General Motors Closes The Deal: Hummer Becomes Chinese Brand

U.S.-based carmaker General Motors Co. (GM) on Friday concluded an agreement to sell the iconic Hummer brand to Chinese-based Sichuan Tengzhong Heavy Industrial Machinery. The financial aspects of the agreements were not disclosed, but sources close to the deal said the Chinese buyer was going to pay 150 million USD for Hummer. This could be the first major Chinese entry on the U.S. auto market.

Under this agreement, General Motors will continue to manufacture Hummer until 2012, when Sichuan Tengzhong is scheduled to take over production effectively.

Before the acquisition is completed, the Chinese regulatory authorities need to make sure that the U.S. brand can be profitable and that Hummer SUVs are in line with the national strategy to improve energy efficiency.

"One of the big issues we have is to convince them Hummer will not stay as is," said Hummer CEO Jim Taylor. "That it can be a lot greener and a lot more fuel-efficient than it is," he added. Taylor is hoping to finalize the deal in 30 days.

Under this agreement, Sichuan Tengzhong will buy the Hummer brand, trademark and intellectual property rights necessary for manufacturing Hummer vehicles. Hummer dealerships will continue to operate based on the same agreements they already have in place with GM. The U.S. carmaker will not provide any financing.

Hummer sales are currently 64 per cent down from the corresponding period of 2008 with General Motors reporting global Hummer sales of only 426 units in September.

Sichuan Tengzhong will buy 80 per cent in Hummer, whereas Chinese magnate Li Yan will take the rest via Lumena Resources Corp., one of the world"s leading producers of sodium sulphate, an important raw material required to produce detergents, glass and pharmaceuticals.