General Motors Corp (GM) said on Tuesday it had reached a tentative deal to sell its Hummer brand to a privately held Chinese company, part of an effort to drop four unprofitable vehicle lines and leave bankruptcy as a leaner company.
GM said in a statement a day after filing for bankruptcy that it had reached a memorandum of understanding with Sichuan Tengzhong Heavy Industrial Machinery Co (四川騰中重工機械) for the sale. Tengzhong said it would retain Hummer’s senior management and operational team.
GM said Tengzhong would also enter into a long-term contract assembly and key component and material supply agreement with GM.
Under the deal, which is subject to regulatory review and is expected to close in the third quarter, Tengzhong will assume Hummer’s existing dealer agreements.
Financial terms were still under discussion and will not be disclosed, GM said. Bankers have said Hummer could fetch about US$100 million in cash in addition to other commitments.
The deal marks the first time that a Chinese buyer has acquired a brand from one of the struggling US automakers.
Chinese parts suppliers and automakers have shopped for US automotive assets, including those at bankrupt Chrysler LLC, but no deals have been completed despite the enormous pressure on US automakers in recent years to cut costs.
Based in Sichuan Province, Tengzhong makes special-use vehicles, highway and bridge structural components, construction machinery and energy facilities.
Tengzhong will expand into the premium off-road vehicle segment, it said in a joint statement with GM.
Tengzhong’s Web site did not indicate whether the company has experience running plants overseas or of producing passenger vehicles of any kind.
GM said earlier on Tuesday that the buyer of Hummer, whom it did not initially identify, would contract to build the H3 model sport utility vehicle and the H3T pickup truck at GM’s plant in Shreveport, Louisiana, through at least next year.
In addition, GM said the investor would fund future vehicles for Hummer and invest in alternatives to the heavy gas-guzzling engines that are the hallmark of the brand.
In Shreveport, where 800 workers work on a single shift building Hummer H3 and H3T models, there was relief that a new buyer would keep the line running for at least a while longer.
“We’re just excited that Hummer may live on,” said Morgan Johnson, president of UAW Local 2166, which represents workers at the GM plant.
After losing US$88 billion since 2005, GM is in the process of cutting debt, workers and brands in bankruptcy.
It is seeking to sell its Saab and Saturn brands by the end of this year and plans to discontinue Pontiac by the end of next year.
That would leave a smaller GM to be rebuilt around the Chevrolet, Cadillac, GMC and Buick brands. Together those account for more than 80 percent of current sales.
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