GM Sells Hummer Unit To Chinese Firm And Investor

It has been widely expected that General Motors' Hummer unit, the maker of trucks inspired by the U.S. military's Humvee, would soon have a new Chinese owner.

On Friday, Hummer's sale became official with GM announcing that had reached a definitive agreement with China's Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd.

GM didn't disclose the sales price. But reports are that the sale price was about $150 million, much less than the $500 million GM had estimated it could sell the company for in its bankruptcy filing.

Once a symbol of the American penchant for really giant gas-guzzling vehicles, the Hummer brand became something of an automotive dinosaur when U.S. gas prices soared to $4 a gallon last year.

NPR's Frank Langfitt reported the following for the network's newscast:

Tengzhong makes things like dump trucks — not passenger vehicles.

Auto analysts say it's buying Hummer in part for the brand name and technological know-how.

Crystal Jiang follows the Chinese auto industry as an associate professor of management at Bryant University in Rhode Island.

She thinks Tengzhong wants to develop a more fuel-efficient Hummer and sell it to China's new rich.

JIANG: "Look how Chinese consumers buy vehicles. It's not about the flexibility, utility or reliability. It's about my social status"

GM said in a statement:

Under the terms of the definitive agreement, the buyer will acquire the ownership of the HUMMER brand, trademark and tradenames, as well as specific IP license rights necessary for the manufacture of HUMMER vehicles. The buyer will also assume the existing dealer agreements relating to HUMMER's dealership network.

Tengzhong intends to purchase HUMMER through an investment entity, in which it will hold an 80 percent stake. Mr. Suolang Duoji, a private entrepreneur with holdings that include the Hong Kong-listed thenardite producer Lumena, will hold the remaining 20 percent stake. Financial terms of the agreement were not disclosed.

 

The transaction is subject to customary closing conditions and regulatory approvals and/or review by government agencies in the U.S. and China. The completion of the definitive agreement enables the companies to continue and further the overall regulatory review process.

"HUMMER is a strong global niche brand and this agreement signifies another important milestone in writing the next chapter for both GM and HUMMER," said Fritz Henderson, GM President and CEO. "For HUMMER, the combination of its knowledgeable leadership team, vehicle design expertise and the capital financing of Tengzhong portend a successful future."