Chinese company to buy GM’s Hummer brand

Posted: June 3, 2009 in Hummer, News

A day after filing for bankruptcy protection, General Motors Corp.moved quickly on two major matters: striking a deal to sell its Hummer brand to an industrial company in China and offering do-or-die operating agreements to U.S. dealers it has marked for closing.

The automaker filed for Chapter 11 , a process that will leave it nearly 61 percent owned by the federal government and unburdened of nearly three-quarters of its debt.

GM said it has an agreement to sell Hummer to Sichuan Tengzhong Heavy Industrial Machinery Co. It did not disclose the price or other terms but said it expected the deal to close in the third quarter.

Tengzhong, which builds industrial machinery, said it plans to keep Hummer’s senior management and the auto company’s existing dealer agreements.

The Chinese company said it plans to reach a long-term contract assembly and key component and material supply agreement with GM. That would secure more than 3,000 U.S. jobs, GM said. But the automaker also cautioned that the deal was subject to final negotiations.

Based in the Chinese province of Sichuan, Tengzhong is a privately owned company that makes road, construction and energy industry equipment. It said it is looking to grow Hummer both in the U.S. and overseas markets, particularly China.

Hummer “is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business,” Yang Yi, chief executive of Tengzhong, said in a statement.

The Hummer brand, once a cash cow for GM, came to represent a symbol of the company’s misdirected priorities and lack of balance as gasoline prices spiked at more than $4 a gallon a year ago.

Still, Hummer has a nationwide network of dealers and a highly loyal customer base, and it could be an attractive toehold in the U.S. market for a foreign buyer without a distribution structure in the world’s largest auto market.

Separately, GM said its U.S. dealers started receiving letters offering them deals to operate under strict new rules or face termination of their franchises in court.

Some 1,100 dealers the automaker previously identified for elimination will be offered unspecified cash settlements to wind down their franchises, while most of GM’s other 5,000 dealers will be asked to comply with tough standards going forward or face a similar fate. GM has a goal of reducing its dealership network to 3,600 outlets by the end of next year.

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  1. […] Original post:  Chinese company to buy GM's Hummer brand « Car Trends […]

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