General Motors Co (GM) signed a deal on Friday to sell its iconic but tarnished Hummer brand to an investment partnership headed by an obscure Chinese machinery maker in an agreement that underscores the fast rise and global ambition of the Chinese auto industry.
The deal with China’s Sichuan Tengzhong Heavy Industrial Machinery (四川騰中重工機械) caps a year-long struggle by GM to shed a military-derived SUV brand that has become synonymous with gas-guzzling excess.
It marks the first time that Chinese investors have stepped in as buyers into the distressed US auto industry.
PHOTO: AFP
The sale also comes at a time when China has emerged as the world’s largest auto market and GM remains majority-owned by the US government after being driven into bankruptcy.
“The long-term game plan is to ride the China wave,” said Jim Taylor, the GM executive who has helped steer the sale and will remain in Detroit as the new company’s chief executive.
The deal remains subject to regulatory review in the US and China.
Chinese officials have signaled that the deal would be treated favorably, Taylor said.
Financial terms were not announced. A person familiar with the deal said earlier on Friday that the Hummer business would be sold for about US$150 million, far less than GM’s early estimate that Hummer could fetch more than US$500 million.
Under the deal, Lumena Resources Corp chairman and founder Suolang Duoji would hold 20 percent of the investment vehicle buying Hummer.
Tengzhong would hold the remaining 80 percent.
The sale of Hummer is part of a drastic restructuring plan by GM, which also involves the disposal of its SAAB, Opel and Saturn operations as part of its US government-sponsored restructuring in bankruptcy.
Tengzhong, a little-known heavy machinery maker, has been in detailed negotiations with GM since it announced an initial plan in June to acquire the premium off-road Hummer brand.
Tengzhong executives, including CEO Yang Yi (楊怡), have been in Detroit for more than a week for the final round of negotiations after GM missed an initial goal of completing the deal by the end of last month.
GM, which emerged from bankruptcy in July after taking US$50 billion in US government funding, is cutting its stable of brands in half to focus on Chevrolet, Cadillac, Buick and GMC.
Hummer’s sales peaked in 2006 but have been hit hard since by a slumping US economy, higher gasoline prices and a shift in US consumer tastes away from Hummer’s heavy-duty SUVs and its military-derived styling.
Through September, Hummer’s US sales were down 64 percent this year.
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