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| Tiger in the tank |
| John Foley / Jun 05, 2009, 00:56 IST |
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Hummer: China gave the world gunpowder, the compass and paper. America replied with the muscle car, the mullet and subprime mortgages. Now the uneven trade continues: General Motors plans to sell its Hummer brand – an icon of American gaudiness – to little-known Sichuan Tengzhong, for a smattering of cash and pledge to keep US jobs.
The Hummer, originally modelled on military vehicles, has become roundly scorned in the US for being ostentatious, oversized and impractical. It was voted the brand least associated with value by online pollster Brandindex in May. High fuel costs have diminished its virtually non-existent charms. Sales volumes of GM’s three-tonne monster fell 40% in May, compared to the previous year.
Newly bankrupt GM should be glad of any outcome for Hummer that doesn’t involve boarded-up factories. An injection of Chinese capital will keep some 3,000 workers employed, and keep some of GM’s production lines busy. That matters more than the cash itself, likely to be no more than $200m.
As for Tengzhong, it's not the obvious owner for a sports utility vehicle brand. It’s not even a carmaker, but a conglomerate specialising in heavy-duty vehicles and highway maintenance machinery. Unlike carmakers though, Tengzhong has cash, and may feel it can learn some new tricks for building robust off-road vehicles. The idea of diversifying into high-end SUVs smacks of financial experimentation.
Unfortunately for China, Hummer is everything the Middle Kingdom needs less of. Its models boast fuel consumption of around 15 miles per gallon on a good day – less than half that of China’s top selling SUV, the Honda CR-V. A recent hike to forecourt petrol prices doesn’t bode well for SUV demand. Tengzhong may have to green up the Hummer to make it more than a niche brand.
The chance to snap up an American icon for peanuts means Tengzhong probably isn’t too worried about that. It should in any case win plaudits at home for its contributions to US-China co-operation. And there’s always the chance that the car that taste forgot will appeal to China’s penchant for conspicuous consumption – if only of gasoline.
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