General Motors' iconic Hummer brand could fetch up to $750m in a sale, but would likely generate little interest and the company would probably have to look overseas to attract even a few buyers.
GM, the largest US carmaker, said last Tuesday it is reviewing its Hummer brand and could sell the SUV line, which has become synonymous with gas-guzzling excess and has hurt GM's image at a time when consumers are demanding more fuel efficiency.
"At this point we are considering all options for the Hummer brand, everything from a complete revamp of the product line up to a complete sale of the brand," GM Chairman and Chief Executive Rick Wagoner said.
But as oil prices touch all-time highs, interest in buying a brand that provides 9 to 15 miles a gallon in fuel efficiency will be thin.
Some bankers said possible buyers could come out of Russia, where Hummer has a strong cache, and countries such as India and China, where camakers are looking to get a foothold in the US market.
Still, even for those buyers, Hummer's biggest strength is its biggest weakness: it is a niche model with a limited product line.
The Hummer brand was originally conceptualized as a multipurpose, off-road military vehicle, and created what came to be known as Humvees for the US military. Those were made by a company called AM General.
GM bought the Hummer brand from AM General in 1999 and went on to sell the H1, H2 and H3 civilian models that became the symbols of toughness and coolness.
California's governor, Arnold Schwarzenegger, added to the image by boasting of a fleet of eight Hummers. He brought the brand into every American living room when he famously referred to it while debating rivals during the gubernatorial race.
But as oil prices have risen, Hummer sales have fallen. US demand - which comprises the bulk of total Hummer sales - has plunged 30% so far this year. Even the "Governator," as Schwarzenegger was dubbed, has sold his fleet.
And with increasing environmental concerns, the image has quickly gone from cool to not-so-cool.
"It's a very clear-cut, incredibly well-defined and very strong brand name," Catherine Madden, senior automotive analyst for Global Insight, said. "It's also a very high profit-margin vehicle line. But those profits could be marginalized significantly because of a segment shift in vehicle purchases."
With fuel prices at about $4 a gallon across many parts of the United States, consumers are increasingly turning to fuel-efficient vehicles.
"For foreign automakers looking to enter the US, it is not a very attractive asset because it brings them into the market with a product that consumers are shying away from," Argus Research analyst Kevin Tynan said.
Analysts and bankers don't see Ford or Chrysler, now owned by Cerberus, showing an interest. "Both are overloaded with products that consumers are shifting away from and both are in precarious positions themselves," Madden said.
"And Western Europe is not going to go running behind this brand. Their infrastructure doesn't allow it and the cost of gasoline is higher there."
One banker, who declined to be identified, said a likely buyer would be a rich Russian business oligarch who would view Hummer as a trophy asset.
One person who comes to mind is Russian billionaire Oleg Deripaska, who owns GAZ OAO GAZA.RTS, Russia's second-largest carmaker. GAZ bought a stake in Canadian auto supplier Magna International last year.
Other names that pop up amid speculation are Indian automaker Mahindra & Mahindra, which bid for Ford's British brands Jaguar and Land Rover and lost out to rival Tata earlier this year.
Candidates could also include China's Chery Automobile and Geely Automobile Holdings, both of which want to enter the US market.
Some bankers agreed that the brand, considered a distressed asset amid current oil prices, could go for $500 million to $750 million. GM does not break down financial performance by brand, but judging by Hummer's 2007 unit sales, its revenue was at least $2.5 billion.
GM sold about 66 000 Hummers in 2007, of which about 55 000 were in the United States.
But IRN Inc analyst Erich Merkle said: "For anyone, from any part of the world, this would be a very tough sell. What's in it for any buyer?"
One more challenge a prospective buyer would face would be access to the dealer network. GM currently sells Saab, Hummer and Cadillac in combined showrooms so a buyer would have to negotiate access to the GM dealer network. That could also limit the buyer to selling only Hummer vehicles in its showrooms in the United States.
"That would be a big challenge," Merkle said. "And to get financing for the purchase, and then for the ongoing working capital would also be very challenging at this point in time."
Another possibility is that GM could end up with a partnership with someone either willing to invest in revamping the line or willing to move the manufacturing overseas and help focus the growth outside the United States.
Private equity players, who had retreated from a buying spree as the availability of credit tightened, could partner with an automaker to make a bid, but "chances of private equity wanting to take on Hummer are low," a banker said.
GM has long been criticized for having too many brands with overlapping models. Billionaire investor Kirk Kerkorian, who bought a nearly 10 percent stake in GM in 2006 and placed his aide, Jerry York, on the board, had then called on GM to get rid of its Hummer and Saab brands.
GM was struggling then and is struggling again. It lost $3.25bn in the first quarter, its US sales plunged 30% last month and it plans to restructure its product line-up. That begs the question: is Saab next?