x Abu Dhabi, UAEFriday 28 July 2017

GM to sell 'strong brand' Hummer

Deal expected to save 3,000 jobs at Hummer dealerships and production facilities in the US

Hummers on the lot at Tustin Hummer, a dealership in Tustin, California on June 1, 2009. General Motors Corp. said Tuesday that it has tentatively agreed to sell its Hummer brand.
Hummers on the lot at Tustin Hummer, a dealership in Tustin, California on June 1, 2009. General Motors Corp. said Tuesday that it has tentatively agreed to sell its Hummer brand.

DUBAI // General Motors (GM) plans to sell its Hummer unit to Sichuan Tengzhong Heavy Industrial Machinery, a Chinese equipment maker, Bloomberg reported yesterday, citing people familiar with the deal. The US car maker has said the sale is expected to close by the end of the third quarter this year, but has not yet identified the buyer.

"Hummer is a strong brand," said Troy Clarke, the president of GM North America. "I'm confident that Hummer will thrive globally under its new ownership. And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive auto maker." The tentative deal was also expected to save more than 3,000 jobs at Hummer dealerships and production facilities across the US. Terry Johnsson, the managing director of GM Middle East, told Reuters last September that two Gulf investors were interested in buying the brand.

The announcement comes on the heels of the car maker's bankruptcy protection filing on Monday, the third-largest in US history. In 60 to 90 days, the car giant said it would re-emerge as a new, leaner company with the Cadillac, Chevrolet, GMC and Buick brands and would shed the Hummer, Saab and Saturn lines. While GM's chapter 11 filing has major consequences in the US, with American taxpayers putting up US$30 billion (Dh110.19bn) for a 60 per cent stake in the company, it was a "non-event" in the Middle East, said Mike Devereux, the president of GM in the region.

Its operations in the Middle East, with about 11,000 employees, were exempt from the US government-backed restructuring plan, he said. "We are a self-funded, private, profitable company, as many business units outside of the United States are for General Motors," he said. "We will continue operating as usual." Mr Devereux said the company would push forward with ongoing investments in dealerships and improvements on its $73 million spare parts warehouse in Jebel Ali. GM was also introducing four new models to the region this year, including the Chevrolet Camaro.

Although GM planned to close 1,100 dealerships throughout the US, Mr Devereux said all of its 150 dealerships in the GCC, Levant and Iraq would remain part of the GM network. However, 10 per cent of its administrative staff in GM's regional headquarters in Dubai were laid off in February, he said, reducing the number to 170. Jose Paul, a car industry analyst at the business consultancy Frost and Sullivan, said Hummer's new owner would need to have a clear plan to retain consumer confidence.

He also said GM's bankruptcy filing put the brand at risk of losing market share because consumers were uncertain about the company's future, its after-sales service and the resale value of its cars. "This is a long-term commitment when you buy a car, four years or five years," he said. "What will be critical is for GM to come out of bankruptcy at the earliest possible." Mr Devereux said the US government had backed all GM warranties and products and there was no reason for consumers to be concerned. "Our dealers are open for business, warranties will be honoured, spare parts will flow, dealers will continue to invest in new facilities both for selling and servicing vehicles."

GM sales in the first quarter have dropped by 19 per cent to 26,277 units in the Middle East, down from 32,440 in the same period last year. * with agencies aligaya@thenational.ae