GM: Saab Sells, Hummer Sinks

The demise of Hummer, promising smaller models including this concept Hummer Hx will die with the brand.

For General Motors three out of four will have to do.

Four is the number of brands GM has been working on getting rid of, but three represents the number of those same brands that the company will end up closing down. On Tuesday, GM completed the sale of Saab to Spyker, but on Wednesday the automaker announced some bad news: its Chinese buyer for Hummer was backing off from the deal. As a result of the canceled deal, GM will begin to shut down Hummer. Pontiac and Saturn represent the two other brands deep-sixed by GM.

Not Approved

Sichuan Tengzhong Heavy Industrial Machines Company, the proposed buyer for Hummer was a long shot for the brand anyway. As a maker of heavy duty equipment the company had no experience with automobiles. The Chinese government was never too keen about the deal, effectively nixing it by not extending their approval.

In the Feb. 24, 2010 issue of “The New York Times,” GM simply reported that the $150 million deal “cannot be completed.”

Once Hummer is out of the way, GM will be able to concentrate on its four core US brands—Cadillac, Buick, GMC and Chevrolet—as well as its foreign brands which include Holden, GM Daewoo, Opel and Vauxhall. At one time Hummer represented a highly profitable niche brand for GM but the military themed sport/utility vehicle brand was also criticized for producing cars known for their girth and lack of fuel efficiency.

Moving Forward

GM offered a one paragraph news release announcing the canceling of the deal and the closure of Hummer. As many as 13,000 jobs may be affected by the brand’s demise as that number includes a number of dealership positions. GM says that they will continue to honor Hummer warranties while also making available Hummer parts.

Like Hummer, Saab had also been for sale and appeared to headed to dissolution when its original buyer, Koenigsegg, backed out late last year. As GM announced that Saab would be shut down, Dutch exotic car maker Spyker expressed interest in buying the Swedish automaker. That deal nearly collapsed as well until GM announced in late January that they had reached terms with Spyker. Spyker then began to fast track the Saab sale through the European Union system gaining quick regulatory approval before closing on the deal this week.

In other GM news, the automaker announced that a third shift will be added to their Lordstown, Ohio plant in order to accommodate production of the compact Chevrolet Cruze. As a result of that decision, some 1200 jobs will be added, bringing the worker total there to 4500.

Source: General Motors

Hummer Deal Not Final In China

Rumors that the Hummer brand has been sold are premature as evidenced by an all important step which has yet to be made – approval from Chinese regulators who could still nix the deal.

Tengzhong Steps Forward

Though GM has announced that Sichuan Tengzhong Heavy Industrial Machinery Co. (Tengzhong) is the intended purchaser of the Hummer brand, its production facilities and related intellectual properties, the buyer still has to jump through some hurdles back home. Namely, Tengzhong needs to get the approval of Chinese regulators, which isn’t a given considering that Tengzhong has no experience running a car company.

Tengzhong expects to rely heavily on General Motors and its American operation to keep Hummer going, at least through 2012. By then, Tengzhong may be able to shift some Hummer production to China, although making a complete shift doesn’t appear likely. Tengzhong is buying 80% of Hummer, with local business baron, Li Yan purchasing the remaining shares.

Sodium Sulphate Magnate

According to The Wall Street Journal, “The 46-year-old is chairman (Li Yan) of the Sichuan-based company, which he founded and successfully listed on the Hong Kong Stock Exchange in June. Lumena is one of the world’s biggest producers of sodium sulphate, a key raw material used in detergents, glass and pharmaceutical products.

The Hummer deal comes one week after GM’s bid to sell Saturn to the Penske Auto Group collapsed. That failure means that Saturn will be phased out, probably before the year ends.

GM is also finalizing deals to sell Opel to a group led by Magna International as well as to sell Saab to a group led by Koenigsegg, a Swedish super car manufacturer. Both those deals should conclude sometime in the fourth quarter.

Once Hummer is out of the way, GM will be supporting four brands with a presence in the US market – GMC, Buick, Chevrolet and Cadillac. The company still owns Holden of Australia and GM Daewoo in Korea, plus a number of smaller operations and businesses scattered around the world.

Tengzhong Construction, Engineering

For its part, Tengzhong is recognized as one of China’s largest privately owned engineering companies. However, because China is a communist country blending in capitalistic initiatives, Tengzhong still has to complete certain procedures in its homeland before the deal is final. If all goes according to plan, then Hummer will be sold to Tengzhong at a cost of approximately $150 million.

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