It is now all but set. China machinery firm Tengzhong will pay GM $150 million for Hummer, one of the most well-known SUV brands in the world. A product by the same name has been used by the US military for several years. The Hummer came to symbolize the ability to conquer the American outdoors, at least by car.
Hummer was the victim, it seems, of the rise in oil prices last year. It was such a fuel guzzler that GM could not sell them. Gas prices went down this year, but Hummer sales did not recover. Some industry experts say that the problem was that Hummers were not well-built and defective cars kept shoppers away.
China has been in the car business for decades, making vehicles for its growing population of drivers. The nation will move into the No.1 spot for total car sales this year, passing the US which has held the top spot for a century. Hummer is China’s first foray into owning a global brand and facing competition from SUVs made by every major Asian auto company, the US’s Big Three, and several European car companies.
The Chinese will not find an easy time of marketing a brand outside their borders. Most major global auto companies are losing money now. Vehicles sales are not expected to grow much in 2010 in any major market except China. The dogfight for market share is vicious and Hummer sales have declined for some time.
The Chinese might have been better off buying a more promising brand, perhaps Pontiac, Saab, or Volvo. As it turns out, they are almost certain to learn a hard lesson.
Douglas A. McIntyre
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