Hummer Sold by GM to Chinese Corporation
After years of declining sales, General Motors has sold the Hummer brand of off-road vehicles to a Chinese heavy equipment company. After announcing a potential deal in July, GM signed a deal with the Chengdu, China-based Sichuan Tengzhong Industrial Heavy Machinery Company Ltd. On October 9.
In the arrangement, the Tengzhong Company is reported to acquire 80 percent of Hummer assets, with the remaining 20 percent going to Suolang Duoji, a Hong Kong investor with partial ownership through Sichuan Huatong Investment Holding Co. The deal is still pending approval of both U.S. and Chinese regulatory agencies, but it is believed it will be finalized in early 2010.
If approved, GM will gain approximately $150 million in exchange for the Hummer brand, trademark, trade names and intellectual property license rights to build Hummer vehicles. Tengzhong will also acquire all currently existing dealership agreements. These negotiations will reportedly save 3,000 jobs, and could create 641 more with other companies.
Tengzhong has previously only manufactured industrial equipment and commercial trucks, and acquiring Hummer will be their first venture into consumer products and vehicles. GM will continue to manufacture the six models of Hummer vehicles until 2011, and could potentially expand production until 2012.
The Hummer gained popularity in 1990 during Operation Desert Storm. Action movie star and current California governor Arnold Schwarzenegger requested that AMG, the company that owned Hummer at the time, build him a one-of-a-kind civilian model. Less than two years later, the first consumer Hummers were released for sale to the public.
Sales were not very high due to the vehicles’ large price tag and excessive gas consumption. GM purchased rights to produce Hummers from AMG in 1999. Since the purchase, GM has developed several models. Hummer saw its peak year of profits in 2006, and sales steadily dropped ever since.
