Ask Jim Part 3: New HUMMER Brand Ownership

When the HUMMER brand becomes independent from GM, it will also be getting a new parent company in China’s Sichuan Tengzhong . While the new ownership will essentially allow HUMMER to operate as an independent U.S. company making its own decisions, some may still be uneasy about having the parent company overseas. In part three of our latest “Ask Jim” series, HUMMER CEO Jim Taylor takes questions on the new ownership and what it means for the brand’s future.

Questions & Responses

Name: John Chastan, Wisconsin

Question: Jim,

We all realize that GM was a large organization which lent itself to red tape and layers of indecision.

What aspects and freedoms of the “new” HUMMER organization are you looking forward to the most and what will more independence mean for product development, customer care and dealer relationships?

ok maybe that was four questions…

Jim: My entire team is looking forward to the opportunity to control our own destiny. GM did an good job of growing the HUMMER brand globally in less than 10 years to make it one of the most recognized brands in the world. However, as a new, independent company, the sole focus of every team member will be HUMMER and HUMMER customers. This means a greater focus on selling HUMMERs around the globe; greater focus on delivering innovative future vehicles that continue to improve the brand’s reputation; greater opportunity to work directly with our dealers, and most importantly, focus on ensuring the customer experience becomes the industry standard.

We’re also looking forward to the opportunity to greater speed in decision making. As a small, lean organization, the entire team will be operating with a bias towards action.

Name: Thomas Rose, (military in) Iraq

Question: I should be happy that my beloved HUMMER brand still has life in this economic downturn. While I realize we live in a global market and foreign interests own much of America, there is something unsettling about a foreign country owning something HUMMER. It feels like we will be selling the rights to Apple Pie soon.

Can you help put these worrying feelings to rest?

Jim: Thank you for everything that you and the rest of the men and women in uniform do to keep our country and way of life secure. Rest assured that HUMMER will very much remain a U.S. brand. Thanks to the vision of the State of Michigan, we have received generous support to keep the global headquarters in Michigan following the close of the sale. It is also our plan to keep production in the US for the foreseeable future. The sale of HUMMER will result in the retention of at least 3,000 US jobs directly associated with HUMMER and thousands of jobs indirectly related to the brand.

Name: Joe Rochester Hills, MI

Question: Will Hummer contiue to offer GM discount?

Jim: HUMMER will not offer the GM discount, as HUMMER will no longer be part of General Motors. However, we will develop the appropriate sales and pricing strategy that is both competitive with other vehicles in the market and continues to meet the needs of our customers and the company.

Name: Dusty Michaels, Virginia Beach, Virginia

Question: It seems Tengzhong got a very cheap deal when they purchased HUMMER. That is, it seems like anyone having won the lottery could have purchased the brand. Therefore, it seems difficult to believe GM was not able to keep the brand a float. Moreover, it seems odd, GM could successfully sell HUMMER while other more profitable GM brands were lost.

Can you help make any sense to this deal between GM and Tengzhong?

Jim: When GM made the decision to put the brand up for sale, it was in the middle of a financial crisis, which resulted in the company’s bankruptcy. For GM, it was not a matter of whether or not it could keep the brand afloat, but whether it had the resources to invest in future product for a brand that represented only .3 percent of its global sales.

Due to the depressed current economic conditions and state of global financial markets, any asset, whether it is a product or good, stock, real estate or company sold today is going to be at an extremely attractive price for the buyer.

However, the purchase price of HUMMER is only a small portion of the transaction. When we put the brand up for sale, one of the main objectives was not only to find a buyer who could pay the purchase price for the brand, but who also had the capital resources to fund the future product programs that are the life-blood of any auto company. There were many bidders interested in the HUMMER brand, and most of them had the cash to buy the brand, but they did not have the resources to fund future product programs, where as Tengzhong did.

Name: Greg Thibodeaux Shreveport , LA

Question: What is in store for Shreveport Hummer Plant short term and long term? Will new models be built in Shreveport? Thanks!

Jim: Under the terms of the definitive agreement with GM, all H3 and H3T models will be built at the Shreveport Assembly facility until 2011, with an optional one-year extension to 2012. We are currently evaluating production options and locations in the US for long-term production.