News outlets are atwitter with the news that GM z9General Motors, or Government Motors, as you please) will sell it’s Hummer division to an unnamed investor:
General Motors first confirmed the sale of its Hummer brand last August and followed up the announcement with the release of an official document for potential buyers just one month later. Poor sales, growing public concern for the environment and the recession have all added up to weaken Hummer’s sales chances, but there is hope that a company based in emerging markets like China, India or Russia could still be interested.
Today, GM, which entered bankruptcy proceedings earlier this week, confirmed that it has entered into a memorandum of understanding (MoU) with a potential buyer for Hummer. The sale is expected to close by the end of third quarter of this year and is subject to customary closing conditions, including receipt of applicable regulatory approvals.
While selling the company to an offshore investor might sound tempting, I think it’s highly improbable for a variety of reasons; most notably that Hummer is the civilian arm of the AM General Corporation, the company that makes the HMMWV military vehicle (i.e., the military version of the Hummer.) Selling the company to Russia would mean we just sold the specifications for our military HMMWV to Russia; or to a third-world country.
I’d like to think that even the Obama Administration wouldn’t make a tactical error as grave as this; but I’ve learned not to be surprised anymore by these bozos. It could happen, but let’s say it’s unlikely.
In fact, let’s say the Pentagon refuses to approve the transfer of technology outside the U.S. That would mean they would have to sell to either an American group of investors, or another American car company. Barring a group of investors making an offer, that leaves an American car company, which means either Ford or Chrysler.
It’s not going to be Chrysler, for several reasons. First, Chrysler already owns Jeep. Giving them Hummer would give Chrysler a corner on the SUV market with the number one and two off-road vehicles in the U.S. Almost certainly someone in Congress would object.
Second, it’s an odd curiosity that Chrysler used to own AM General almost thirty years ago. Back in the early 80’s when Lee Iacocca was negotiating the bailout that first saved Chrysler, one of the stipulations was that Chrysler sell the AM General corporation — so that if Chrysler went bankrupt, the government would still be able to buy Hummers for the military. Chrysler is in the same situation today as they were then.
That leaves . . . Ford.
Assuming Ford can get up the cash required (which may be problematic to the whole situation), Hummer is a good fit for Ford for several reasons. First, Ford lacks a big off-road vehicle like the Jeep or Hummer. Their trucks and SUVS are very capable off-road, but the Hummer and Jeep are really in a class of their own.
Second, the Hummer is a gas hog, getting about 10 mpg. Ford’s trucks get into the 20’s per gallon, and Ford is in the process of introducing Hybrid SUVs and trucks. I’m sure Ford could work wonders with the Hummers mileage, which has the potential to help the military version as well.
Lastly, Ford may be the only viable candidate for the purchase, and the government is well-motivated to keep the Hummer’s manufacturing secrets withing the confines of a U.S. company. Ford might be able to work some kind of deal with the financing with the government’s blessing.
As a side note, there appears to be some commonality between the Hummer and the Ford F150 Series of trucks. HERE’s a guy building a Hummer out of scrap Ford parts — and doing a good job of it, too
And why won’t GM say they’re selling Hummer to Ford? Well, if you were going bankrupt and selling your big off-road prestige line to your mortal enemy, would you publicize it?
So I’m going to say Ford will buy Hummer. Anything else would be a surprising breach of national security.
But I’ve learned not to be surprised anymore.