U.S. expert questions Tengzhong's plan to buy Hummer
www.chinaview.cn 2009-06-06 10:43:53   Print

    by Jing Zhao Cesarone

    CHICAGO, June 5 (Xinhua) -- General Motor's Hummer is considered as an exaggerated and extreme example of a disregard for the environment and there are significant brand negatives for the Chinese company Tengzhong to buy it, a U.S. financial expert said Friday.

    In an interview with Xinhua, Richard L. Wottrich, managing director of International at Dresner Partners, an investment banking firm based in Chicago, said, "The vehicle is too big, uses too much gas, and is viewed as a toy for the rich. These are rather significant brand negatives for the Chinese company Tengzhong to consider."

    "Hummer is a difficult brand name to reconcile with current global conditions and political thought," he said.

    Wottrich further explained, "The brand is based upon the High Mobility Multipurpose Wheeled Vehicle (HMMWV or Humvee), a military 4WD motor vehicle manufactured by AM General. It is an essential part of the landscape of war in Iraq and Afghanistan. AM General sold the rights to the Hummer name to GM in 1999."

    Wottrich has over 30 years' experience in the financial services industry, providing business owners with exclusive representation and consultation in mergers and acquisitions.

    Regarding the potential risks, Wottrich noted, "In the General Motors arsenal of products, Hummer was just another product choice along with dozens of others. For Tengzhong, concentration on a single brand carries higher risks."

    Wottrich said, "The final consideration is brand name development and new products. What market will Tengzhong focus on? The mature and stable Western markets have the negative views of Hummer mentioned. If they target developing countries, this becomes a symbol of wealth obtainable by few."

    Wottrich has initiated merger and acquisition transactions in China and has delivered speeches at several influential events such as "2005 Summit of CEOs and Career Managers of Chinese and Foreign Enterprises" in Beijing and the Greater China Business Conference at the Kellogg School of Management, Northwestern University, in 2008.

    It was reported one day after GM filed Chapter 11 bankruptcy on June 1 that GM had struck a deal to sell its Hummer truck unit to a privately owned Sichuan Tengzhong Heavy Industrial Machinery Company Ltd. in southwestern China.

    The Hummer and other large vehicles have been a drag on the U.S. auto industry since fuel prices spiked in 2008 and the recession deepened.

    GM said it sold 5,013 Hummers worldwide in the first quarter, down 62 percent from the 13,050 that it sold in the same period of the previous year.

    Hummer isn't the only brand that GM is leaving behind. The automaker will also shed its Pontiac, Saturn and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year.

Special Report:  Global Financial Crisis

Editor: Xiong Tong
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