Three sources with direct knowledge of the sale process have said Geenral Motors’ up-for-sale Hummer line does have a few offers and that active discussions are ongoing, but that a deal is still not certain.
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The struggling automaker, which put Hummer up for sale in June, has not closed the auction yet. But one of the sources told Reuters the bids on the table “are not ideal.”
All the sources said the final bids came in much lower than GM expected when the auction began, mainly due to deteriorating market conditions.
The sources said none of the bids are from overseas. A banker told the news agency he would be surprised if the brand went for more than $200m to $400m. Earlier assessments had been in the $500m to $750m range.
GM is facing the challenge of selling the macho gas-guzzling brand amid tough credit conditions and a weak economy that has pushed US auto sales to their lowest level in almost three decades. It has a self-imposed deadline of 31 March.
Hummer sales have plunged by 65% so far this year.
“The Hummer strategic review process continues,” GM said. “We are moving forward and expect to be able to provide some sort of an update before the first quarter.”
Sources told Reuters said a decision was not likely this month.
If it can’t sell, GM’s only option would be to shut down the brand as it focuses on restructuring its operations and seeks up to US$30bn in emergency government funding.
It spent over $1bn to buy out Oldsmobile dealers when it shut down that brand in 2004 though phasing out Hummer would be cheaper because it has fewer dealers than Oldsmobile did, but any expense at this time would pinch GM, which is hard-pressed for cash, the news agency noted.
