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.

See Also — Electric Hummer Combines the Best of Two Worlds

Will Tengzhong Build Hummer HX?

One of the more interesting concept vehicles I have previewed over the past few years was the Hummer HX, an off-road vehicle that somewhat resembles a bloated Jeep Wrangler. Previewed at the 2008 North American International Auto Show (NAIAS) in Detroit, the HX was designed by a team of three twenty-something designers led by David Rojas, suggesting a new design and engineering direction for the iconic military-esque brand.

Tengzhong’s Bid For Hummer Accepted

Yesterday, news about Hummer’s sale to Tengzhong, a Chinese heavy industrial equipment maker surfaced, a move which will inject fresh cash into parent General Motors while preserving the jobs of about three thousand factory workers and dealership employees.  With two US factories to tap, Hummer will continue to be built in the states — at least for now — and could see some new models, perhaps the HX.

The following pictures of the HX (courtesy of GM Corp.) show a model that is geared to younger drivers, with removable body panels that will allow drivers to customize their ride for whatever type of trip that they take. Imagine the HX on Daytona Beach — the roof panel comes off. Or, pounding its way through mud — wheel panels could be removed. Even the doors come off, just like on a Wrangler.

There are some things that need to be ironed out to make the Tengzhong deal a reality. Though Tengzhong is a privately owned business, the communist government must approve of the deal first.

Pushing For Smaller Cars

China has been pushing its own automakers to build smaller cars, thus Hummer flies in the face of what the central government wants. Yet, I expect that this deal will go through as it will give China an important toe-hold in the US automobile market, the first of its kind. Don’t be surprised if Tengzhong eventually merges with a Chinese car company as the communists want to consolidate the fourteen companies now operating in China down to a much smaller and easier to manage number.

The US government will need to formally approve of the Hummer deal too, but since the feds now own at least 60% of GM, that shouldn’t be a problem. President Obama has already praised the deal, thus if Congress objects they’ll have to go up against him in order to oppose the deal. That isn’t likely to happen.

GM purchased Hummer from AM General in 1998; that company will continue to make Humvee military vehicles for the US government as its operations aren’t affected by Hummer’s sale.