacts alike must meet these regulations, so buying Hummer may have been a very cheap way to buy a lot of workers who are experienced in the industry. What these workers designed and built before is much less important than the inherited knowledge and infrastructure. I wouldn’t jump to conclusions quite yet.

    I think the Chinese are smarter than they’re being given credit for. If they have any common sense, they know SUVs are not going to sell well in the US, and they know they can get Chinese labor cheaper in China if they want to design and build an SUV for China. I have to believe what they bought was experienced American workers who can design cars to American standards and are familiar with American styling and amenity preferences. It will remain to be seen how they use these workers, but my money is not on them producing Hummer-sized SUVs indefinitely. I won’t be surprised if they keep Hummer around as a boutique brand and spin off a car division under a different name. The latter would be the real money maker.

  5. Tom says:

    The Chinese will fail with Hummer, just as hundreds of Asian and European companies have failed with “bargain priced” and unwanted American companies over the years. Hummer will be just another example of Americans laughing all the way to the bank. You need think no further than the sale of Chrysler to Daimler. Only Chrysler stockholders and management won with that deal.
    As for Saturn, let’s hope it falls into the hands of someone who wants and knows how to build the car of the 21st century. Perhaps the new Saturn will be something it never would be with GM, a successful leader.

  6. K L Reddington says:

    Chinese Hummer? Awesome deal. If they did a knockoff, we get no money. This raises several questions. Will they leave it here and alone or move the tooling to china and build there? I understand Cessna has a small plane being built in China. General aviation avgas is still leaded also. international standards. 100 octane

  7. no name says:

    You know who will buy the hummer? the rich in china and those countries that we are paying part of the $5/gallon gas too.

    china probably has the low costs labor to make it work.

    Iraqis Snap Up Hummers as Icons of Power
    http://www.nytimes.com/2009/03/30/world/middleeast/30hummer.html?_r=1&scp=5&sq=hummer%20iraq&st=cse

  8. gmo says:

    I would guess the logic for not shuttering the brand parallels on a smaller scale that for not just letting the the whole of GM go down – wanting “soft landings” as opposed to rapid disintegration for flailing companies. The Administration seems to want to focus on minimizing job losses as much as possible during the economic downturn. Not to say it is the right choice, but I would guess their calculus was that the public/political/symbolic negative of killing the entire brand and the X jobs lost (the WSJ article indicates at least 3000 at stake with Hummer, though with 21k total GM already said to be going away…) would be worse than a positive of being able to say we are taking a step forward in abandoning that foundation of sand, or however Obama phrased it.

  9. paulm says:

    for sure, but what about the coal utilities?

    They need to be shutdown some how soon too.

  10. K L Reddington says:

    Vestes just laid off 600 people in the UK. Wind turbine sales are drying up.

    [JR: Nice try. Slowing from their torrid growth rate, maybe.]

  11. Jim Beacom says:

    Um, folks? Aren’t we forgetting that the U.S. military replaced all of its jeeps with Hummers about 20 years ago? Back then it was called the High Mobility Multipurpose Wheeled Vehicle (HMMWV or “Humvee”… thus the commercial variant was called was the “Hummer”. Get it? Cute huh? About the only thing cute about this gaz-guzzling yuppie monstrosity).

    It was only after certain types of wealthy people started going ga-ga over the ugly military design that they decided to market a commercial civilian version in 1992.

    The government has no choice but to keep Hummers in production for the military until they can come up with something else to replace it. So what to do? Aha! Sell the division to the Chinese, move production of our basic military transport vehicle off shore and let it be made more cheaply by someone who was, until very recently, our mortal enemy.

    Brilliant!

  12. ecostew says:

    Is China getting US sales access along with the deal?

  13. Frank C. says:

    Saab has a long history of excellent safety, fun driving characteristics, and fuel efficient yet powerful turbocharged 4 cylinder engines. This has been somehow lost in the debate around auto mpg and GM.

    I believe that with the right marketing and resources it is a viable brand. Saab’s are good today, and that is with underinvestment.

    They are a fine deal used.

  14. no name says:

    “Sell the division to the Chinese, move production of our basic military transport vehicle off shore and let it be made more cheaply by someone who was, until very recently, our mortal enemy.”

    the military and civillian hummer companies are different companies.

  15. David B. Benson says:

    Gas prices locally have rapidly shot up to $2.739.

    $4 by the end of the year? :|

  16. Mike D says:

    Humvees are built by AM General, a (100% American-owned) defense contractor. They leased the design and name to GM.

  17. Joe!?! says:

    The new Joe would expect natural gas to fuel the future Hummers for a very long time

  18. Hendo says:

    What a twist! As I understand it, the Hummer was built in the same factory that turned out the EV in the 90′s. I had the impression that the Hummer was a better commercial option that the EV at the time.
    I like the irony.