Buy Hummer? Nyet, says Russian automaker

[davidlane]

Automotive News
August 18, 2008 - 12:01 am ET

Sure, a Hummer might be perfect for banging through the frozen tundra or soaking up some excess petrodollars. But a Russian auto company says the brand isn't going to that country.

Vedomosti, a Moscow business publication, reports that Oleg Deripaska, the billionaire owner of Russian Machines, is angling to buy Hummer from General Motors.

Nyet, says spokesman Igor Vagan. "On the situation with Hummer brand, we can say the following: Russian Machines neither received any proposals to consider acquisition of the Hummer assets nor is strategically interested in such a deal," Vagan said in an e-mail last week to Automotive News.

Russian Machines is the parent company of GAZ, one of Russia's oldest automakers.

GM CEO Rick Wagoner said recently that the company is getting plenty of inquiries about Hummer. GM wants to sell or rethink Hummer, whose sales have collapsed because of high fuel costs.

[Greg Burr]

They still make military vehicles don't they? In light of recent events (which should not have been a surprise to anybody), this should never happen.

[skipp71]

Hummer as GM has it is just a brand name, a front company that markets vehicles. The original H1 and H2 are/were built by AM (American Motors) General who do indeed build military vehicles and licensed the rights to market the H1 to GM. The H2 (Tahoe) and H3 (Colorado) have no military versions and are GM designs so tooling could be sold with the brand (much like Chrysler and the previous gen Stratus to Russian maker GAZ) without issue. The H1 was a Civilianized Military vehicle and all that tooling and vehicle rights are owned by AM General. No conflict of interest at all with GM selling the brand.

[GMusa]

GM needs to keep Hummer... downsize its vehicles and make Hummer more fuel efficient!

[Chaz_23]

Wagoner is a liar. No one is going to spare them from dealing with Hummer on their own. Now where are all of GM's overpaid ivy-league supposed geniuses? Are they all that incompetent?

[ZillaZ]

Originally Posted by Chaz_23

Wagoner is a liar. No one is going to spare them from dealing with Hummer on their own. Now where are all of GM's overpaid ivy-league supposed geniuses? Are they all that incompetent?

How much do those guys get paid anyway? I really have no idea.

I think that somebody will buy Hummer just for the dealer network, who cars about the products... when you can buy a nation wide distribution network made up of GM's best dealers (only the best dealers were awarded Hummer franchises). They could sell anything, doesn't have to be a Hummer... but it would be convenient if it started with an H.

[blkwrxsti]

Originally Posted by ZillaZ

How much do those guys get paid anyway? I really have no idea.

I think that somebody will buy Hummer just for the dealer network, who cars about the products... when you can buy a nation wide distribution network made up of GM's best dealers (only the best dealers were awarded Hummer franchises). They could sell anything, doesn't have to be a Hummer... but it would be convenient if it started with an H.

Come on - who else would think of selling off liabilities instead of assets? It's a brilliant plan you wished you'd thought of - just admit it. It's like Jack Black says - "...there's never a charge for awesomeness!".

[SUPERBADD75]

Originally Posted by skipp71

The H2 (Tahoe) and H3 (Colorado) have no military versions and are GM designs so tooling could be sold with the brand (much like Chrysler and the previous gen Stratus to Russian maker GAZ) without issue.

once again i see another person that has no idea what they're talking about call the H2 a Tahoe, and the H3 a Colorado. the H2's chassis is based on 3/4 ton truck parts, with only the rear portion even remotely related to the Tahoe. the H3 chassis, while heavily based on the Colorado, is fully boxed where the Colorado is not, and the suspension mounting points and crossmembers are all welded on, where some Colorado pieces are bolted. there are, of course, a lot of other differences, but from the very bottom they are different. i hate people calling these vehicles Tahoes and Colorados because they're just not. you can not buy a Tahoe with a chassis anywhere near as off-road ready as the H2's, and the same goes for a Colorado versus the H3.

[LAPTOP GAMER]

I don't understand why they can't just scale back production to meet demand, that makes more sense to me.

[ZillaZ]

Originally Posted by LAPTOP GAMER

I don't understand why they can't just scale back production to meet demand, that makes more sense to me.

They could do this, but they'd rather have the cash from the sale of Hummer to fund the company until the volt arrives and saves the world.

[ZillaZ]

Originally Posted by blkwrxsti

Come on - who else would think of selling off liabilities instead of assets? It's a brilliant plan you wished you'd thought of - just admit it.

A liability? It's not exactly a liability if it's profitable... unless you mean a PR liability.

[blkwrxsti]

Originally Posted by ZillaZ

A liability? It's not exactly a liability if it's profitable... unless you mean a PR liability.

Asset or Liability doesn't depend entirely on past profits (even if we ignore that Hummer had their capital investments for engines, frames, and various components by the GM truck programs it's based on).

Asset implies that something is worth something on the open market. I was talking about the idea that the Russian company in this thread and the Indian company in the other thread decided not to bid (not a low bid, but a no-bid). The stated reason was that the Hummer brand carried enough baggage that they would prefer to launch a new brand from scratch (that costs a lot of money!!!). Think about it - a company wanting to make it in the US market decided they'd rather spend a few billion to launch their own brand, train their own dealers, come up with new designs, build their own factories, etc. than to buy the stuff that Hummer had. Sounds like a liability to me...

Given that Hummer is probably selling all tradenames and the factory, and maybe even some rights to use the current designs and tooling - these two companies must have independently come to the same conclusion - that there was enough negative baggage and dealer/customer obligations to offset the assets (either that, or both companies couldn't figure out how much to bid after hiring an army of investment bankers).

[blkwrxsti]

0 for 3:

http://www.reuters.com/article/compa...080819?sp=true

"...But with no interest from the Russian, Indian and Chinese carmakers, and GM's very public financial crisis, anybody still interested in the brand is likely to make a lowball offer.

So short of giving the brand away for pennies on the dollar, it's hard to see what GM might do.

GM CEO Rick Wagoner recently said there is "significant interest" in the automaker's assets, including Hummer.

Unless Wagoner knows something the market doesn't, a Hummer sale could veer off-road, and GM might have to eliminate the brand. Then again, there is always a buyer at the right price."

[baloo]

Originally Posted by blkwrxsti

Given that Hummer is probably selling all tradenames and the factory, and maybe even some rights to use the current designs and tooling - these two companies must have independently come to the same conclusion - that there was enough negative baggage and dealer/customer obligations to offset the assets (either that, or both companies couldn't figure out how much to bid after hiring an army of investment bankers).

There is no Hummer factory. Otherwise I agree with you, though. All this talk about downsized Hummers, hybrids and diesels is great and all, but in the end establishing a new brand is probably cheaper than convincing people Hummers are actually sensible vehicles. With a new brand you get a clean start, but repositioning an existing brand is an uphill PR battle, simply because people have already made up their mind about it.

A car is considered a total loss when the cost to fix it is greater than its value. In order to establish Hummer as a sensible Jeep-alternative you would need a completely new image, a completely new line-up of vehicles and you probably wouldn't get to keep the current H2 customers either. Pretty much the only thing that doesn't require massive investments is the dealer network, but everything else will cost billions. In terms of economics, the Hummer brand may very well be "totalled".