Money Matters, Simplified.
GM’s Hummer on its way out
by Neka Sehgal - February 25, 2010 - comments
Though the U.S. auto maker is all set to shut down the brand, it did not give a time frame for the closing.
General Motors (GM) announced Wednesday the closure of their Hummer division after negotiations of a potential sale to Chinese industrial company Sichuan Tengzhong Heavy Industrial Machines Co. Ltd. collapsed.
The Chinese company pulled out of the deal to buy Hummer after it failed to get clearance from Chinese regulators within the proposed time frame for the sale.
John Smith, GM vice president of corporate planning and alliances, stated, “One year ago, General Motors announced that we were going to divest HUMMER, as part of focusing our efforts on Chevrolet, Buick, GMC and Cadillac going forward.
“We have since considered a number of possibilities for HUMMER along the way, and we are disappointed that the deal with Tengzhong could not be completed.”
No specific time frame for closure
Though the U.S. auto maker is all set to shut down the brand, it did not give a time frame for the closing.
However, GM promised to entertain the existing Hummer warranties and provide service and parts to current owners of the vehicle worldwide.
Nick Richards, spokesman for the Hummer, stated, "We just reached this decision today so we’re just beginning the process. Typically winding down a brand can take several months. If there are viable alternatives for part of the brand or all of the brand during the process we’ll consider them."
Collapse of deal a major setback for GM
The fall through in the deal is a major setback for GM. Hummer will be the third brand that automaker is being forced to shut down after Saturn and Pontiac.
Nearly 3,000 U.S. factory jobs will be at stake following the closure of Hummer, including manufacturing workers, dealers, staff members, and other areas. The brand has 370 dealers worldwide and 153 in the nation.
A little about Hummer
GM bought the Hummer brand from AM General in 1999. The original Hummer was a large SUV, a tough vehicle based on the military high mobility multi-purpose vehicle. It was very visible during the 1991 Persian Gulf War.
The company went on to produce several models based on other civilian needs, which personified the big, gas-guzzling vehicles.
Hummer's popularity crashed when gasoline prices began to soar. The sales became sluggish because of cost, poor fuel economy in terms of gas and mileage.
The general economic weakness plus the harmful effects of emissions on the environment further lowered the viability of the vehicle.
The sale of U.S. Hummer plunged to 9,046 last year from nearly 56,000 in 2007. About two-thirds of its sales have been in the nation and one-third internationally.