GM's gas-guzzler now China's new ride

[smart142 605]

Chinese company emerges as likely buyer of the Hummer division of troubled auto maker

Gordon Pitts

Wednesday, Jun. 03, 2009 07:33AM EDT

As the likely economic superpower for a post-recovery world, China seemed to have everything, except its own mighty global brands. A Chinese company took a major step toward closing that gap Tuesday, emerging as the likely buyer of the Hummer division of troubled General Motors Corp.

It means the Chinese, who possess immense manufacturing and financial clout, are buying a powerful symbol and a famous automotive brand from the Americans, who own great labels but now lack the money or the production model to sustain them.

It is a critical step toward realizing the Chinese ambition of becoming fully integrated automobile players – not just joint-venture manufacturers, but owners and marketers of their own vehicles to be shipped to all corners of the world.

“This is just the beginning,” said Wenran Jiang, a political scientist at the University of Alberta who studies the rise and spread of China's economic muscle. “The Chinese will have more brands.”

The thrust into owning major brands is something Chinese government and industry have been discussing for years, he said, but the issue has always been timing. Now, with GM on the ropes – and military vehicle production excluded from the deal – the moment is apparently right.

After filing for bankruptcy protection on Monday, GM said Tuesday it has tentatively agreed to sell Hummer to Sichuan Tengzhong Heavy Industrial Machinery Co., based in Chengdu in western China. The buyer deals in road construction, plastics, resins and other industrial products, but the hulking Hummer would be its first step into the automotive business.

GM said the sale, whose price is undisclosed pending final negotiations, will likely save more than 3,000 U.S. jobs in manufacturing and engineering and at various Hummer dealerships. Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period.

That is being applauded by workers in Shreveport, La., where H3 and H3T Hummers will continue to be built through at least 2010. But after that, the Chinese will no doubt examine bringing their newly purchased brand back to their own lower-wage plants.

The Hummer may seem like a questionable purchase – an egregiously gas-guzzling SUV that, according to GM's critics, symbolizes all that is wrong with the lumbering auto giant. But in China, the Hummer holds special appeal, for it underlines the recent economic surge powered by a new middle class.

In China, the Hummer has emerged as the ultimate status symbol, the signal by a big boss that he has finally arrived. Even the name denotes macho swagger – according to Prof. Jiang, the pronunciation of Hummer comes close to a Mandarin word for a powerful stallion.

The newly rich entrepreneurs of modern China like nothing better than taking their Hummers on long weekend drives – often 10 to 12 of them linked in a convoy of the brassy U.S.-made SUVs.

“When the news first hit me, my reaction was: Now, they not only own the cars – they own the brand,” said Prof. Jiang.

He said the deal is all about China buying a recognizable consumer label – just as in 2004, a Chinese company, Lenovo, bought the rights to ThinkPad notebooks and other personal computer technology from IBM. “This is the automobile industry's equivalent of the IBM deal,” Prof. Jiang said.

It was inevitable for China to make a similar move in autos, he added. Last year for the first time, more cars were sold in China than in the United States. Global manufacturers, in joint ventures with local companies, are doing well in China, including General Motors. Often, they are transferring car-making technology to their Chinese partners.

In time, with the help of North American and European management, China will be exporting large amounts of automobiles to North America and Europe, he predicted. Even so, the Chinese aspire to have their own brands, and the critical decision is whether to buy these brands or create them. With Hummer, the decision was made to buy.

Earlier Chinese bids for big North American companies have been assailed for national security concerns. But this deal doesn't include Hummer's military vehicles. A private company in Indiana, AM General, builds the military version, known as the Humvee. AM General sold the rights to make civilian Hummers to GM in 1999.

The Chinese attraction to GM products goes back many years, symbolized by the popularity of plain, solid Buicks among party bosses and bureaucrats. But in this new age of getting rich, the Hummer has pushed out the Buick in the consciousness of the middle class.

Not all people like the trend, and there is a backlash against conspicuous consumption, Prof. Jiang said. Similarly, in North America, critics have seized on the rugged but fuel-inefficient Hummer as a symbol of excess as GM's financial troubles grew and gas prices rose. For the first four months of this year, Hummer sales were down 67 per cent.

But the Chinese apparently feel sales will rebound in a global recovery. Certainly, their own mine and factory owners don't seem to be paying attention. For these people, no replica of a European castle would be complete without a Hummer parked outside, Prof. Jiang said.

With reports from Associated Press and Reuters

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Source.

[booneylander 37]

Mmm. Let's take the biggest hunk of steel trolling the roads and let's start making it in a country that will go to any extent to manufacture something as inexpensively as possible with no regard to quality control, adequate engineering or safety factors. I hope I won't meet THAT Hummer when it snaps in two while rolling down the freeway at 140 kph.

[deezle 0]

So the symbol of egotistic, irresponsible, unbridled capitalistic excess now goes to a communist economy. This does not bode well for the future of the planet, nor for the future of a budding economic power that should have learned from the mistakes of others.

[MikeT 744]

Hey the West had a wild ride of systematic excessive consumption for 50+ years ....so is it fair to deny that to the emerging economies?

[PrairieBoy 1]

Good riddence to the Hummer!

[Treehugger 0]

This shows a big step in China wanting to become a dominant player in the automotive world though......I recently saw a show on National Geographic and China has entered into talks with both Toyota and Honda to begin production in China. That is a huge step when you consider the long standing political difficulties between China and Japan.

[smart65 28]

The newly rich entrepreneurs of modern China like nothing better than taking their Hummers on long weekend drives – often 10 to 12 of them linked in a convoy of the brassy U.S.-made SUVs.

This just illustrates that they have the same enthusiasm for their Hummers as we have for our cars. Our get-togethers often feature many smarts travelling in a convoy.

[Big Panda 0]

The "Hummer" will become China's version of the "motorhome". A family of 3 can comfortably live in an H2 or even an H3. They just have to be careful of where they mount the ceiling fans.......

Edited June 4, 2009 by Big Panda

[PrairieBoy 1]

The 'original' Hummer is surprisingly'small' inside. This is due to the engine and drivetrain components mounted in the centre of the vehicle, between the seats, and also up fairly high.

Edited June 5, 2009 by PrairieBoy

[IMSMRT 0]

But would you want to be hit by a smart car in one of those?

[Francesco 71]

Chinese government unlikely to approve Hummer purchase deal?

[deezle 0]

So perhaps the Chinese rulers are in fact wiser than many westerners realize? And perhaps the planet does have a glimmer of a hope at survival? Human nature being what it is ---- the likely answer to both is probably: Nope.