Tata, Mahindra to Buy GM's Hummer?
After the acquisition of Jaguar and Land Rover, Indian auto companies rank high in the global M&A pecking order. Merchant bankers are learnt to have approached both the Tatas and Mahindras for General Motors' (GM) iconic brand, Hummer.
The all-American SUV and pick-up brand, which is often associated with both US military might and sheer Hollywood style machismo, is up for sale as announced by top GM executives earlier this week.
According to auto industry sources, the successful completion of the Jaguar and Land Rover deal has turned the Tatas into hot property in the auto deal beat. Mahindra and Mahindra (M&M), which was also in the fray for the two Brit brands, is the other Indian company that merchant bankers are approaching. Neither company has reportedly taken a definitive decision on the deal yet.
When contacted, a Tata Motors spokesperson refused to comment. An M&M spokesperson also refused to comment on the 'market speculation'. Earlier this week, GM announced that it was stopping production at its four plants that build gasoline-guzzling pickup trucks and SUVs.
It also announced that it is looking at all possibilities for its Hummer brand, including a complete sale. General Motors CEO, Rick Wagoner, said, "At this point, we are considering all options for the Hummer brand, everything from a complete revamp of the product line up to a complete sale of the brand."
The move, along with a sharper focus on its electric concept Volt, are a reaction to gas prices and increasing mileage consciousness in the US.
Although an iconic brand, the Hummer has turned into a bit of a hot potato of late thanks to a variety of reasons. Even its most ardent admirer, Arnold Schwarzenegger, who at one point defied Hollywood's hybrid obsession to own a fleet of Hummers, has now given them up.
Its gas-guzzling image does not sit well at a time when oil prices are going through the roof and everyone in the industry is chanting mileage.
Also, its association with the US military makes it a politically incorrect brand. However, in terms of brand recall, it is one of the strongest in the GM bouquet.
According to analysts, the Hummer could be a good option for both the Tatas and Mahindras, provided the price is attractive. Since both companies have a strong SUV presence and global ambitions, this could be a nice fit if the negative brand associations are taken care of.
The Hummer recorded a 35% drop in sales in the first half of this calendar year. Last year, it saw an over 20% drop in sales. Hummers account for just 1% of GM's total sales.
The boxy SUV has military genes that go back to the early 80s. Its civilian avatar came a decade later when AM General introduced it.
GM bought the Hummer brand in 1999, following which it has launched two new products-the H1 and H2.