China View of the Hummer Sale

Hummer bid hurdles still remain, experts say
By Li Fei (China Daily)
Updated: 2009-06-16 08:08

Sichuan Tengzhong Heavy Industrial Machinery may still have to overcome many hurdles to win regulatory approval for its controversial acquisition bid for the Hummer brand even after a crucial ministry signaled no rejection.

Tengzhong's bid for the now bankrupt US car giant General Motor's Hummer brand is "rational and normal" given the current global financial crisis, Yao Jian, a spokesman for the Ministry of Commerce, told reporters yesterday.

Yao said his ministry, a key government body that has a say in the approval of Tengzhong's bid, had not yet received any application from relevant parties.

This is the first official remark concerning the deal, which has aroused heated debate in the country on whether the virtually unknown makers of special-use vehicles and bridge and highway components has the industry expertise and resources to turn the Hummer business around.

Hummer bid hurdles still remain, experts say Hummer buy a rocky road for obscure China firm. While the provincial government of Sichuan, where Tengzhong is based, is keen to see the deal go through to raise its profile, the central government has the final say.

And analysts said the government, which has identified energy saving and efficiency as one of its key tasks, is unlikely to grant a go-head to the deal.

"We cannot interpret (the spokesman's) comments as a signal that government will let the deal go through, as there are other powerful bodies involved, such as NDRC (National Development and Reform Commission)," said a senior industry watcher, who asked not to be named.

"NDRC, which has been the advocator of energy efficiency and savings efforts, is very unlikely to approve the deal as it may invite public outcry," the analyst said.

But analysts said even though the image of the gas-guzzling Hummers might not fit with China's energy saving efforts, the market for the iconic off-road sports utility vehicle (SUV) was still large in the country.

"Like it or not, Hummers will still find many buyers here", said Jia Xinguang, an independent auto industry analyst.

China is the bright spot for luxury carmakers such as Porsche SE, amid the global financial crisis.

China may pass Germany as its second-biggest market within three years, said Helmut Broeker, Porsche's China head.

http://www.chinadaily.com.cn/bizchina/2009-06/16/content_8287836.htm