GM May Sell Brands to Foreign Automakers

General Motors has recently opened the possibility of liquidating its least profitable brands in an attempt to avoid another session of catastrophic loses, according to Reuters.

The main interest comes from automakers in India, China and Russia, with Hummer brand being the most likely candidate for sale.

An automaker choosing to sell one of its less profitable brands is not entirely bad, but selling assets overseas always comes with a risk. The Hummer brand has seen sales drop dramatically in the suddenly gas-conscious domestic market, but it was still profitable overseas. The sale could possibly net $4 billion for GM, but it would come at the loss of any long-term profitability if gas prices ever stabilized to previous levels.

Gas-guzzling SUVs are certainly not the future of the automotive industry, and America needs to avoid inefficiency and steer toward fuel awareness, but the situation at GM goes far beyond the lack of profits from Hummer. GM is suffering just as the rest of the nation is suffering, but the sale of brand rights to foreign control typically leads to restructuring, and layoffs.

Hummer was a problem for GM which should have been fixed before this crisis point was reached. Many decried its inefficiency years ago when the price of gas was easier to stomach. The launch of large SUVs like Hummer was based on fairy-tale conceptions of future markets, and not on reasonable, long-term growth capabilities. And now, while CEOs and GM may lose their jobs – and likely get large severance packages for their services – American’s working in GM assemblies will be in much more difficult circumstances.

Source Reuters:

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