If I heard that someone had actually bought a Hummer in this day and age, I'd consider that big news. So when I heard that someone actually bought the entire company, the Hummer brand, I considered it enormous news. As you doubtlessly know by now, if the deal is approved, a Chinese company will buy the Hummer division from General Motors. This raises many questions, but the big one is WHY?
Last year, sales of Hummers fell 51%, and they are down 67% so far this year. Maybe the new owners think that those who weren't buying Hummers were saying to themselves, "What's holding me back is that they're a General Motors product. I'd buy one of those things if they were just owned by a Chinese company."
The prospective owner is Sicuan Tengzhong, a heavy machinery company. They say they plan to keep selling Hummers in America and all over the world, including China. In China, the Hummers would be subjected to a 40% tax that they impose on vehicles with big engines. So, good luck on that. The good news is that Sicuan Tengzhong says that they are going to continue to manufacture Hummers in this country. So at least for now, approximately 3,000 Americans will be able to keep their jobs. But if I were those workers, I'd keep one eye on the want ads, because I don't know how long they're going to keep making these simulated military vehicles.
It's interesting that General Motors was able to unload Hummer before it sold Pontiac, Saab, or Saturn, the other brands that it is dumping. I would've thought Hummer would've been a tougher sale. After all, the Hummer had come to symbolize many of the admitted negatives of the cars that the American auto industry has been making: It's too big, it's not fuel-efficient, and it looks silly in a nursery school parking lot.
I guess those Chinese businessmen see something in the Hummer that I don't. The parties won't disclose how much money the Chinese company is going to pay for Hummer, but I'm sure it was a bargain. And maybe they made one of those deals the car companies keep advertising on TV -- you know, if the Sicuan Tengzhong executive who agreed to this deal loses his job, G.M. will take back the cars and the Chinese company won't owe a penny.
Legend has it that Hummers came about because of Arnold Schwarzenegger. Apparently, while making the classic film, "Kindergarten Cop," he saw a convoy of military Humvees drive by. He loved the way they looked, so he persuaded the Humvee company to make a civilian version, which became the Hummer. Can you imagine having that kind of power? You'd like to have something, so you talk a company into manufacturing it? I wish Schwarzenegger would look at a commercial aircraft, and call the people who make it and persuade them to make one that's comfortable in coach and always on time.
The Hummer story is filled with irony. Since it looks like a military vehicle, the Hummer has always projected the image of a super-patriotic American car. Some of them are even painted with a camouflage design. The company that made the Humvees that Schwarzenegger admired was located in America's heartland – in Indiana. Now you'd have to go to China to talk to the head Hummer honcho.
It's possible that this arrangement won't end up making either side happy. Why do I say that? Guess who G.M.'s financial advisor is for this deal. It's Citigroup. I'm not kidding. That's the same Citigroup that was so mismanaged that the phrase "toxic assets" came into the vernacular. It's the same Citigroup that received billions of bailout bucks. And that's who G.M. went to for financial advice? That makes about as much sense as a military vehicle company taking business advice from an actor who someday would be governor of a state that goes billions of dollars in debt while he's in office.
Like I said, I'm happy that you Hummer workers won't be thrown out of work, but keep your options open. And don't let them pay you in stock.