Global sales of Hummer were down 62 percent in the first quarter this year, having already fallen by half from 2007 to 2008. Hummer sales in China are miniscule, and the market has fallen dramatically in the U.S.
Global sales of Hummer were down 62 percent in the first quarter this year, having already fallen by half from 2007 to 2008. Hummer sales in China are miniscule, and the market has fallen dramatically in the U.S. Getty Images
Hummer owner Liu Haiyun in Shanghai belongs to an off-road club and is trying to organize a gathering of 100 Hummer owners in China. "Buying Hummer proves your power," he says. "It shows your value."
In China, a heated debate is under way about the viability of the bid by an obscure Chinese machinery maker to buy ailing General Motors' Hummer brand.
A day after it declared bankruptcy, GM announced a tentative agreement to sell the Hummer line to Sichuan Tengzhong Heavy Industrial Machinery Co. Tengzhong Heavy Industrial is a 4-year-old company that has just 4,800 employees in China, according to its Web site.
GM has voiced hopes that the deal will save 3,000 autoworkers' jobs in the U.S.
But China's state-run media has heaped scorn on the deal. "A snake swallowing an elephant," said one commentary in the state-run media. Even the staid China Daily opined that the deal "obviously does not make sense."
Hummer's sales in China last year were a tiny fraction of the worldwide total. Hummer sold 547 vehicles in the country of 1.3 billion people, compared to 27,468 Hummers sold in the U.S.
Four-Wheeling In The New China
The media reaction has been telling: Hummer, an all-American symbol of excess, is not welcome here, reflecting China's growing disenchantment with American-style excess.
But in some circles, Hummer fever is catching in China. Among the super-rich, a large gas guzzler is the status symbol to top all others. Videos circulate online of wedding corteges made up solely of Hummers.
Hummer owner Liu Haiyun in Shanghai says he can absolutely understand why a Chinese company would want to buy the Hummer brand.
"Nowadays, from the point of view of doing business, it's all about image," he says. "Buying Hummer proves your power. It shows your value."
Liu bought his own Hummer in 2004, and has since covered 75,000 miles in it, mostly with his off-road club.
He is planning a gathering of 100 Chinese Hummer owners later this year. He constantly receives telephone calls from other Hummer owners seeking advice about how to customize their vehicles.
Liu loves the idea of Tengzhong Heavy Industrial's acquisition of Hummer, which he sees as more evidence of China's increasing global influence.
Obscure Company, Shaky Deal?
But auto industry analyst Michael Dunne of J.D. Power and Associates says that Tengzhong, a manufacturer of heavy equipment, seems to have come out from nowhere in the bid for Hummer, and that could be a problem. Even inside China, he says, "99 people out of 100 would say, 'I have not heard of this company until this deal struck the papers last week.' "
The deal has exposed Chinese sensitivities about foreign acquisitions. The China Daily says it shows Beijing's lack of purchasing power: Chinese companies have been blocked from pursuing major acquisitions, it says, yet are encouraged to take second-rate deals like this one.
Li Shufu, chairman of Geely Automobile, a Chinese car manufacturer, told the Chinese press that he was contacted several times by Hummer, but he had no confidence in its market future.
Global sales of Hummer were down 62 percent in the first quarter this year, having already fallen by half from 2007 to 2008. Hummer sales in China are miniscule, and the market has fallen dramatically in the U.S. — 71,159 vehicles sold in 2006 compared to the 27,468 last year, according to J.D. Power.
Some Chinese newspapers say Tengzhong has not yet secured the financing necessary for the deal. Others suggest the Chinese company may have trouble getting the deal approved by various Chinese government agencies.
"If I had to bet, I would probably bet against it going through, but crazier things have happened," says Chip Chaikin, managing director of Blue Point Capital Partners in Shanghai.
He points out that this deal runs counter to China's auto policy in two important ways.
"One is to promote consolidation of car producers in China: to make it a more competitive industry with greater scale. Introducing a new producer of cars is not really in anybody's inbox. The second is to increase efficiency of cars and more ecologically friendly cars. It's difficult to think of a brand that runs more counter to that than Hummer," he says.
Tengzhong has said it aims to produce a more fuel-efficient Hummer, but there are doubts as to whether it has the experience to do this.
Some observers think that this could simply be a publicity stunt; through its bid, this obscure machinery maker has achieved a level of global hype that no amount of advertising could have achieved.
But for true believers like Hummer owner Liu, this could be the beginning of a beautiful new era.
"After Hummer comes to China, the price will drop a lot. For many men, owning a Hummer is a dream. They lust after it," he says. "So if the price drops, there'll be a big market for Hummers here."