Hummer may still have a place within GM

When General Motors first revealed that its Hummer brand was under review during its official restructuring announcement earlier this month, most suspected that the SUV label – and all its associated dealers – would be sold to another company or axed altogether. However, the decision is not as easy as it first appeared as there are a number of complex forces that GM must consider in deciding the fate of Hummer.

Hummer still commands a loyal following in North America and despite its flagging sales the brand’s popularity is increasing in global markets. Hummer has only recently expanded into more foreign markets and demand outside North America remains positive, an analyst from research firm Global Insight told the Detroit Free Press.

However, to remain successful overseas Hummer will need to expand its lineup, which will be difficult to justify given the current financial state of GM. One strategy will see the introduction of biodiesel capable models by 2010. The biodiesel models offer 30% better fuel-efficiency than their petrol equivalents.

Then there’s also the issue of upsetting dealers who have invested massive capital in the brand by buying franchises. Selling or axing Hummer could end up costing GM millions in lawsuits. To make the situation more difficult, there are reports that carmakers in China and India are seriously considering an acquisition of Hummer. However, none of the suitors have any experience in North America or building and marketing vehicles like Hummer.