The selling of Hummer by GM to Tengzhong has been a well-covered media spectacle that currently remains a work in progress. Not surprisingly, many were skeptical when the news first broke that a little-known specialty manufacturer from China would be acquiring Hummer, a brand that, even though in recent memory had become more synonymous with stretch limos and upper-class suburbanites, carried significant value and recognition. Currently, the main holdup impacting the sale is the Chinese government, which needs to sign off on the sale before it can be finalized.
Because the Chinese government has remained mum on the issue, speculations and rumors surrounding the government’s stance on the sale have been circulating through various news outlets. In a recent piece from the Wall Street Journal, three reasons are presented why the Chinese government may not support the Hummer sale:
Reason 1: China does not want to introduce Hummer into its auto industry because of environmental concerns. Not only are the Chinese trying to cut down on greenhouse gases, they are trying to promote more fuel-efficient vehicles, too.
Reason 2: Tengzhong does not have the experience to run Hummer. Even though Hummer is not particularly large compared to other brands in the GM portfolio, it still takes a certain amount of know-how to work effectively in auto manufacturing.
Reason 3: The Chinese government may actually be backing Tengzhong, but are acting with uncertainty in order to cast doubt over the deal. This could potentially lower Hummer’s final selling price if GM becomes more desperate further along the line to unload the brand.
Rebutting to the points presented above, the aptly-named Hummer Guy at HummerGuy.net has come up with three reasons on the opposite end of the spectrum. The reasons why the Chinese government will support the Hummer sale are:
Reason 1: Hummer fuel economy is not as bad as it is made out to be. A similarly-equipped four-wheel-drive Hummer H3T and four-wheel-drive Ford F-150 are not that far apart in gas mileage (14 combined mpg for the H3T and 15 combined mpg for the F-150), but you hear less ruckus about the Ford.
- H3T equipped with 5.3L V-8 and four-speed auto, F-150 equipped with 4.6L V-8 and four-speed auto
Reason 2: Tengzhong’s experience with specialty, heavy-duty vehicles is more than ample to run Hummer. Its production capacity is over 10,000 vehicles per year, which is plenty for a niche brand like Hummer.
Reason 3: The Chinese want to make headway into the American auto market. Hummer is already well-known in the U.S and dealer networks are already in place. What would you rather buy: a Brilliance, Geely, or Hummer?
With these points being made, which side of the argument do you think presents a more compelling case?