The Hummer's allure is on the wane

Ronald Perelman, one of the best-known corporate raiders of the 1980s, is forming a venture to buy AM General.

The firm makes a range of military vehicles, and has developed the Hummer on behalf of General Motors.

Sales of Hummers have plummeted this year as rising fuel prices have hit demand for the vehicle.

The Hummer costs $50,000-plus new, and squeezes out just 10 miles to the gallon.

Deals on wheels

Mr Perelman, whose fortune is estimated at $3.8bn by Forbes magazine, has an extraordinary track record.

He is best known for his 1985 takeover of cosmetics firm Revlon, one of the key deals in the decade's wave of leveraged buyouts.

Financial details of the AM General deal are being kept secret, but Mr Perelman evidently feels the company is undervalued.

The company is currently owned by industrial conglomerate Renco Group, which bought it in 1992 for $133m.

GM still owns the rights to the Hummer brand.

In the firing line

The Hummer is still one of GM's most profitable vehicles: the company is reckoned to clear $15,000 profit on every sale - a huge margin in the highly competitive US car market.

The Humvee, the Hummer's military ancestor

For years, it was the vehicle of choice for celebrities, and is still favoured by the likes of Arnold Schwarzenegger, California's governor.

Sales have fallen by 22% this year, however, a reaction to the protracted rise in fuel prices.

And the Hummer - the civilian version of an armoured car also made by AM General - has been particularly targeted by environmental activists.