Yesterday, General Motors announced that it would be shutting down its Hummer brand. Until late-February, it was thought the business unit might be purchased by Chinese firm Sichuan Tengzhong Heavy Industrial Machines Co. Unfortunately, Chinese regulators didn't approve. Consequently, GM is thought to have no choice but to liquidate Hummer's assets. But another report today indicates that there may still be an interested buyer -- and from the U.S.
Raser specializes in electric-conversion and hoped to make plug-in hybrid Hummers, according to TCC. The firm had developed technology similar to what will be used in GM's upcoming Chevy Volt, which would allow long distance travel, but on very little gasoline. That could have made Hummer a perfect fit: there's definitely an underserved market segment for big plug-in hybrid SUVs.
So why no deal? That remains unclear. Perhaps GM was unhappy with Raser's bid. But since Tengzhong's bid of $150 million was initially accepted, it's hard to imagine how much more insultingly low it could have been. GM may have determined that it would be financial better off just liquidating the brand's assets rather than selling it for whatever Raser offered.
That move certainly won't please Hummer employees or fans of the brand. Moreover, the prospect of a greener Hummer might have conjured up new demand for the re-engineered vehicles. Still, as Saab has shown, a GM division isn't dead until it's completely gone. After failed acquisition talks and a decision to wind down Saab, Spyker Cars ultimately swooped in to purchase that brand. So Hummer lovers can still hope for a similar result where GM takes Raser up on its offer.
Update: Just got a comment from GM regarding why the company isn't selling Hummer:
The car business is somewhat unique in that regard. Carmakers have legal obligations to provide warranty support and spare parts for a decade or more. And when a customer buys a vehicle, he or she has an expectation that someone will stand behind it for a very long time.
If you laptop dies after three years, you are probably still satisfied. If you car dies before 10 year or 150,000 miles, you probably feel betrayed.
So you can't sell a car company unless you are reasonably certain that the buyer has a solid business plan and enough financing to have a real shot at success. If we sold Hummer to someone on a wing and a prayer, and the deal collapsed a year down the road, customers, their attorneys, and government regulators would turn right back to GM with an expectations that we would make things right.
A systematic wind down of an auto brand is not very romantic, but it is the best way to provide for the brand's dealers, suppliers and customers. Given the realities of the business, it is the only moral choice.
This implies that Raser had not, in fact, met enough of the bidder requirements. I incorrectly thought TCC's source had indicated all were met (upon review, this response makes sense as TCC said "nearly all"). It would have been nice if GM hadn't declined to comment on the TCC article and stated this as the reason, however. But this response does shed some light on the mystery.