GM ready to unload Hummer

General Motors is now one step closer to selling off the Hummer brand to Chinese company Tengzhong. Today GM announced that they are in a definitive agreement that will allow Tengzhong to acquire the Hummer brand and trademarks as well as rights to manufacture Hummer vehicles. Tengzhong will own 80 percent stake in the company and a private entrepreneur will hold the remaining 20 percent.

Part of the agreement requires Hummer to contract manufacturing and other services to GM for a period of time. The H3 and H3T will continue to be built in the Shreveport, Louisiana plant and the H2 at the Mishawaka Indiana plant until June 2011 with a possible one year extension. This is good news to the 3,000 plant workers who will continue to be employed.

Once the deal is final, Hummer is expected to offer an alternative power train in each model, E85 capability in the 2010 H3 and H3T, and the potential for a diesel engine in the H3 for markets outside of the U.S.

While the financial details were not officially announced, Bloomberg is reporting the sale is worth about $150 million, which is quite a bit less than the $500 million General Motors said it was seeking during bankruptcy proceedings. It looks like the collapse in negotiations for Saturn last week spurred GM to consider a lower price to keep this deal from falling through as well.

—Liza Barth 

Hummer drivers lead in tickets

Hummer drivers get almost five times as many tickets as the national average for all vehicles, according to a 2009 study. 
 
Conducted by San Francisco-based Quality Planning, a company that provides statistical information to insurance companies to help them determine rates, the one-year study looked at violations during 2007 and 2008. The findings were standardized based on the number of violations per 100,000 miles driven for different models. Drivers of Hummer H2s and H3s stood out over smaller vehicles, so to speak, with 4.63 time more tickets.
 
The reasons for this could be debated long and hard, but one theory was offered up by Mark S. Foster, author of “A Nation on Wheels: The Automotive Culture in America since 1945” is that “Hummer drivers feel like kings of the road, because of their elevated driving position. As these statistics show, they are leading the pack when it comes to violating the law, which may effect their driving attitude.”
 
A somewhat scarier interpretation was offered by Quality Planning President Dr. Raj Bhat, who said “Or perhaps Hummer drivers, by virtue of their driving position, are less likely to notice road hazards, signs, pedestrians, and other drivers.”
 
That theory could be compromised somewhat by the number two top violator on the list: The relatively low-riding Scion tC coupe. Third place also goes to Scion for the xB wagon. The study points out that younger drivers normally have a higher incidence of violations. Scion actually scored a trifecta in the study, as the xA checked in at number seven. Also in the top 10 were the 481-hp Mercedes-Benz CLK63 AMG and 507-hp CLS63 AMG at number four and six, respectively, proving hooliganism is classless.
 
At the other end of the spectrum, the list of cars least likely to be ticketed included models favored by a decidedly more mature demographic, with the number one spot going to the Jaguar XJ. Also on the list were the Buick Park Avenue and Rainier.
 
Interestingly, the least-likely list also included the Chevrolet Suburban and Tahoe, whose drivers evidently don’t share the ticket-gathering ways of Hummer drivers. Or maybe they’re just better at getting away with it. 
 
—Jim Travers

Should you buy a Hummer, Saab, or Saturn?

Buying from these three orphans of the General Motors bankruptcy process carries newfound consumer risks, making it difficult to endorse buying their vehicles right now. Further, there are just three models between them that meet Consumer Reports standards to be recommended: Saab 9-3 sedan, Saab 9-5, and Saturn Aura XR V6. And of those, the Saabs are decidedly dated cars overdue for a redesign.

While Hummer, Saab, and Saturn are not part of Motors Liquidation Company, where the so-called bad assets from the former GM corporation are staged, these brands are pending imminent sale or other resolution. Think of them as the kids who didn’t make the varsity team. They may get picked for junior varsity, or simply sent home.

Each brand has a likely purchaser lined up (Hummer – Tengzhong, Saab – Koenigsegg, Saturn – Penkse Automotive Group), though the deals have not been finalized. We can report on the current vehicles and state expectations that parts, service, and warranties will be honored by the next owners. But the reality is, we don’t know for sure what the future holds. Do you want to gamble with your own money, even though incentives are likely to be high?

Another factor is the dealer body. Many dealerships have closed under the weight of the recession, while others will be relinquishing their franchise rights when they expire. Hummer, Saab, and Saturn dealerships are not nearly common as Chevrolet stores. If the local dealership closes, how convenient would it be to visit another? And, what if the new owners withdraw from your region, choosing instead to focus on areas that would maximize per-store volume?

Plus, there is an underlying concern for consumer protections with lemon law and personal injury claims, as reported previously with Chrysler and GM.

The bottom line is that there are significant unknowns that add risks to buying what are in most cases mediocre vehicles. If your heart is set on purchasing from these brands and you are looking from a great deal, I suggest you wait a few months to see how the ownership situation shakes out.

Read: "What the post-bankruptcy GM means to you."

—Jeff Bartlett

Car brands: Who owns what?

The auto industry is very complicated these days, with constant change across all corners of the globe. The worldwide economic slowdown dictates widespread cost reductions, inspiring partnerships and changes in ownership. Further confusing the scene are past commitments between companies: For example, the new 2011 Jeep Grand Cherokee is based on a Mercedes-Benz platform–even though Chrysler and Mercedes are no longer joined at the hip.

To help clear up some of the confusion, here is a road map to navigate who owns what brands among the major companies that sell in the U.S. car market.

BMW owns: BMW, Mini, and Rolls Royce

Fiat owns: Alfa Romeo, Ferrari, Fiat, Lancia, Maserati; Chrysler, Dodge, Jeep–20-percent stake

Ford Motor Company owns: Ford, Lincoln, Mercury, Volvo (for now), and still owns 13.4 percent of Mazda

General Motors owns: Buick, Cadillac, Chevrolet, GMC. Also owns a controlling interest in Daewoo, as well as Opel and Vauxhall in Europe and Holden in Australia. (Pontiac to be discontinued)

Honda owns: Honda, Acura

Hyundai owns: Hyundai, Kia

Tata Motors (India) owns: Jaguar and Land Rover

Mazda (partially owned by Ford)

Mitsubishi

Daimler AG owns: Mercedes-Benz and Smart

Nissan owns: Nissan and Infiniti (Nissan is owned by Renault--France)

Porsche owns: Porsche and a majority share in Volkswagen

Subaru (A controlling interest of Subaru is owned by Toyota)

Suzuki

Toyota Motor Company owns: Lexus, Toyota, Scion, Daihatsu and Hino Motors, with a stake in Fuji Industries (Subaru’s parent company) and Isuzu

Volkswagen owns: Audi, Volkswagen, Bentley, Bugatti, Lamborghini, and overseas SEAT and Skoda.

In formal negotiations to be sold:
Hummer: Tengzhong (China)
Saturn: Penske Automotive Group
Saab: Koenigsegg (Sweden)

--Liza Barth

GM car warranty confusion leaves consumers and dealers in the dark

Despite assurances from General Motors President and CEO Fritz Henderson that “We have absolutely no intention at all of not taking care of customers" (from CBS Early Show interview), there is one thing that is clear about vehicle warranties during the GM bankruptcy: There is confusion.

In posts on January 6 ("Who will perform warranty service on my GM car?") and another one on June 2 ("My dealer closed! What do I do?"), we reported that GMs instructions for Saturn owners needing warranty service are very clear:

"Under the terms of the warranty, the customer should first attempt to bring their vehicle to any Saturn retailer for warranty service. If there is no retailer in their immediate area, or if it is an emergency situation, the repair can be made at any General Motors dealership. In non-emergency situations, it is a good idea for a customer who is having trouble finding a nearby Saturn retailer to call Saturn Customer Assistance before going to a non-Saturn location. That number is (800) 553-6000."

However, not everyone has received that message.

GM confirmed to us that it “…received Bankruptcy Court approval on June 1 to honor all warranty programs related to vehicles and related components, which also includes lemon law claims, field actions/recall costs and buyback activities.” Additionally, GM's warranty coverage is backed by the U.S. Government for passenger cars and trucks purchased on March 30 through July 31. 

But there are still challenges for motorists seeking warranty repairs. For instance, some Saturn dealerships are going out of business due to the economy, and yet others are deciding not to sell Saturns and service them under warranty. In addition, it appears that internal policies limit–and may even prevent–non-Saturn GM dealers from servicing Saturn vehicles.

According to David Henson, founder of Warranty Matters who provides multi-brand warranty auditing and training services, the GM Policy and Procedures Manual has specific language that limits cross-brand service work. For example, a Chevrolet dealer can work on a Pontiac or Saturn vehicle, if the dealer either sold it as a used vehicle or it was considered an emergency repair situation. Participation in the cross-brand work is not mandatory, says Henson, as dealers might not have the training or tools required to diagnose and properly repair the vehicle.

As a GM spokesperson explained, a Saturn dealer may not be equipped to perform complex repairs on a Corvette, or vice versa. And the term “emergency” is open to interpretation by the local service manager.

Todd Ingersoll, president of Saturn of Danbury and Watertown (Conn.), confirmed the rule, saying it is “General Motors’ policy to allow any division to fix any General Motors car in an emergency, or if they sell the vehicle as a used car.”

A GM representative explained that service for vehicles from the four discontinued or otherwise disposed of brands will continue to be provided by any Hummer, Pontiac, Saab, or Saturn retailer—again, assuming they are still around. GM confirms the policy is that in emergency situations, these vehicles can be serviced at any GM dealer.

Other dealers we spoke with were not as clear on the policy. Adding to the uncertainty is that General Motors currently uses three different warranty management and parts ordering systems: one for Saturn, one for Saab, and one that covers the remaining brands. This makes is difficult for non-Saturn dealers to order the correct parts for Saturn vehicles, according to Henson.

Overall, the confusion hurts the consumer and may even sour them on buying from the “new” General Motors. Likewise, dealers may be turning away business unnecessarily.

It is a shame, as GM has assured us that “There will be an adequate supply of parts to service vehicles, including vehicles associated with discontinued brands.  As brands/models are phased out, GM will continue to provide service parts based on the total number of vehicles on the road, customer demand for parts, and estimated needs for future parts.”

Mark LaNeve, GM North America vice president - Vehicle Sales, Service and Marketing, said, “We're standing behind our products, we're honoring our vehicle warranty programs, we have an adequate supply of service parts for all products and our dealers stand ready to provide great service. Putting our customers first remains a primary focus every day."

The message from General Motors is good and consistent, but it needs to be clearly communicated to the local level. Since our investigation began, Janine Fruehan Manager, Quality & Safety Communications, has assured us that just such a message is being prepared.

We are calling on General Motors and the Auto Task Force to issue a statement that makes it clear to all GM dealers and consumers that owners can take their Hummer, Pontiac, Saab, and Saturn vehicles to any GM dealer for service, even if the car was not purchased at that dealer or not an emergency situation. Clear communication would help all parties.

In the meantime, we recommend car owners call ahead and confirm with a service manager that warranty work will be performed. If one dealer refuses, call another.

For further information, visit: www.gm.com/restructuring/

Read "What does the GM bankruptcy mean to you?" To get more answers to the most common questions and concerns about GM’s bankruptcy, visit our Auto Crisis hub.

—Jon Linkov

Chinese truckmaker set to buy Hummer

You may already be familiar with what will likely be the first Chinese car on sale in the U.S., a Hummer.

Sichuan Tengzhong Heavy Industrial Machinery Company (Tengzhong) is in advanced talks with GM to purchase Hummer. Tengzhong is expected to enter into a long-term contract assembly and supply agreement with GM, pending government approvals on both sides, in the third quarter this year.

The New York Times cites industry analysts who estimate the purchase would be for less than $500 million. Established in 2005, privately owned Tengzhong manufactures construction and specialty trucks in China. It has expanded through acquisitions, and the Hummer brand would give it access to the U.S. and a consumer product for sale worldwide.

The deal promises to preserve more than 3,000 jobs, as the intention is for Hummer to continue to be run from America. GM expects a commitment to keep the Shreveport, La., plant building H3s and H3Ts through 2010, with the possibility to extend. Production in South Africa would be consolidated to the Shreveport plant.

As part of its downsizing and restructuring, General Motors decided to sell off the iconic brand of civilian SUVs modeled after the U.S. military HMMWVs built by AM General. The first “Humvee” was built in 1985, and made famous with its televised role in Operation Desert Storm, where 20,000 examples served. The first civilian H1 was first produced in 1992.

—Eric Evarts and Jeff Bartlett

GM closes factories to reduce inventory

General Motors will soon idle 13 North American plants for multiple weeks to reduce dealer inventory. The shutdowns will be staggered and vary in length from two to several weeks. These temporary closings are in addition to the traditional summer breaks for U.S. and Canadian assembly plants. Adjusting production to suit demand is a normal practice. Other companies, such as Honda and BMW, are doing it, as well.

At the end of March, approximately 767,000 GM vehicles were in U.S. dealer stock. To better reflect projected market conditions, GM wants to reduce that figure to 525,000 vehicles by the end of July.

In addition, GM says this action will aid its efforts to work with troubled supplier Delphi, who began bankruptcy proceedings about four years ago and continues to face finance challenges.

The plant closings will not impact the newest GM models, including the Chevrolet Camaro and upcoming Buick LaCrosse.

Closing the factories should help GM and its dealer bodies better align supply with demand, though it will certainly impact employees and suppliers.

For car buyers, this is a sign that the extraordinary deals often available now may begin to fade away come summer, with the industry as a whole likely to be better balanced come the fall model-year change over.

As we have blogged previously, the time for the best deals on new cars may be now, with job-loss programs like GM Total Confidence adding appeal.

Learn more about how to buy a car in today’s market.

We will continue to monitor this fast-moving story, reporting here in the Cars blog and also updating advice and news on the Auto Crisis hub.

—Jeff Bartlett

Ford and GM offer job-loss incentives to help boost sales

In an effort to stimulate car sales and boost consumer confidence, Ford and GM have announced their job-loss customer protection plans. Both incentives, similar to the Hyundai Assurance and AutoNation programs, are an effort to help consumers worried about job stability and making monthly car payments.

Ford’s program, called the Ford Advantage Plan, will cover payments of up to $700 a month for 12 months on any new Ford, Lincoln, or Mercury if customers lose their jobs. In addition, Ford announced zero-percent financing on select vehicles in their lineup. The program will run until June 1st.

General Motor’s program, called GM Total Confidence, will cover payments of up to $500 a month for nine months if you lose your job for economic reasons. In addition, during the first two years of ownership, GM will help protect the retail value of the vehicle at trade-in time if the outstanding principal loan is more than the NADA Clean Retail Value. All vehicles will be backed by a five-year/100,000-mile powertrain warranty with roadside assistance and alternate transportation should your vehicle break down. The GM program is available on vehicles purchased from April 1st through April 30th.

The Hyundai program has produced a bump in sales; GM and Ford are hoping it will work for them, as well.

—Liza Barth

Car and truck recalls

There have been a number of recalls announced in the past few weeks affecting Hummers, Mitsubishi Lancers and Outlanders, and a number of GM vehicles. If your vehicle is listed here, the manufacturer will contact you with information about what to do, or you can use one of the numbers we list below to contact the manufacturer yourself.

2009 Hummer H3T

General Motors is recalling over 1,700 Hummer H3T vehicles due to a problem with the fuel tank front support strap, which could fracture. If this occurs, the fuel tank would only be supported by the rear support strap and the stone shield. The fuel tank could separate from the vehicle and cause a crash.

Dealers will install a new fuel tank front support strap free of charge.

The recall is expected to begin on or before April 10, 2009. Owners may contact Hummer at 800-732-5493 or at www.gmownercenter.com.

2009 GM vehicles

General Motors is recalling over 276,000 2009 GM vehicles which include the Buick Enclave, Chevrolet Cobalt, Chevrolet HHR, Chevrolet Malibu, Chevrolet Traverse, GMC Acadia, Pontiac G5, Pontiac G6, Saturn Aura, and Saturn Outlook. These vehicles have a problem with a transmission shift cable clip that may not be fully engaged when the vehicle shifts into Park, which could result in the vehicle rolling away.

Dealers will inspect the clip and replace if necessary, free of charge. The recall is expected to begin by March 24, 2009. Owners may contact Buick at 1-866-608-8080, Chevrolet at 1-800-630-2438, GMC at 1-866-996-9463, Pontiac at 1-800-620-7668 and Saturn at 1-800-972-8876 or www.gmownercenter.com.

2008-2009 Mitsubishi Lancer and Outlander

Mitsubishi is recalling almost 40,000 2008-2009 Outlander and Lancer vehicles due to a problem with the brake booster check valve that could cause the check valve to stick when the engine is shut off. When the vehicle is started again, there may be insufficient brake assist which could increase the stopping distance of the vehicle and cause a crash.

Dealers will replace the brake booster check valve free of charge.

The recall is expected to begin in April. Owners may contact Mitsubishi at 1-800-222-0037.

Personal Picks: Luxury SUVs

Luxury SUVS…are there more politically-incorrect vehicles on the road today? The December test group of $58,000-$71,000 machines might seem like a head-scratcher now. But, surprisingly, our subscribers tell us in our Annual Questionnaire that they own these things: we have significant data on Toyota Land Cruisers, Porsche Cayennes, and Land Rover Range Rover Sports. However, we do not have enough data on the Hummer H2. It’s probably not a stretch to say that Consumer Reports subscribers and H2 owners usually don’t go together. So, why do we test them? To cover the full spectrum of mainstream models to empower our readers to make informed decisions.

What would we buy if we won the lottery? Here’s a look:

Tom Mutchler: If I’m in the market for a $60,000 SUV (trust me – I’m not), I don’t want to wind up annoyed every time I drive it. I don’t want the nagging feeling that a cheaper model was bigger and more capable. And when I drive it, I really don’t want people waving at me with less than five fingers.

That limits my choices here. The Porsche Cayenne annoys me: it has a stiff ride, tight seats, illegible optional $1,200 (!) brown-faced gauges, and inscrutable radio controls. A sweet exhaust note and good grip just aren’t enough to win me over. As nice as the Toyota Land Cruiser is, the Sequoia has a lot more space and tows more. (I can live without the LC’s cool “crawl” off-road mode for $10,000 less.) Unless I had to climb a rock hill everyday to get to work, a Hummer H2 isn’t in the cards. Passersby aren’t exactly afraid to share their opinions – pro and con – about the H2, either.

Even though I feel a bit guilty about it, I really like our Land Rover Range Rover Sport. It’s fetching in Lucerne green and pale leather; it’s no surprise that an identical truck was part of the prolific product placement on the aiming-at-the-upscale Bravo TV show “Top Design.” You sit up high and there are big windows. Power isn’t generous without the optional supercharger, but the HSE’s V8 sounds really good. Finally, the Sport handles a lot better than our 2005 LR3, which shares this truck’s platform.

I’m a logical guy. Land Rover is at the bottom of CR’s reliability ratings. An Acura MDX is a far more practical purchase. And the RR’s profligate with fuel. But I’m happy to put a (non-alcoholic) beverage into the Sport’s console refrigerator, go for a drive, and be happy that nothing’s broke on it yet.

Gabe Shenhar: If you’re going to be politically-incorrect and socially irresponsible, and still get your bonus this year, you might as well go all the way and treat yourself. Right? Truthfully, nobody actually “needs” any one of these four indulgent SUVs; there are other vehicles that do the same for less.

That said, I found myself enjoying two of these luxury SUVs for entirety different reasons. The Land Cruiser, with its comfortable ride, quiet cabin and utterly amazing off-road ability impresses the heck out of me. But as a suburban family three-row SUV, its tall stance, clumsy handling and compromised packaging detract. And, for that lofty price, I could get a Mercedes-Benz GL320 diesel that drives beautifully and gets decent gas mileage.

I also like driving the Cayenne. It’s one of the few SUVs you can truly hustle in corners, and it has the great steering and brake feel of a Porsche. The catapult and sound of the V8 is addicting. You put up with the stiff ride and some unintuitive controls, but what else do you expect for $70,000? Rationally speaking, however, there isn’t a whole lot the Cayenne does that the BMW X5 doesn’t do, other than being more exclusive.

Rick Small: I’m not a big fan of this group. The Cayenne is relatively sporty but heavy and large – seems like a rolling oxymoron. It really can’t do “sporty” very well and it’s too expensive. The Land Cruiser does a good job as a large luxury SUV. But for me it’s too big and clumsy to drive every day. If you need this size vehicle and want some luxury, the Cruiser is a good choice. The Range Rover is expensive and great off-road but not as comfortable or reliable as the Land Cruiser. I don’t think too many people do serious off-roading with a vehicle this expensive, anyway. The Hummer tows well but is not very roomy. It’s also expensive (do you see a pattern here?), thirsty and very awkward to drive. For my money, I would choose a three-row Mazda CX-9 or Honda Pilot. These are much less expensive, reliable, use less fuel and are better every day drivers than these luxurious beasts. The CX-9 favors the sporty side while the Pilot leans more toward comfort.

Mike Quincy: The Cayenne, Range Rover Sport and (especially) the Hummer are train wrecks: people can’t help but stare and be oddly fascinated by what they see. If I had to pick my 9-year-old son up from school or at a friend’s house, he loved it when I showed up in the H2. If my wife and I were going out, she was always a bit more jazzed to see the Cayenne. And I agree with Tom’s assessment of the Range Rover Sport: it’s surprisingly nice to drive. But to keep these brutes running means paying hefty bills – either for gas, maintenance or both. At least the Land Cruiser has a history of good reliability, but its 14 mpg overall makes me cringe.

The truth is that if I’m spending crazy money, I’d rather have a good pickup truck than any of the models we’ve covered here. But I’ll stick with the “luxury” theme and treat myself to a top-of-the-line GMC Sierra Denali crew-cab pickup. Though still a gasoline pig, it has style, luxury, one of the best sounding and smoothest V8s around, and I can actually haul stuff without worrying about it getting dirty. I’ll also save enough to buy a new road bike (hint, hint…Christmas is coming, honey). In reality, I can’t afford the truck, though, but maybe the bike.