The road ahead for Hummer

General Motors and Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd have entered into a "definitive agreement" for the transfer of Hummer to the Chinese company.

In a press release issued by GM in the US on Friday of last week, the agreement speaks to Tengzhong acquiring the "ownership of the HUMMER brand, trademark and tradenames, as well as specific IP license rights necessary for the manufacture of HUMMER vehicles."

The press release declared that under the auspices of the agreement, Tengzhong would "also assume the existing dealer agreements relating to HUMMER's dealership network."

Tengzhong will purchase Hummer through an investment company which will take an 80 per cent share in Hummer, while the remaining 20 per cent will be allocated to a Hong Kong-listed company named Lumena.

In and of itself, the agreement leaves a lot of questions unanswered for local dealers and staff employed within GM Premium Brands marketing the Hummer brand. However, Holden's National Media Manager, Scott Whiffin, says that nothing is truly set in concrete as yet.

Certainly the press release from GM indicated that the sale process would not move forward without the transaction being "subject to customary closing conditions and regulatory approvals and/or review by government agencies in the U.S. and China."

"At this stage it's absolutely business as usual," says Whiffin.

"There is no change to the dealer network or the distribution channel. Closing of the sale process in the US is contingent on regulatory approvals in both the US and China," he confirmed with the Carsales Network yesterday.

So there's at least one bureaucratic hurdle to overcome before the transfer of Hummer from GM to Tengzhong takes place. Under the agreement, the press release states, the company will continue to operate as per the status quo, building both the H3 and H2 models in different plants. While it ensures job security for 3000 Hummer workers in the US, there was no mention of the Port Elizabeth plant in South Africa, where the H3 is converted to right-hand drive.

"In Australia there are no changes for customers or dealers to sales and service arrangements," says Whiffin, "Likewise warranty agreements will continue to be honoured."

Sales of H3 in Australia have not enjoyed the same level of consumer support that Jeep has -- admittedly over a longer period of time. Both brands grew out of US defence procurement, but whereas Jeep is a long-established brand in this country, Hummer barely gained a foothold before the onset of the Global Financial Crisis and General Motors' consequent Chapter 11 bankruptcy proceedings.

For the year to date, the Hummer has sold 403 units locally -- less than half the number sold last year (923), which was also the same figure as the number of Dodge Nitros sold this year, coincidentally. Where sales of the Dodge continue apace, the Hummer is fast letting slip market share. Just 12 cars were sold last month, versus 41 in September 2008.

In Australia, Hummer's misfortunes just add to the problems faced by GM Premium brands. Originally intended to be a tripartite formation comprising Hummer, Saab and Cadillac, the subsidiary, supported locally by Holden, had to abort the introduction of Cadillac earlier this year as the Global Financial Crisis worsened.

In recent years, Saab, as well as Hummer, has been one of the underachieving GM brands, both here and abroad. At least things are picking up for the Swedish brand, with a new 9-5 soon to burst onto the scene here and the parent company for Swedish Supercar builder, Koenigsegg, in the wings to take Saab of GM's hands.

How these convoluted transactions will impact local operations remains unclear.

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