Summary
General Motors, in another step towards cutting its brand count in the U.S. as it recovers from bankruptcy, is ready to complete a deal to sell its Hummer brand to a Chinese company that builds heavy machinery. Hopefully, future sales will all be made in China.
Analysis
The Chinese seem to be following in the footsteps of Japan. A country and its citizens hit the big time exporting cheap products all over the world and they go on a spending spree.
My question is why in the world a company in China wants to build Hummers? Most people I know that lost temporary control of their senses and bought one of these things sold it within a year. The novelty wore off pretty quick. Even rich people who buy things just to buy them no longer covet Hummers.
Hummer entered the civilian market in 1992. Non government Hummer sales were averaging between 800 and 1,000 units when GM bought the brand in 1999 from AM General which has continued to build the Humvee armed forces version.
Hummer's U.S. sales peaked at 71,524 in 2006, before demand was choked by soaring gasoline prices. Sales through September of this year dwindled to 8,193.
What little market might still remain in the U.S. for these things is going to get flattened over the next few years by "green" regulation. Sichuan Tengzhong said they are going to keep build them in this country, so does it mean that they see China as an export market? It might be a novelty item - again for the newly rich - but somehow guiding a Hummer around the choked streets of Peking does not sound like fun. And what about all the talk we hear about China leading the way in electric vehicles. Is it possible to build a battery big enough to power a Hummer? Who would really want an electric Hummer?
In the past we've done a pretty good job of foisting expensive real estate and golf courses to foreign buyers. Looks like we haven't lost our touch.
Jack Sayer consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
