A Hummer H3T rolls down the assembly line at GM's Shreveport, LA, assembly line.
The fate of the Hummer brand is now hanging by a slender thread after General Motors Corp. rejected eight separate offers for the brand and ordered employees working on Hummer to wind down the group’s operations.
Until a few weeks ago, it looked like Hummer, one of four brands GM planned to abandon after its emergence from bankruptcy, would find a new home.
The Chinese truck maker, Sichuan Tengzhong Heavy Industrial Machinery Corp., had tendered an offer – but one it couldn’t win final approval for from regulators in Beijing.
On February 24th, GM announced it would begin phasing out Hummer, though it left the door open to finding an alternative buyer, much the same way a white knight emerged to save another one of the four brands, Sweden’s Saab. According to a memo prepared on March 5, eight offers have since been fielded.
“Unfortunately there were no qualified or capable candidates. Consequently, we are immediately pursuing the wind-down of the Hummer Brand. In other words there is no more slow winddown it really is wind-down of Hummer,” according to a memo signed by Matthew Koch, from the Hummer Deal Execution Team.
That said, the memo suggests that all is not lost, and even if GM can’t find someone to step in and keep Hummer going, there could be some partial salvation.
“We may,” Koch’s memo said, “have folks interested in purchasing Hummer intellectual property and tangible assets.”
GM is still getting feelers, insiders tell TheDetroitBureau.com, and Hummer executives are still fielding additional offers while hoping for a last-minute reprieve that could save the brand. However, it is pretty clear at this point that any buyer will have to show up prepared to pay cash.
GM had negotiated with Sichuan Tengzhong almost exclusively for nearly a year, and there were clear signs for several months that the Chinese company was in a position to finish the deal, according to the source briefed on the negotiations process.
Dangling that possibility, Tengzhong had hoped to extend negotiations with GM – and the U.S. maker did offer a brief reprieve, extending the deadline from the end of January. However, GM’s board of directors has become impatient with the sales process, according to sources briefed on the situation.
GM has now ended all negotiations with the Chinese company, Hummer spokesman Nick Richards confirmed. Tengzhong also stopped paying rent for Hummer’s Auburn Hills headquarters and engineering center at the beginning of February.
In hindsight, Hummer executives now believe that offering Sichuan Tengzhong exclusivity was a huge mistake. Meanwhile, some GM insiders insist Hummer could have emerged as a viable business if it had been given a chance.
The collapse of Hummer deal also has raised questions about the role of Citibank, which GM had recruited in the summer of 2008 to help conduct what was described as a “complete strategic review” of GM’s options for the brand. As the sales process unfolded, Citibank promoted Sichuan Tengzong, which also was one of the bank’s clients, even though the firm had no experience in the retail end of the automotive business.
GM shut down the Hummer line at its Shreveport assembly plant in January, though the operation could have quickly been ramped back up if a deal with Tengzhong or another buyer was completed.
The “HummerGuy” Internet site, meanwhile, reported that GM does plan to briefly reopen Louisiana plant, next month, to fill an order for 849 Hummer H/3s.
The end of the Hummer negotiations could lead to the elimination of 200 to 300 local jobs that had been connected to the deal.