Monday, June 08, 2009

Humming a Chinese Tune

It seems that the all-American gas guzzler is soon to be made in China. Sichuan Tengzhong Heavy Industrial Machinery Co. is expected to purchase the Hummer brand from GM because GM has followed one of the worst business models over the last twenty years or so.

This is not a done deal and I won't speculate on if the US and Chinese governments approve this sale. Although, US military contracts come to mind for reasons to veto the sale on this end. But, what would it mean if Hummer were made in China? It would probably be cheaper for Tengzhong to produce the behemoth in China and ship it to the US, therefore I'll go with such a scenario.

The majority of Hummer owners in the US are conservatives. How will they feel if they walk into a dealership to purchase another Hummer that is no longer made in the US? Will they trust a car made in China? That last question depends on the person--there are plenty of Americans who are becoming more protective about products that are made at home, and there is a lot of skepticism as to the quality of Chinese-made products.

So far, no Chinese car companies have broken into the US market. If we look at Japanese and Korean car makers, it took them some years before the American public bought large numbers of their vehicles. There are also fewer people buying gas guzzlers because of high fuel prices, not to mention the SUV price tag. How long is Tengzhong willing to wait before the American public begins buying its Hummers?

Tengzhong can probably depend on high demand for the Hummer in China. There are relatively few around Asia now. The Chinese are beginning to lean toward the mentality that bigger is better when it comes to cars (wonder where they got that idea?). So, it seems that there won't be a shortage of buyers on the mainland. But how many of these enormous vehicles can the roads in China hold? Traffic is bad enough right now; a few thousand Hummers will just make it worse.

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