Thread: SAD times for HUMMER

Tengzhong may build new Hummer plant in Chengdu



Shanghai, June 4 (Gasgoo.com) Sichuan Tengzhong Heavy Industrial Machinery Co, a machinery company based in western China, will spend 550 million yuan (US$80.5 million) to buy Hummer brand, and invest another 450 million yuan to set up a new Hummer production line in Chengdu, the capital province of Sichuan, Chengdu Business Daily reported Thursday, citing a letter of intent from Tengzhong. GM said on Tuesday that it has signed a memorandum of understanding with Sichuan Tengzhong for sell Hummer to the Chinese machinery company. Tengzhong promised to retain Hummer's senior management and operational team, keep jobs and the production base in the United States until 2010.
According to the local Chinese newspaper, GM had contacted Tengzhong on a possible deal back in February this year. In March, Hummer's CEO, James Taylor, together with its management teams, came to Chengdu to meet with leaders of Chengdu municipal government and on March 11, Taylor and its delegation hold further negotiations with Tengzhong in Deyang, a city in the northeast part of Sichuan province.
Neither GM nor Tengzhong officially has disclosed financial details of the deal. According to GM's bankruptcy files, Hummer's value was around $500 million.
Yang Yi, CEO of Tengzhong, said in a statement that Tengzhong will continue to invest in the Hummer brand and its research and development capabilities so as to allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S.
Tengzhong is one of the largest privately-owned enterprises in Chengdu. It specializes in making special-purpose vehicles and road and construction equipment but has no experience in the passenger-vehicle market. The company was founded in 1965 and shed its state-owned designation by turning private in 2005.
Tengzhong has been active in domestic mergers and acquisitions in recent years. It reportedly owns two manufacturing facilities in the suburbs of Chengdu, with a total of 4,800 employees.


http://autonews.gasgoo.com/auto-news...n-Chengdu.html

would you do any less with your business.......Maximize profit margin......difference in salary structure aone will probably cover the investment money in no time!

Interesting Video..

http://www.newsy.com/videos/hummer_in_different_hands

Well...at least Tengzhong make construction machinery, but this is the equivalent of Caterpillar buying the F series name and specs and expecting to know how to build passenger trucks by 2010. It's going to be a bumpy road to a usable product. Hummer has a very low safety rating as it is; if they start cutting corners on materials and production methods it's only going to get worse. Plus GM ownership came from the break up of American Motors, so it wasn't originally theirs, and they never quite came up with the right civilian version until quite recently.

To me it looks like someone wanted to buy a Tony brand name but hasn't really looked at the implications. Wait till they find out their biggest market probably isn't the US, but instead it may be Iraq (Hummer is REALLY popular in Iraq). Land Rover rules in Europe. Jeep rules here (or at least that's what I understand, I don't specialize in the vehicle market). My business analyst side is raising a VERY skeptical eyebrow at this one.

I have more hope for Saturn, because of its roots as a more innovative brand. It has never been a money maker for GM and the original vision has diffused so we are still talking about a questionable future. However with more support from the owner (I don't think GM ever really bought the Saturn idea) it may work.

In May, HUMMER was the only automaker in Russia to post a month-over-month sales gain, according to Automotive News.

HUMMER sales rose 111.5% while all other automakers posted a double digit decline. During the first five months of the year HUMMER sales were up 85.6%, compared to a 47% average drop in sales among all automakers.

While HUMMERs don’t account for a very large portion of Russia’s overall vehicle consumption, increased demand for HUMMERs is a great thing. International sales are a vital part of HUMMER’s long-term viability, and will play an important role in the design and timeline of future HUMMER models.

www.hummerguy.net

BEIJING - China's planning agency is likely to reject a Chinese company's bid to acquire General Motors Corp.'s Hummer unit, in part because its gas-guzzling vehicles conflict with Beijing's conservation goals, state radio reported.

The National Development and Reform Commission is also likely to say Sichuan Tengzhong Heavy Industrial Machinery Corp., a maker of construction machinery, lacks the expertise to run Hummer, China National Radio said late Thursday. It cited no source.

Tengzhong said it has yet to reach a definitive agreement with GM, which the company said previously was required to make a formal request for government approval of the deal.

http://www.msnbc.msn.com/id/31571951/ns/business-autos/

Don't you remember in the first "Raiders of the Lost Arc" they had a chink named short round that was driving the car - and he had wooden blocks on his feet so he could reach the pedals. That's the same problem the Chinese would encounter.

Originally Posted by Buster

BEIJING -
....The National Development and Reform Commission is also likely to say Sichuan Tengzhong Heavy Industrial Machinery Corp., a maker of construction machinery, lacks the expertise to run Hummer, China National Radio said late Thursday. It cited no source.

http://www.msnbc.msn.com/id/31571951/ns/business-autos/

I was wondering about that...a Hummer might appear to be similar to the base of a cherry picker but they are not the same thing. I can tell you NDRC is one of the most powerful Ministries in China, and if they decide to actively oppose it, it's not going to happen. They are..well roughly analogous to OMB in power.

For those that can appreciate an American Machine that fills both the need for fun and business..here are some pictures of a few of my friends employing what HUMMERS are made for this past week at Big Bear CA....Saying goodbye to wonderful American Icon and passtime..



http://www.bettssoftware.com/photos/2009/bigbear-august2009/index.html

South Carolina, Tennessee, and Michigan were all in the running for the location of HUMMER new global headquarters and today it will be announced that HUMMER will create their global headquarters in Southeast Michigan.
To sweeten the deal, the state of Michigan offered the automaker a state tax credit of $20.6 million over 10 years, which is contingent upon GM completing the sale of HUMMER to China’s Tengzhong. On the other side, HUMMER has agreed to invest $9.4 million over 5 years on the project.
The site, expected to be in either the Detroit suburb of Auburn Hills or the city of Detroit itself, will create nearly 1000 Michigan jobs which include up to 300 directly with HUMMER and another 600 or so indirect jobs.

GM had expected to close the sale of HUMMER to Tengzhong by the end of September, and those familiar with the matter say that meeting that self-imposed goal is “looking less likely.”
According to those sources, GM may have been “overly optimistic” given all the deals GM is currently trying to close.
We suspect most of the major sale terms have already been negotiated, and in a deal as complicated as this, making small wording changes on one side requires a complete legal review by the other party. This back-and-forth is quite typical in major acquisitions, and considering the massive asset liquidation of GM going on right now, legal reviews that usually take only one day could be taking several.
While GM is still working to close the deal as soon as possible, they have not released any new timeline on completing the deal.
For most, a few more weeks may not be a big deal. For others, such as smaller HUMMER dealers who haven’t had new inventory in months, the waiting game may be too much of a financial risk. Hopefully we won’t see any more dealer closings before a deal is complete.


www.hummerguy.net

With a 60% share in General Motors, the U.S. Government hasn’t exactly been shy about asserting company-wide changes. In March, the President’s administration ousted then CEO Rick Wagoner, and just recently we learned about GM’s strict expense and travel policy that brought them into compliance with other bailed-out businesses. Would it be so crazy to believe that the U.S. Government isn’t allowing GM to produce any HUMMER models for U.S. consumption until later in the year while allowing GM to produce HUMMERs for international markets? That is the case according to a source within General Motors.
What caught our attention was that the GM plant in Shreveport, LA is currently producing HUMMERs, but dealers in the United States have been told they are still months away from getting units – forcing many dealers to buy and ship vehicles from around the country just to keep up with local demand. As it turns out, the HUMMERs in production are destined for Mexico and Canada – two markets that, even combined, would have less demand for the HUMMER than the U.S. market.
GM may point to the “days supply” of HUMMERs in the United States and say more production isn’t needed. However, if you’re on the fence about buying a HUMMER vs. another competitor, and the dealer tells you in order to get the vehicle you want it will take two weeks, and an extra $1500 to ship two vehicles across the country (smaller dealers that only have 3 or 4 HUMMERs left are only interested in trading to other dealerships, not selling, since they don’t want to be left with empty lots and no certainty of when they will have more inventory), which would you choose?
Selection is down and prices are up, making it impossible for dealers to stay competitive in the marketplace – driving sales down and thus increasing the “days supply.”
It appears that the U.S. government is worried more about the perception of public tax dollars going to a company that produces HUMMERs rather than actual dollars and sense. After all, HUMMER is a profitable brand for General Motors. Why then, if there is production capability, demand from dealers, and more money coming into the automaker is the U.S. Government not allowing GM to produce HUMMERs until later in the year, presumably after a sale to a Chinese company is finalized?
Politics, perception, and reelection.
GM isn’t the only company the political decision is hurting. With an average dealership staff around 12, and the largest employing around 50, it’s tough to keep the doors open and employees fed when you don’t have the products your customers are asking for.
The U.S. Government needs to realize that HUMMERs are a niche vehicle that has a niche market. Albeit smaller than the market for many other vehicles, the company still has the chops to stand on its own and be profitable. That is, if the bureaucrats in Washington don’t run the brand into the ground first by artificially limiting the supply for political reasons.


www.hummerguy.net 09-28-09