Bankrupt US car giant General Motors has announced a tentative deal to sell the Hummer brand of sport utility vehicles to a Chinese company. AM General will still manufacture the Humvee for the US military.
The deal announced on Tuesday will see the brand sold for to Tengzhong Heavy Industrial Machinery Company, based in the southern Chinese province of Sichuan. The Chinese government has not yet cleared the sale.
GM said in a statement that it has a memorandum of understanding with the company regarding the sale.
Bankers have previously estimated that the Hummer brand and assets could fetch about $100m in cash and some other commitments.
The sale of Hummer is part of an effort by the Detroit-based firm to drop four unprofitable GM vehicle lines with the desire to emerge from bankruptcy as a leaner company.
A top official for GM said Tengzhong would not only continue to produce the Hummer model, it would also develop an environmentally friendly version.
Tengzhong said the Chinese domestic market will play an important role in its global strategy.
"The company's strategy is to go global with the Hummer brand global and that will include the Chinese market," said a public relations spokesperson.
Tengzhong and GM said in a joint statement that "the team intends to expand Hummer's dealer network worldwide, particularly into new and under-served markets such as China".
The sale is still subject to regulatory approval. This is the first time that a Chinese buyer has acquired a brand from a US vehicle-maker.
If it clears both China and the US, more than 3,000 jobs would be saved at Hummer factories and dealerships across the US.
Tengzhong will retain Hummer's senior management and operational team. The company will also enter into a long-term contract assembly, component and material supply agreement with GM.
In the Hummer plant in Shreveport, Louisiana has 800 workers who work on a single shift. Union workers expressed relief that a new buyer would keep the line up. ."We're just excited that Hummer may live on," said Morgan Johnson, local president of the United Auto Workers union.
Chinese parts suppliers and automakers have shopped for other US automotive assets, including those at Chrysler, but the Tengzhong deal appears likely to become the first to be completed.
Sichuan-based Tengzhong makes special-use vehicles, highway and bridge structural components, construction machinery, and energy facilities.
Hummers, originally built by AM General, were initially designed as multipurpose, off-road military vehicles.
The first model produced was the H1 Humvee, which spun off into the civilian Hummer brand bought by GM in 1999. The H1 was so large in would not fit in many home garages or parking garages at work. It was followed with progressively smaller models: the H2 and the H3.
But soaring fuel prices and the impact of the credit crunch have hit sales with consumers in many key markets turning against the Hummer, seen as a symbol of 20th century excess with its macho styling and poor fuel economy.
AM General still makes the Humvee for the US military.
english.aljazeera.net/news/asia-pacific/2009/06/20096321215729673.html
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