General Motors Co will wind down its iconic but tarnished Hummer brand after Chinese regulators rejected a $150 million bid by an obscure Chinese machinery maker to buy the money-losing SUV line. GM had been trying to complete the deal by the end of February after reaching a definitive agreement in October to sell Hummer to Tengzhong, a little-known heavy machinery company based in Sichuan province.
A brand that grew out of the US military multipurpose vehicle known as the Humvee produced by AM General, Hummer was lauded early on for a tough image but became synonymous with gas-guzzling excess when consumers became more interested in high oil prices and environmental responsibility. GM bought the Hummer brand from AM General in 1999 and went on to produce several civilian models.
Industry experts and sources with knowledge of the situation say that, Tengzhong had faced questions in China over how a little known heavy machinery maker with no international experience could buy and turn around a struggling foreign brand like Hummer.
Many also said that regulators might balk at letting a Chinese firm acquire a US brand known for making gas-guzzling vehicles at a time when China was emphasising the development of more environmentally friendly technologies.
The privately owned Tengzhong was formed in 2005 through several mergers and has fewer than 5,000 employees.
GM said it will continue to honour warranties and provide service support and spare parts to current Hummer owners.
This marks the third sale of a GM brand that has fallen through or been abandoned by the automaker, which was restructured in bankruptcy last year, backed by some $50 billion in US taxpayer funding. A tentative deal reached by GM to sell its Saturn brand to Penske Automotive Group Inc also collapsed at the end of September, just before it was expected to close. GM also scrapped a plan to sell its Germany-based Opel unit to a group led by Magna International last year.
The wind-down of Hummer is expected to take several months and GM will continue to entertain viable offers early in the process. GM has not built any new Hummers at its plant in Shreveport, Louisiana, since mid-January and currently has about 2,500 vehicles in dealer inventory.The Shreveport plant continues to build the GMC Canyon and Chevrolet Colorado mid-sized trucks.
GM put Hummer up for sale initially in summer 2008, a full year before the automaker fell into a government-supported bankruptcy reorganization in which it planned to divest Hummer, Saturn, Saab and a controlling stake in Opel.Hummer’s US sales have plunged to just above 9,000 last year from nearly 56,000 in 2007. About two-thirds of its sales have been in the United States and one-third internationally. – Reuters
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