Hummer, Tengzhong Heavy Industrial Machinery Finally Strike Deal
General Motors has reached a deal with Tengzhong Heavy Industrial Machinery to sell its Hummer brand. After months of negotiations, the sale is almost final, pending the government approval of both parties. The deal should be finalized by the end of the year.
The Chinese company is estimated to have paid $150 million, one-third the priceat which GM valuedHummer earlier this year. Having just emerged from bankruptcy, GM said Hummer would be one of the brands it would sell. The American automaker is also poised to sell its Saab brand. Saturn will fizzle out, as a deal to sell it to Penske Automotive fell through. The Pontiac brand will also cease to exist after bankruptcy restructuring is complete.
Tengzhong Heavy Industrial Machinery is just that, a heavy machinery manufacturer with almost no automotive experience. During the transition period GM will assist in managing the company. Hummer will most likely keep its headquarters in southeast Michigan, as we reported a few weeks back. As for vehicle manufacturing, "GM will manufacture on contract for the Chinese company" for an undetermined amount of time.
Li Yan, head of Tengzhong, is ambitious about the acquisition, including a possible small mass-market vehicle to appeal to the Chinese public. "It's an entrepreneurial decision by a very entrepreneurial man who thinks he's acquiring a unique brand asset at a very low price," an anonymous source told The Washington Post.
The deal does not include the HMMWV military vehicle, which is owned and produced by AM General, based in Mishawaka, Indiana.