Chinese Government Rejects Tengzhong’s Hummer Purchase

#Hummer

According to Reuters, sources close to the Chinese government indicate that regulatory approval for Sichuan Tengzhong Heavy Industrial Machinery Company's purchase of the Hummer brand has been rejected. Interestingly, government officials continue to insist they haven’t received a formal application for approval from Tengzhong.

As reported yesterday, this doesn’t necessarily spell the end of the Hummer line. One option would be for Sichuan Tengzhong to set up an offshore shell company to purchase Hummer, making China's approval unnecessary. Still, the company's goal would be to produce new Hummers at Chinese plants and sell the vehicles in the Chinese market, something China officials may still not be willing to do, especially if Sichuan Tengzhong is seen as trying to avoid Chinese regulations in the purchase deal.

Other hurdles are also still firmly in the way of Chinese Hummers. As a heavy equipment manufacturer, Sichuan Tengzhong currently has no experience building passenger vehicles and China itself is stressing the construction and sale of new eco-friendly models - a chief reason the deal was not approved by Chinese government, according to sources. Those factors, combined with potential financing issues for future production, and the fact that Hummer is currently a destitute, money-losing brand, could dampen enthusiasm in the deal to a large degree.

Still, word on the street is that the General and Sichuan Tengzhong have yet to give up, so stay tuned for the latest updates.

Source: Reuters

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