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Approval of Hummer Deal "Likely," H3 Production May Pause on Monday

Although we've heard precious little news surrounding the sale of Hummer to the Chinese Sichuan Tengzhong Heavy Industrial Machinery Company, a General Motors executive expressed optimism that Chinese regulators would approve the purchase.

Kevin Wale, president of General Motors China, told reporters at the Automotive News World Congress that he thinks Tengzhong is likely to win approval from the Chinese government to purchase the brand.

"I'm optimistic that it's going to happen," he said, echoing comments from GM Chairman Ed Whitacre. Earlier this week, Whitacre noted "as far as we know, [the sale] is proceeding like it should."

The issue, it seems, lies largely with the Chinese government. As the state controls most industry, it prohibits inexperienced firms from entering into what it considers key industries -- automobiles being one. While Tengzhong manufactures construction equipment and heavy trucks, it has little to no experience playing in the consumer automotive segment.

Approval needs to arrive sooner than later, however, as GM has established a deadline of January 31 for the deal to be completed. Otherwise, Hummer may be facing the same fate as Saab, Saturn, and Pontiac.

Until approval arrives and the sale is completed, GM plans on halting production of the H3 and H3T models at its plant in Shreveport, Louisiana, on Monday. The cut isn't expected to radically alter the livelihood of the plant's 1120 employees -- the facility also builds the Chevrolet Colorado and GMC Canyon pickups, and H3 production accounts for less than 25 percent of its production. Dealers won't likely feel a pinch, either, as they currently have nearly a seven-month supply of H3s.

Source: The Detroit Free Press (1,2)