By KEITH BRADSHER and NICK BUNKLEY
Published: June 2, 2009
General Motors has reached a preliminary agreement for the sale of its Hummer
brand of large sport utility vehicles and pickup trucks to a machinery company
in western China with ambitions to become a carmaker.
The buyer is the Sichuan Tengzhong Heavy Industrial Machinery Company, based in
Chengdu, G.M. said Tuesday. The price was not disclosed, but industry analysts
had estimated that the Hummer division would sell for less than $500 million.
The deal, expected to close in the third quarter, 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 G.M. “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.”
Hummer is one of four brands that G.M., which filed for bankruptcy protection
Monday, plans to drop. The company also plans to close or sell Saturn and Saab
later this year and to eliminate Pontiac in 2010. G.M. revealed Tuesday that it
had 16 bidders for Saturn and three for Saab.
G.M. announced the deal early Tuesday in Detroit but said that the memorandum
of understanding would not allow it to reveal the buyer or the price. It
confirmed that the buyer was Tengzhong after The New York Times reported on its
Web site that the company was seeking approval for the purchase in China.
The White House welcomed the pending sale of Hummer while quickly pointing out
that it had not been involved. The transaction “is good news for the 3,000
Americans who will be able to keep their jobs, the two American plants that
will remain open and the more than 100 Hummer dealers that should be able to
stay in business all around the country,” said Bill Burton, a presidential
spokesman.
“As the president said, the U.S. government is not going to get involved in the
day-to-day business decisions of G.M. — and this is an example in which it did
not,” he added. “This sale came as a result of a commercial process and G.M.
reached an agreement that will keep thousands of Americans working in a
situation that could have ended instead with a devastating liquidation of this
company.”
Tengzhong is a privately owned company, but Tuesday’s deal required preliminary
vetting by Beijing officials, who retain the right to veto any effort at an
overseas acquisition by a Chinese company and who give special attention to
deals of more than $100 million.
Tengzhong is known in China for making a wide range of road equipment, from
bridge piers to highway construction and maintenance machinery. But even before
the Hummer deal, the company had been moving more into heavy-duty trucks,
including tow trucks and oil tankers.
“Over all, we’re pretty pleased,” said a Hummer spokesman, Nick Richards. “If
you think about the qualities we’d want in a new owner for the brand, this
buyer really met all the criteria. They’ve got a proven track record in
international business, and they’ve got a long-term vision for the brand.
They’ve got the capital to invest in more efficient vehicles, which is what’s
necessary to grow the brand.”
If the deal is completed, it would be the first acquisition of a well-known
American auto brand by a Chinese company, after many months of speculation
about such a deal. Chinese automakers have already purchased the MG and Rover
brands, two of the most famous names in British automotive history.
As a Chinese company, Tengzhong could face a challenge in presenting the deal
to American Hummer owners. The brand has long sought to emphasize patriotism,
stressing that the Hummer H1 was essentially the same vehicle built in the same
factory as the Humvee that carries American soldiers into battle in Iraq and
elsewhere.
It was Gov. Arnold Schwarzenegger of California who persuaded the longtime
maker of Humvees, A. M. General in Mishawaka, Ind., to build a civilian
version. As he recounted at a Hummer news conference in 2001, Mr.
Schwarzenegger was filming the movie “Kindergarten Cop” in Oregon in 1990 when
he saw a convoy of 50 Humvees drive by and decided that he had to have a
civilian model of the same vehicle, which became the Hummer H1.
G.M. bought the rights to the Hummer brand in 1999 and began making somewhat
smaller Hummers. G.M. initially procured the H1 from A. M. General, but
discontinued the model in 2006.
