General Motors’ sale of Hummer to Tengzhong Heavy Industrial Machines Co. Ltd. is dead and as a result GM has decided to just wind down the brand.
After months of negotiations, the agreement between Tengzhong and GM stalled because of a multitude of reasons, including poor sales of Hummer and the fact that the sale would go against the country’s increased efforts in curbing gas-guzzling vehicles in favour of more eco-friendly cars. The deal with Tengzhong was supposed to save Hummer from folding, which was what GM initially planned to do if it couldn’t find a partner to buy the brand.
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General Motors had a hard time unloading Saab off of its hands until Spyker eventually came to its rescue. Now it looks like GM is facing a little case of déjà vu after reports that Tengzhong Heavy Industrial Machinery, the company that has been linked – for the longest time – as the would-be buyer of Hummer, is apparently getting cold feet.
According to Reuters, the Chinese National Development and Reform Commission and the Ministry of Commerce, the two governing bodies that would have to approve the sale of Hummer to Tengzhong is questioning the rationality of buying a brand that’s not necessarily famous for fuel-efficiency, in light of the fact that the country is now taking steps to become more eco-friendly. Guess nobody saw that coming, huh?
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After months of negotiations and a few bumps in the road along the way, General Motors has finally reached an agreement with China’s Sichuan Tengzhong Heavy Industrial Machinery to sell an 80% stake of Hummer to the China-based company.
News of the impending sale have been floating around for months now but for a time, the deal was met with some strong resistance from the Chinese government especially since the proposed purchase of a gas-guzzling vehicle like Hummer goes against the country’s new protocol of becoming more eco-friendly out on the roads.
But now it seems that the road to the sale has been smoothened out and while the deal still needs approval from a number of regulatory agencies in the US and China, it’s looking like it’s only a matter of time before Hummer finds a new home out on the Far East.
For its part, Tengzhong’s foray into the world of consumer vehicles is a step away from its comfort zone of only producing commercial trucks and industrial equipment. Nevertheless, the company is optimistic that it can make a seamless transition into producing fuel-efficient vehicles down the road.
According to Tengzhong’s CEO, Yang Yi: "We are excited about some of the initiatives already underway at HUMMER that we believe our investment will be able to accelerate, particularly related to the creation of the next generation of more fuel-efficient vehicles to meet not only future regulations but also customer expectations."
As part of the deal, GM will continue producing Hummer vehicles in its plants until June of 2011 with a possible one-year extension until 2012.
Press release after the jump.
It’s been awhile since we last heard of the Hummer-to-China deal, but apparently, the two sides have been working hard on ironing out the final kinks of the deal that would involve Sichuan Tengzhong Heavy Industrial Machinery buying one of the most iconic SUV brands in the world.
As part of the deal, which is expected to be completed at the latter part of the year, Tengzhong will maintain Hummer’s vast dealership network – the SUV brand is sold in more than thirty countries around the world.
A Tengzhong spokeswoman said: “there will be no change in Hummer’s existing global sales networks and the quality of its after sales services after the completion of the deal.”
For a while, the deal was being opposed by members of the Chinese government because it didn’t reflect too positively on the country’s attempt in becoming more eco-friendly.
Now it seems that the government has reserved course, with the commerce ministry softening its stance, saying that the deal was nothing more than a company taking advantage to grow its portfolio and network all over the world.
With talks now in the advanced stages, expect the deal between Tengzhong and Hummer to be finalized sooner than later.
It’s beginning to look like Hummer is not moving to China after all.
Weeks after it was reported that General Motors was on its way to selling the beleaguered car franchise to investors from the East, strong objections towards the impending sale may have killed all the talks between GM and the Sichuan Tengzhong Heavy Industrial Machinery Corp.
China’s planning agency was apparently behind the blocking of the sale, saying that purchasing the Hummer would go against China’s new energy-saving policies.
In addition to that, China’s National Development and Reform Commission also noted that while the Hummer remains one of the most popular SUV brands in the world, selling it off to a buyer that has neither the expertise nor experience to produce the Hummer would only hurt the franchise’s credibility in the long run.
You may recall the surprising news a while back that General Motors found a suitor for the Hummer from China, which caught a lot of people by surprise. And now, it may not come to fruition, after all.
We haven’t heard any response from General Motors yet, but with the strict laws in China regarding foreign purchases – they require regulatory approvals, by the way – it’s becoming more and more likely that GM should open the possibility of having to look for a different buyer for the Hummer franchise because as it stands, the Sichuan Tengzhong Heavy Industrial Machinery Corp may have been pulled out of purchasing the Hummer by its own government.