General Motors has signed a deal with AM General Corp. to distribute the Hummer, one of the biggest sport utility vehicles made.
The Hummer is the Army-like, go-anywhere, $60,000-to-$80,000 sport utility owned by such people as Arnold Schwarzenegger. And GM has left the door open to a much wider deal that it hopes will have AM General's owner saying, "Go ahead, make my day!"
Tom Davis, group executive at the GM Truck Group, told CBS.MarketWatch.com that talks would continue with hopes of a much wider agreement. Will GM take a stake in AM General, owned by Renco Group, a private New York investment firm?
"Not at this point in time, although those discussions are still under way as part of closing the deal this fall," Davis said.
For now, GM will distribute the Hummer, starting in the year 2000, as the two firms explore further retail, marketing and distribution opportunities. Financial details of the current agreement were not released.
But it's clear that one day next year, you will be able to easily buy a Hummer, if your visit to a Chevy dealer convinces you that a Corvette might be a wee bit too small.
Davis discounts any thought that the Hummer is aimed at countering Ford's introduction of its new Excursion, which hits dealer lots this September. The Excursion will be priced in the $34,000-to-$40,800 range, nearly half the price of a Hummer.
Both vehicles weigh in at about 7,090 pounds; the Hummer has a 42-gallon gas tank, compared to 44 gallons for the Excursion.
The Excursion will be be 7.1 inches longer than the Hummer, but when it comes to elbow room the Hummer is the winner. It is 6.5 inches wider than the upcoming Ford.
AM General will continue making the Hummer, which could realize a major distribution boom from the current deal. There are less than 100 Hummer dealers now, but thousands of GM outlets across the country. It is not clear which GM brand might carry the Hummer.
General Motors will continue to aim the huge Hummer at what it sees as its main audience.
"When you look at where the brand rings true in the marketplace, it really is strong with younger people who are below age 30," Davis said.
Which means it probably won't be sold alongside too many Buicks.
Is there a chance that a GM nameplate might be added to the Hummer grill?
"We're still in the discussions, but clearly (with) the tremendous value of the brand, we wouldn't want to do anything that would take a focus off the Hummer brand," Davis said.
AM General would continue to "have full responsibility" for the Humvee which is the military version of the Hummer, Davis said.
Written By Ron Amadon, CBS MarketWatch