Gulf Arab investors eye GM's HUMMER unit

[Ming]

Gulf Arab investors eye GM's Hummer
Reuters, Tuesday August 26 2008



DUBAI, Aug 26 (Reuters) - Two Gulf Arab investors have expressed interest in buying General Motors Corp's Hummer brand, the company's Middle East chief told Reuters on Tuesday.
"For sure, there has been interest from various parties within the Gulf ... there is a precedent in the cases of Aston Martin, Ferrari or Daimler, and those kinds of solutions could be very realistic solutions," GM Middle East Managing Director Terry Johnsson said in a telephone interview.
GM Chief Executive Rick Wagoner said on Aug. 21 the automaker was readying sales documents for its Hummer brand and had initial expressions of interest from potential buyers that it hoped to develop into formal sale talks.
"We have had two separate investors raise their hand as being interested, but I don't know what's happened since then," Johnsson said.
Johnsson said he was not directly involved in the sale process.
Luxury sports cars, gas-guzzling SUVs and tank-like Hummers all jostle for space on Gulf highways, where the oil-rich economy has been buoyed by a more than fivefold rise in crude prices since 2002, unlike in the West where drivers have been hit by soaring fuel costs.
Gulf Arab states and companies spent about $60 billion on foreign assets last year, almost double the previous two years combined.
In the auto industry, Abu Dhabi's Mubadala Development Co bought a 5 percent stake in Ferrari in 2005, while Kuwait's Investment Dar last year bought half of Aston Martin.
And the Abu Dhabi Investment Authority (ADIA), the world's largest sovereign wealth fund which has bought into Citigroup, is interested in buying a large stake in Daimler, a German magazine reported earlier this month.
GULF A GOOD FIT
Analysts have said they expect the military-derived Hummer brand to be a tough sell for GM, which aims to raise up to $4 billion in asset sales through 2009 as part of a plan to conserve cash and ride out a brutal downturn in U.S. sales.
Earlier this month, automakers from India, Russia and China backed off after holding exploratory talks on the brand according to sources familiar with the matter.
Selling off the division that makes the famous road hog would likely do more to address GM's reputation for building gas guzzlers than improve its cash position.
Making vehicles that average between nine and 14 miles per gallon, Hummer is not a particularly attractive asset as gasoline prices squeeze drivers and environmental concerns increasingly trump any other notion of what is cool.
Modelled on U.S. military vehicles widely deployed in the Gulf War in 1991, the Hummer sports utility vehicle (SUV) made its debut shortly after that time, when U.S. gasoline prices were less than half what they are now.
The Gulf would be a viable option, however, since rapid economic growth, low fuel prices and the brand's position as a status symbol have made the region one of the biggest buyers of the Hummer.

Source: http://www.guardian.co.uk/business/feedarticle/7753061

[paddyk]

Can anyone prognosticate what this deal may contain: Plants, tooling, employees, franchise agreements, etc.?

Thanks in advance.

[Rocket 88]

Originally Posted by paddyk

Can anyone prognosticate what this deal may contain: Plants, tooling, employees, franchise agreements, etc.?

Thanks in advance.

Just our souls...

[steinravnik]

Well, they have all our money and loads of cheap oil, so why not?

[StormHunter77]

Our country is selling itself apart. Corporate greed is leading the front. Do we even know what it means to be American anymore? I realize we are a capitalistic society, but our country was formed on ideas that need constant attention and nurturing. Freedom, self-government, justice - it's all being replaced by corporate rhetoric. Selling everything that we built our strengths upon to the highest bidder is not only wrong, it's cowardly and cheap. When are we going to wake up?

This isn't even about Hummer. Something about this story just happened to tick me off. Perhaps it was the straw that broke the camel's back. I mean, look at what we are selling off - corporations, iconic pieces of American architecture built by our grandfathers and great grandfathers (i.e. NYC real estate being bought by foreign investors and such), now a brand that originally stemmed from AM General. Our own military HUMMVEE supplier! Before too long, very few people will control a very large amount of just about everything.

See you at the gas pump. I am starting to think the Volt is WAY more important than anyone really understands.

[2648562]

Damn, GM's created a mess. Their shares will rise if they can unload it to these guys, but the headlines... OMG, the headlines and negative press are going to kill them. I would rather they just shut Hummer down. Since when did losing a few billion dollars matter to GM anyhow?

[HoosierRon]

Originally Posted by 2648562

Damn, GM's created a mess. Their shares will rise if they can unload it to these guys, but the headlines... OMG, the headlines and negative press are going to kill them. I would rather they just shut Hummer down. Since when did losing a few billion dollars matter to GM anyhow?

I'll bet you that the media response would be positive: GM has seen the green light. First the Volt, and now it is ridding itself of this environmental sin against the new world religion. General Motors has been redeemed!

[usa1]

Kind of funny to see the 1970's replay in front of our eyes.

1. Oil prices surge.
2. Certain parts of the world get very rich, very quickly
3. These newly rich areas piss their money away on luxury items, buildings, etc.
4. Oil prices drop because of reduced demand or alternative energy sources
5. The formally rich have nothing to show long term for all their money they spent.

I'm looking forward to steps 4 and 5.

The key is for the US and other consumers of imported oil to reduce demand and make new energy sources available. Behavioral changes are helping now and CAFE will help with the former in a few years. There appears to be a lot of willingness in the country to pay more now to invest in latter.

Mark

[RamJet502]

How can GM make so many poor decisions?

[Chaz_23]

Hey GM. Why not keep making Hummers and just export them yourself to Arabia at a huge markup. You know how to do it, just like you did to Americans for the past 5 years. Fill the lots with ultra-loaded Hummers. There's money to be made here, and GM is begging someone else to take the gold mine.

[2648562]

Originally Posted by HoosierRon

I'll bet you that the media response would be positive: GM has seen the green light. First the Volt, and now it is ridding itself of this environmental sin against the new world religion. General Motors has been redeemed!

LOL. That's possible. But a lot of Hummer owners (and want-to-be owners like myself) are going to have some seriously bruised egos.

[JeffInDFW]

Will women be allowed to drive them without a male member of their family present?

If Hummer is sold to "Arab Investors", their sales will go to zero. I can tell you there is NO WAY IN HELL I will own one.

[davidlane]

Originally Posted by 2648562

Damn, GM's created a mess. Their shares will rise if they can unload it to these guys, but the headlines... OMG, the headlines and negative press are going to kill them. I would rather they just shut Hummer down. Since when did losing a few billion dollars matter to GM anyhow?

Since they have run out of money to lose and are still burning cash at over $1 Billion a month with no financing in place to fix the problem.

[paul8488]

Sellsellsell! If they can find someone to pay them anything the should sell it. Even though Hummer COULD theoretically be managed properly and used to make money, GM is without question in no position to leverage Hummer and make anything of it. Sellsellsell!

[Whitesky]

Originally Posted by HoosierRon

I'll bet you that the media response would be positive: GM has seen the green light. First the Volt, and now it is ridding itself of this environmental sin against the new world religion. General Motors has been redeemed!

And just like ALL religions, it is founded on mythology and causes more harm than good!