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Hummer Likely Sold To Chinese Company

There is a strong likelihood that GM's Hummer brand has been sold to a huge Chinese industrial company, Sichuan Tengzong Industrial Machinery, Co. The Chinese company will apparently continue to build the Hummer vehicles in the existing American Shreveport Louisiana plant for at least the next year. The production of the military style HMMWV are actually produced by a different company, AM General, the only existing spin-off of the old American Motors Corporation. hummer.jpg

Part of the problem from the beginning for the Hummer vehicles were the very high price tag. The vehicles were always a very high end SUV with only a limited market. This past year with the economy slipping so badly, the sales really fell off badly, erasing any real profitability for the brand.

For the Chinese company, it should give China it's first major entry into the American auto market and the use of some dealerships to beginning extending it's reach to eventually market Chinese-produced automobiles in the U.S.

It almost could have been expected that either a company from China or India would purchase the Hummer brand, as corporations from these countries have proven to be most interested in brands such as Land Rover and Jaguar in recent history.


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Comments (6)

Mac Lorry:

If the Chinese adapt the Japanese's winning "market share" as the measure of success they too will wipe the floor with American companies who are stuck in the outdated "profit" measure of success. If Obama really wanted to change America he would find a way to move Wall Street away from valuing companies based on profit (real or potential) alone to valuing them based on market share, at least in part.

To grow market share a company must produce a better product then the competition within a given price range . The "art of the deal", accounting schemes, and Wall Street savvy all move to the back when a company is focused on market share and satisfying the customer moves to the front. Ultimately, the market share driven company will out compete the profit driven company and end up with even higher profits.

Paul Hooson:

Some great business insights there, Mac. I always enjoy your commentary.

Mac Lorry:

I wish I could claim that insight was my own, but it's something I read, I think from W. Edwards Deming. We'll see how long this temporary ban suspension lasts. I pissed off Lee with my first post today, which he removed.

pvd:

Mac: I understand the argument about marketshare but I just don't see how there will be any market for these types of vehicles with gas headed towards $4-5 a gallon within a year. Likewise, I don't see a reason for anyone to pay good cash for what looks like a bad business model. They might take it on as a gift from GM but that's about the best that can be hoped for.

Also, a lot of the early market share efforts of the Japanese involved dumping. I don't htink that that will work in the current political environment.

Allen:

IMO, everyone should step back and take a good look at all manufacturing that is done in this country. Not just the auto's.

Lets assume that (heaven forbid) we have another world war. Where will this country get it's war products from, computer chips from, etc? Most of the production is outsourced to other countries.

What happen if they decide not to supply us? Does any one realize/know how long it takes to start producing products that we would need? It doesn't happen over night.

And due to the greed of some people/corporations, we really don't have much of any industry left to produce what we would need. And who is to blame for that?

Mac Lorry:

pvd

I agree that there won't be much of a market for the Hummer and I agree gas is going back to $4 or maybe $5 per gallon. That said, Paul is right that this gives "China it's first major entry into the American auto market and the use of some dealerships to beginning extending it's reach to eventually market Chinese-produced automobiles in the U.S." For example, the Chinese
BYD-F3DM, which will compete with GM's Chevy Volt. With gas at or above $4 per gallon Americans will be buying fuel efficient cars and in normal comuting the BYD F3DM uses zero fuel.


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