Will the Hummer really fit in China?
BEIJING — Would Confucius drive a Hummer?
News that an obscure Chinese company has reached a tentative agreement to buy bankrupt General Motors’ Hummer unit has people here pondering the larger meaning of Chinese ownership of the mother of all gas guzzlers.
The news has propelled Sichuan Tengzhong Heavy Industrial Machinery Co. onto the radar screen of auto enthusiasts worldwide. And it underscores China’s growing economic might at a time when U.S. industrial prowess is flagging.
China is already the U.S. government’s largest creditor and the largest foreign provider of manufactured goods to the U.S. Now a Chinese firm is the first to salvage a piece of a fallen U.S. titan -- a point of no small pride for many in China.
The new owners are planning to push sales of the gargantuan vehicle here, where it is already a status symbol for China’s newly rich.
The brand “is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage,” said Yang Yi, chief executive of Tengzhong.
But for others, the Hummer is a bad omen, the epitome of American excess before soaring gas prices and the housing collapse humbled the nation’s psyche. As with H1N1 flu, they hope it isn’t catching.
“To me, the car makes me think about the generation born in the 1980s that only believes in hedonism and shows us the bad consequences of consumerism,” said Zhou Xiao Zheng, a sociologist at Beijing’s Renmin University. “I dearly wish we only adopted the good things from the U.S. and not the bad things.”
It’s too late for that.
‘Fierce horse’
Massive U.S.-style furniture stores, luxury malls and gated housing developments hug Beijing’s ring roads. And the Chinese dream, like the American one, increasingly means owning a car.
For most, that entails buying a stripped-down sedan small enough to squeeze into tight parking spaces. But for those who feel a need to announce their presence on the road or traverse China’s rural areas (think wealthy coal mine owners), the Hummer is it.
Known here as “Han Ma,” meaning “fierce horse,” it’s one of the ultimate expressions of wealth and ostentation. Though Hummers were never officially sold in China by GM, they are made available to the Chinese market by independent, third-party importers.
Standing in the sun-scorched lot of a suburban Beijing auto dealership Wednesday amid an assortment of Audis, Toyotas, Hondas and Chinese makes, salesman Zhao Hai Tao didn’t hesitate when asked which he’d choose if he had the money. He knew: a gleaming black Hummer with leather interior and tinted rear windows.
“It’s so powerful,” the sunburned 25-year-old said. “As long as you’re a man, you’ll want one of these.”
But after a few moments, Zhao’s fanciful thoughts gave way to reality. “I know it’s not practical and not fuel-efficient,” he said, looking at the souped-up SUV priced at $200,000. “It’s a dream car that most people can’t afford.”
Gas guzzler
Just how the Hummer will fit into China’s larger energy plans is unclear. China is heavily dependent on imported petroleum, a major worry for policymakers. The government has made fuel efficiency one of its goals. It raised taxes last year on large vehicles, including a whopping 40% surcharge on the price of a Hummer.
On Sunday, Chinese regulators increased the price of gasoline in response to growing costs of crude oil.
Meanwhile, Chinese companies such as BYD Co. have been attracting global attention for their efforts to produce a credible battery-powered car.
“This is not the right time for China” to introduce the Hummer, said Wang Cheng, a researcher for the Innovation Center for Energy and Transportation, a Beijing nonprofit promoting fuel-efficient cars.
Even California Gov. Arnold Schwarzenegger, a longtime Hummer aficionado, shed few tears at the news that the Chinese were buying the brand. He converted one of his Hummers to run on vegetable oil to escape the wrath of environmentalists.
“I’ve always been a big fan of the Hummer, but . . . we know we’ve got to get rid of the big polluting vehicles and cars that drive with very low mileage,” he said. “You know the Hummer gets maybe 14 miles per gallon, and that is not enough.”
Who knew?
Tengzhong, a little-known maker of road and construction equipment based in Chengdu in southwest China’s Sichuan province, has no experience in the passenger-vehicle market. The company was founded in 1965 and shed its state-owned designation by turning private in 2005.
The Hummer deal left China’s auto industry abuzz and observers scratching their heads. Tengzhong said it would continue to manufacture Hummer models in the same plants currently used by GM, meaning it would forgo the benefits of cheaper Chinese labor.
“I just can’t figure it out,” said Jiu Xinguang, an auto analyst based in Beijing. “Why would this company want to buy Hummer? Most Chinese auto companies don’t have anything to gain from a deal like this because they don’t have multinational experience.”
News talk show hosts on Beijing Communication Radio, a station favored by taxi drivers, were just as puzzled Wednesday afternoon.
“This not-so-famous . . . company will be getting more famous every day now,” the host said, chuckling with his guests. “Who thought, when we saw all those pictures of [Humvees] in Iraq, that they would be advertising for Tengzhong?”
The Hummer was originally built on the same platform as the military’s Humvee, produced by AM General. GM bought the Hummer brand from the South Bend, Ind., company in 1998.
The Detroit automaker contracted AM General to continue to build trucks for it, and although the consumer version of the Humvee, known as the H1, is no longer made, the H2 model is still built in Mishawaka, Ind. Hummer’s other model, the H3, is built by GM in Louisiana.
The brand was hugely successful for GM in the first years of this decade, peaking in 2006 with 71,524 sold in the U.S., but has collapsed since then. Last year only 27,485 sold in the nation, and through the first five months of 2009, U.S. consumers bought only 5,113.
Brand’s appeal
The hulking SUVs have found acceptance outside the U.S., however. For international markets, GM manufactures the H3 in one of its plants in South Africa and contracted a Russian factory to build the H2 there starting last year.
More than anything, Tengzhong is buying the brand and intellectual property, but it also gets rights to the current network of Hummer dealers and Hummer management team.
Because Tengzhong is not buying the factories where the Hummer is built, GM said the sale would include “a long-term contract assembly and key component and material supply agreement with GM.”
The Humvee produced for military use was not acquired by GM and is still made in Mishawaka.
John Zeng, a senior market analyst for IHS Global Insight, said Tengzhong should not expect any growth in the U.S. but would be stepping into a Chinese SUV market that grew 25% last year. However, that growth represented mostly smaller models such as the Honda CR-V.
“SUVs are a strong segment,” Zeng said. “Hummer has a good brand image. If they can launch the right product, they might succeed.”
The thought of having to share space with the four-door behemoths on Beijing’s notoriously congested streets worries Wang Tao, a cabdriver.
“I wouldn’t want to be close to them on the road,” he said. “They are huge and not afraid of being scratched.”
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Times staff writer Ken Bensinger in Los Angeles and Nicole Liu and Joshua Frank in the Times’ Beijing bureau contributed to this report.
