General Motors announced yesterday it had finalised plans to sell control of its iconic Hummer brand to a Chinese heavy equipment maker, pending approval from the U.S. and Chinese governments. While Hummer will be controlled by two Chinese automakers, CEO Jim Taylor said the company plans to keep operations headquartered in the US.
Financial terms were not disclosed in the deal, but Sichuan Tengzhong Heavy Industrial Machinery will acquire 80 per cent of the Hummer brand, trademarks, trade names, the dealer network, and the intellectual property rights needed to build Hummers. The other 20 will go to Suolang Duoji, a private entrepreneur.
Hummer has faced challenging times in the past few years. In the seven years since GM launched the brand, it has become a lightening rod for environmentalists. Owners have complained about finding their vehicles keyed in parking lots and being sneered at by neighbours. The automaker tried to revamp Hummer’s image by marketing it as a “purpose-built” vehicle that can go places other SUVs can’t, but then backed off that marketing campaign once GM decided to sell off the brand.
Hummer, whose smallest model gets 16 miles per gallon in combined city and highway driving, sold well until the middle part of this decade when fuel prices began to rise. Through September, GM has sold only 8,193 Hummers in the US this year, down 64 per cent from the same period last year. In September, only 426 Hummers were sold nationwide, according to Autodata.
GM, which spent 40 days in bankruptcy protection during the summer and has received about US$50 billion (RM175 billion) in US government aid, plans to sell its Hummer and Saab brands and scrap Pontiac and Saturn as it tries to streamline its operations. The company wants to focus on four core brands: Chevrolet, Cadillac, Buick and GMC.
The deal still must be approved by the US and Chinese governments, and Chinese regulators initially expressed reservations about Tengzhong’s ability to run such an enterprise.
GM already has seen one similar deal blow up at the last minute. Last week, auto dealership magnate Roger Penske’s bid to buy the Saturn brand fell apart just before the deal was finalised when a contract to make vehicles was rejected by the Renault board.
In June, Sichuan Tengzhong announced that it had a tentative agreement with GM to buy the brand, which features large off-road vehicles that initially were developed for military use.
The consumer version of the Hummer H3 and H3T pickup are assembled at the GM plant in Shreveport, which is slated for closure no later than June 2012. The larger H2 was made under contract with AM General, which also makes military versions of the vehicles. The workhorse military vehicles used in Iraq and Afghanistan are not a part of the deal.
The deal with Sichuan Tengzhong has long been expected. The Michigan Economic Development Authority in September approved a US$20.6 million state tax credit over 10 years for Hummer to build a headquarters in the Detroit area.
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