Chinese Company Buys Hummer Brand from General Motors
General Motors and Sichuan Tengzhong Heavy Industrial Machinery finally agreed to a much-anticipated deal on Friday (October 9, 2009) for GM to sell its Hummer brand.
Financial terms of the agreement were not disclosed, but industry insiders estimate the sale price to be around $150 million. GM’s bankruptcy filing last summer pegged the brand with military roots at $500 million or more.
Hummer is the off-road large sport utility vehicle and pickup truck that once epitomized America’s love for hulking automobiles, while Sichuan Tengzhong is a heavy equipment maker based from Chengdu, Western China and has ambitions to become a carmaker. Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products.
Hummer is one of four brands that GM plans to drop. The company also plans to sell the Saab brand, while potentially scrapping the Saturn and Pontiac brands as it tries to streamline its operations and move away from bankruptcy.
The sale also comes at a time when China has emerged as the world’s largest auto market and GM remains majority-owned by the U.S. government after being driven into bankruptcy. The deal would make Tengzhong the first Chinese company to sell vehicles in North America, though Hummer’s operations would remain in the United States.
“The Hummer brand is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business, allowing Hummer to innovate and grow in exciting new ways under the leadership and continuity of its current management team,” Yang Yi, the chief executive of Tengzhong, said in a statement released by GM. “We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S.”
“The long-term game plan is to ride the China wave,” said Jim Taylor, the GM exec who has helped steer the sale and will remain in Detroit as the new company’s CEO.