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Hummer Returns to the Middle East


At $84 to fill 'er up, only Dubai can afford it.

If any American city is emblematic of the Hummer, it would be Las Vegas. Surrounded by endless desert, Sin City is home to all things big and bling.

Which is why General Motors (GM) should be particularly concerned that Dan Towbin, the owner of one of Hummer's largest US dealerships, has decided to close up shop.I f the Hummer can't make it here, where can it?

General Motors announced earlier this year plans to sell off the Hummer brand. Despite offering huge discounts on the gargantuan, gas-guzzling vehicles, GM reported that overall sales are down 47% this year alone. Unsurprising, given the fact that the national average gas price is $3.66: To fill up Hummer's smallest model, the H3, you'd have to fork over $84.

Towbin's shop is the eighth Hummer dealer to close this year, representing a 5% decline in the brand's dealer base, according to the Wall Street Journal. Many are concerned that dealership closings will make it increasingly difficult for GM to court potential buyers. After all, who has the money (or private oil well) necessary to maintain one of these vehicular beasts?

Terry Johnsson, GM's Middle East managing director, may have an answer. Last August, Johnsson reported that "there has been interest [in buying the Hummer] from various parties within the Gulf." Considering that the Hummer made its debut during the Gulf War, a return to the Middle East would be something of an ironic homecoming for the former military transport vehicle.

Middle East investment in high-end foreign cars isn't unprecedented. In 2005, Abu Dhabi's Mubadala Development Company bought a 5% stake in Ferrari. Meanwhile, Kuwait's Investment Dar bought half of the British luxury performance car manufacturer Aston Martin.

If the trend continues, it won't be long before Dubai really is the next Sin City.

For more on the decline of the Hummer, check out Hoofy and Boo's always astute report.

No positions in stocks mentioned.

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