Hummer
Hummer, the one time epitomy of America’s love for huge gas guzzling status symbols has now been firmly placed in the hands of a Chinese heavy equipment maker.
General Motors Co. and Sichuan Tengzhong Heavy Industrial Machinery Corp. finally signed the much-anticipated deal for GM to sell the brand on Friday.
Tengzhong will get an 80 percent stake in the company, while Hong Kong investor Suolang Duoji, who indirectly owns a large stake in Tengzhong through an investment company, will get 20 percent. The investors will also get Hummer’s nationwide dealer network.
Details of the deal have not been disclosed but it is rumoured that a price in the region of $150 million was agreed early in the bankrupcy it was suggested a figure in excess of $500 million would be likely.
GM and Tengzhong said in a statement that the transaction still must be approved by the U.S. and Chinese governments. Chinese regulators initially expressed reservations about Tengzhong’s ability to run such an enterprise.
Hummer’s current management team will stay with the new company and be headquartered in Detroit James Taylor, the GM executive who has run Hummer recently, will remain as its chief executive officer.
Taylor said Hummer had been in a state "suspended animation" since June 2008 when GM announced it would be reviewed for sale or closure. Since then, its future has been uncertain and it got no marketing support or new products. Financing for leases, a big part of its luxury market, also dried up, Despite all the negatives GM still sold 1,000 Hummers in some months, proving that buyers were still there.
Hummer intends to keep buying fuel-efficient engines and transmissions from GM, but in the terms of the sale they can source them from elsewhere
Taylor felt the brand has been unfairly tagged as a symbol of the American gas guzzler pointing out other vehicles get worse mileage.
Hummer, smallest model gets 16 miles per gallon (14.7 liters per 100 kilometers) in combined city and highway driving, had managed to sustsain its sales until 2006 when fuel prices rose dramatically in 2006 at its peak Hummer sold 71,524.
This year sales are down over sixty percent with only 8,193 sold in the U.S. during the first nine months of the year a huge difference from the heady days of 2006.
The Hummer deal is a victory for GM, which saw a similar agreement to sell the Saturn brand collapse at the last minute resulting in the certain closure of the brand.
GM will now focus on four core brands: Chevrolet, Cadillac, Buick and GMC.
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