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General Motors’ sale of its Hummer brand to China’s Tengzhong may be completed within a week.
The two companies have been working on a deal for Hummer since June, and an unnamed source said to be the discussions said a deal is imminent.
“Tengzhong executives have been traveling between the U.S. and China in the past months and more will arrive in Detroit soon,” the source told Reuters. “If there are no big surprises, an agreement could be finalized next week.”
The source also said that, as expected, Tengzhong is likely to keep Hummer’s senior management and operational team, as well as its dealership network.
The deal, reportedly worth $100 million, would also enter Tengzhong into a long-term agreement with GM over components, material supply and assembly. GM’s Shreveport, La. plant would be contracted to build the H3 and H3T models through 2010.
One final hurdle in the way of a Tengzhong’s Hummer acquisition is approval of the Chinese government. Earlier reports from a state-run radio station said the Chinese government may nix the deal but recent comments from China’s commerce ministry sounded more positive. The unnamed source said Chinese regulators will decide whether to approve the deal after it is finalized.
According to a report on Chinese state radio, the sale of Hummer by General Motors to heavy-equipment manufacturer Tengzhong will not go ahead. The report on China National Radio states that Tengzhong’s acquisition of Hummer goes against the government’s efforts to reduce pollution by manufacturing companies in China.
Tengzhong released a statement in response to the report saying that just because the comments were made on state radio, it does not necessarily reflect the will of the Chinese government.
While neither side has released any details of the agreed sale, it is reported to be worth roughly $100 million.
The China National Radio report also stated that China’s National Development and Reform Commission (NDRC) would also seek to stop the sale of Hummer because Tengzhong lacks expertise in auto manufacturing.
Tengzhong also dismissed this report saying that as no NDRC official was cited. The Chinese heavy-equipment manufacturer did admit that no official agreement with Hummer or GM had been signed but did say that it is continuing to work with the U.S. automaker and the Chinese government.
In an interview with Hummer CEO Jim Taylor, The Detroit Bureau found out plenty about the company’s future plans under it’s new owner, Chinese heavy machinery maker Tengzhong.
In the short term Taylor says that the Hummer H3S will be built in a GM facility in Shreveport alongside the Chevy Colorado and GMC Canyon.
Looking into the future, however, Taylor says that he expects future product development to happen in the U.S. – although where Hummer decides to set up shop will depend on what state gives the automaker the best incentive. As for the company’s main initiatives, they will be to build smaller vehicles that get better fuel economy.
Taylor said that the H4 is coming and that in the next five years Hummer will definitely have some sort of alternative energy vehicle, be it a hybrid, electric or diesel. In fact, he pointed out that Hummer already sells a diesel-powered H3 in South Africa – it just doesn’t meet U.S. emissions standards.
When asked if Hummer would go even smaller than the H4, Taylor said that it was an ongoing topic of discussion. He did, however, add that the most important thing for the company will be meeting stricter fuel-economy regulations, hinting that smaller and more fuel-efficient Hummers might be more of a necessity than a desire.
Additionally, Taylor commented that the trademark image of the brand is likely to change, as the bold Hummer grille and steeply raked windscreen is actually a hindrance to highway fuel-economy.
Most importantly, however, he outlined that Tengzhong is a company with deep pockets and is committed to the brand long term. The auto industry can chew through cash extremely quickly and so to ensure the longevity of the Hummer brand, it was necessary to find a company that was willing and able to look long term.
[Source: The Detroit Bureau]
Earlier today we reported that GM had reached a tentative deal to sell off the Hummer brand to an unnamed party. That company has now been identified as Chinese heavy machinery maker Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. – or just Tengzhong for short.
Tengzhong will take control of the Hummer brand including the senior operational team and the company’s dealership network. It also plans to continue a relationship with General Motors in the immediate future while it looks to expand Hummer with new products.
“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,” said Yang Yi, CEO of Tengzhong. “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.”
In an interview with Automotive News, Hummer CEO James Taylor said that long term the company will look to set up its own engineering and marketing offices in the United States.
Taylor also said that Tengzhong’s plans include expanding the Hummer product lineup and using alternative powertrains to help it meet with increasingly stringent environmental standards.
The Tengzhong company is the largest privately owned engineering company in China, specializing in heavy machinery for large scale construction projects, such as roads and bridges. It does not, however, have any experience in building passenger vehicles.
[Source: Automotive News]
Official release after the jump: