GM in talks to sell HUMMER to Chinese company Tengzhong
When GM finds a buyer for the HUMMER brand, its CAFE levels will be affected in a positive (if very minor, because the H2 is not counted in CAFE figures) way. This isn't the only reason why the General might want to shed itself of the large vehicle division - it's a political liability, too - but every little bit helps. In any case, that anyone is interested in buying a GM product right now is good news for the company, so the current discussions between GM and Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd, a Chinese company, about a potential HUMMER sale must be being watched with bated breath in Detroit.
A statement put out by GM says that there is a proposed transaction on the table for Tengzhong to acquire the brand and the senior management and operational team as well as dealership agreements. For now, the thought is that Tengzhong would contract assembly and component and material supply back to GM, and GM is saying that the deal could save "more than 3,000 US jobs." Tengzhong's CEO said that his company is interested in evolving HUMMER so that it blends the whole constructed adventure/freedom image with "new products such as more fuel-efficient vehicles in the U.S."
AutoblogGreen reader Steve W. wrote in about the news and asked a few important questions:
With only 3000 jobs at risk, wouldn't it be better (for the environment) to just let Hummer die? I guess GM is trying to get every last penny they can for anything anyone is willing to pay for :(We'll look into this, especially the military angle, but if anyone has any information to share, please do so in the comments below.
What happens to the contract for US military vehicles, or are they built by another company now?
Gallery: Detroit 2008: HUMMER HX Concept
[Source: GM]
PRESS RELEASE:
Industrial Machinery Company To Invest in Growth and Global Expansion of Premium Off-Road Vehicle Brand; Deal is Expected to Secure Over 3,000 US Jobs
Tengzhong In Advanced Talks To Purchase HUMMER From GM In Strategic Acquisition
DETROIT and SICHUAN, June 2, 2009 - Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd (Tengzhong) and General Motors Corp. today confirmed details of their proposed transaction, pursuant to which, Tengzhong, a major industrial machinery group, will acquire the rights to the premium off-road HUMMER brand, along with a senior management and operational team. It will also assume existing dealer agreements relating to HUMMER's dealership network. It is contemplated that Tengzhong will, as part of the transaction, enter into a long-term contract assembly and key component and material supply agreement with GM. In an earlier statement, GM said it expects the deal if successful to secure more than 3,000 US jobs. The final terms of the deal are subject to final negotiations.
Based in the Chinese province of Sichuan, Tengzhong is a privately-owned company and a leading domestic manufacturer of road, construction and energy industry equipment. It will expand into the premium off-road vehicle segment through what will be a strategic acquisition for Tengzhong and a catalyst for HUMMER's growth in the U.S. and around the world.
"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. Mr. Yang continued, "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."
HUMMER will continue to maintain its headquarters and operations in the U.S., and will continue to be managed by its existing leadership team. The team intends to expand HUMMER's dealer network worldwide, particularly into new and underserved markets such as China.
"Today HUMMER is a globally recognized brand with excellent growth prospects, both in terms of new markets and new products for our existing markets," said James Taylor, HUMMER chief executive officer. "With Tengzhong's investment and strong support, we will be able to make our visions a reality. This transaction, if successful, will secure more than 3,000 U.S. jobs, and allow us to embark on a more aggressive global expansion, ensuring a successful future with our new partners."
The transaction is expected to close in the third quarter of this year and is subject to customary closing conditions and regulatory approvals. Financial terms of the agreement will not be disclosed at this time.
Credit Suisse is acting as exclusive financial advisor and Shearman & Stearling is acting as international legal counsel to Tengzhong on this transaction. Citi is acting as financial advisor to GM.
About GM
General Motors Corp., one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 235,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.
About Tengzhong
Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. ("Tengzhong") is one of China's major privately owned engineering companies. Tengzhong is a manufacturer of heavy machinery equipment with a presence in special-use vehicles, road and bridge construction equipment and construction and energy industry equipment.
Since its establishment, Tengzhong has quickly become a major manufacturer of machinery and construction components through a series of successful acquisitions. Tengzhong prides itself on its automated manufacturing equipment, its processing systems, significant research and development initiatives and commitment to innovation.
Forward-Looking Statements
This press release contains forward-looking statements. All statements contained in this press release that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections of GM's and Tengzhong's management and currently available information. They are not guarantees of future performance, and investors are cautioned that all forward-looking statements involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove to be accurate. Many factors could cause the actual results, performance or achievements of GM and Tengzhong to be materially different from those that may be expressed or implied by such statements, including but not limited to those discussed in GM's Annual Report on Form 10-K for the year ended December 31, 2008, as amended, and other filings with the SEC. Although GM and Tengzhong believe the assumptions underlying the forward-looking statements contained herein are reasonable, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate.
Reader Comments (Page 1 of 1)
Russell 1:48PM (6/03/2009)
With regards to government contracts, Hummers for the military are built by a completely separate company, AM General. GM bought the name rights for civilian Hummers and initially sold a model produced by AM General. The Hummers sold now, the H2 & H3, are developed by GM and separate from the AM General design.
Reply
Throwback 2:00PM (6/03/2009)
As for letting Hummer die, personally I would like to get SOME of our tax money back so I will happily take the $500 million. The alledged purpose of the government bailing out GM was to save as many jobs as possible, 3,000 is not an insignificant amount. Rmember that is just the direct number. There are parts suppliers, dealers, and GM's engine, frame and component plants that will be supplying the new owners.
Reply
Throwback 2:00PM (6/03/2009)
As for letting Hummer die, personally I would like to get SOME of our tax money back so I will happily take the $500 million. The alledged purpose of the government bailing out GM was to save as many jobs as possible, 3000 is not an insignificant amount. Rmember that is just the direct number, there are parts suppliers, dealers, and GM's engine, frame and component plants that will be supplying the new owners.
Reply
Eric Lemieux 2:13PM (6/03/2009)
This could turn out in a very interesting way in several years if not sooner. Buying HUMMER is most likely one of the cheaper options to gain North American ground for a compagny. Basically the chinese company will begin it's first few years selling HUMMER made by GM while they prepare their own vehicules built somewhere outside North America (I would presume, unless they buy some of those empty factories). After a few years, HUMMER could simply be a sub-brand or disappear completely with the new chinese brand taking over in what is now HUMMER dealership. You can't put the name HUMMER on a vehicule that don't resemble it so I expect them to bring in their new brand that could very well phase out HUMMER entirely after several years if successfull.
Reply
Nick P. 2:37PM (6/03/2009)
I agree that this is a very cheap way to get into the US market. From there, nothing stops them from redefining the brand to include a sedan or a Rav4-type "Mini HUMMER".
They leap-frog the Japanese and that whole business of saving 3000 jobs makes them look good too.
Nicely played, China.
- Nick -
Cellien 3:48PM (6/03/2009)
I would like a mini-Hummer, but overall this sucks.
Reply
JDred 4:13PM (6/03/2009)
I wouldn't hold my breath on them being made over here for very long.
Reply
dave 4:19PM (6/03/2009)
Hummer is being bought for the technology that comes with it. I doubt that it will remain in business for long.
Reply
Tim 5:19PM (6/03/2009)
Schwarzenegger to Showcase Raser's 100-MPG Electric Hummer
http://www.youtube.com/watch?v=gi72atZVc2I
This is an E-REV-40 with faster acceleration than the V8 Hummer and TWICE the milage of a Prius over the standard driving cycle.
Yep, let's sell it to Communist China.
Hugo Chavez said: Thanks, Comrade Obama. He called Obama... Comrade.
Marxists both!
Reply
John Rowell 12:26AM (6/04/2009)
LOL. Two years back I couldn't have imagined GM selling HUMMER to anyone. Now they're in talks with some Chinese company that's interested in buying the brand. How the General has fallen...
Reply
DasBoese 7:44AM (6/04/2009)
Keep in mind that the Chinese already produce the original HMMWV (aka Humvee aka H1) under license from AM General, with some cosmetic changes.
They want the brand so they can sell it to foreign governments under its original moniker, with its original appearance. The Hummer name has quite some brand equity when it comes to military vehicles.
Reply