GM unloads Hummer brand, has it sold to Chinese company

[CougarKing]

Thoughts, anyone?

GM unloads Hummer to Chinese buyer

Bankrupt automaker discloses details of plan to sell truck line to China's industrial company Sichuan Tengzhong.

By Aaron Smith, CNNMoney.com staff writer
Last Updated: June 2, 2009: 4:53 PM ET


NEW YORK (CNNMoney.com) -- General Motors Corp. has struck a deal to sell its Hummer truck unit to a Chinese industrial business, the two companies confirmed Tuesday.

Privately owned Sichuan Tengzhong Heavy Industrial Machinery Company Ltd., based in China, will acquire the truck brand, which has been part of GM since 1999. Tengzhong said it plans to keep Hummer's management team.

"We plan to ... allow Humer to innovate and grow in exciting new ways under the leadership and continuity of its current management team," said Yang Yi, chief executive of Tengzhong.

Yang said the deal "will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S."

The companies said the deal would likely close by the end of September.

As part of the deal, some GM plants will continue to build the Hummer brand for the new owner, at least for awhile. The company said its Shreveport, La., plant will keep building Hummers for the new owner until at least 2010.

The news comes a day after GM (GMGMQ) filed for bankruptcy protection in New York.

"I'm confident that Hummer will thrive globally under its new ownership," said Troy Clarke, president of GM North America, in a press release. "And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive automaker."

GM also said that the deal should protect more than 3,000 jobs in manufacturing and engineering, and at dealerships "around the country."

The sale of the Hummer brand to a Chinese company will not impact the production of U.S. military vehicles. Military Humvees are produced by a different company, privately held AM General, based in South Bend, Ind.
The Hummer and other large vehicles have been a drag on the U.S. auto industry since fuel prices spiked in 2008 and the recession deepened.

GM said it sold 5,013 Hummers worldwide in the first quarter, down 62% from the 13,050 that it sold in the same period the prior year.

Hummer isn't the only brand that GM is leaving behind. The automaker will also shed its Pontiac, Saturn and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year.

That could result in more than 100,000 additional job losses if those dealerships are forced to close.

GM filed for bankruptcy hours after Chrysler's bankruptcy process cleared a hurdle when a federal judge approved its asset sale.

The GM bankruptcy was hailed by President Obama, who wants a complete overhaul of the U.S. auto industry, even though the Chapter 11 filing is expected to result in the loss of 20,000 jobs and the closure of a dozen facilities.

Citigroup (C, Fortune 500) was financial adviser in GM's Hummer deal.

--CNNMoney.com senior writer Peter Valdes-Dapena contributed to this report.

 

[Antoine]

Fair enough if GM is selling truck lines, it is sad but it seems that it is how our economic system is run.

However, I doubt that it is a guarantee to keep the factories in the original country (USA in this case).

China is becoming a worldwide leader, who would have thought that from a communist country.

I understand that money can blind people for a while, but don't forget, we are not dealing with a democratic country. I mean China, not USA 

 

[Fishbone Jones]

This not ground shaking or earth shattering.

"China Overview
The General Motors-China relationship dates back more than eight decades. GM’s mission in China is to leverage the company’s extensive global resources to provide transportation products and services that deliver the best combination of technology and customer care innovation.

GM operates seven joint ventures and two wholly owned foreign enterprises and has more than 20,000 employees in China. GM, along with its joint ventures, offers the broadest lineup of vehicles and brands among foreign automakers in China. Products are sold under the Buick, Cadillac, Chevrolet, Opel, Saab and Wuling nameplates. In 2006, GM’ s sales rose 31.8 percent on an annual basis to a record 876,747 units. GM ended 2006 as the sales leader among global automakers in China.  In addition, Shanghai GM was the sales leader in passenger cars (413,367 units) and SAIC-GM-Wuling was the sales leader in the mini-vehicle segment (460,155 units)."

More here: http://www.gm.com/corporate/about/global_operations/asia_pacific/chin.jsp

 

[Antoine]

I have read similar reports. For example, in a journal was written that middle class Chinese are planning to buy houses made in wood and it is good for our industry. OK, I agree on the business side, but on the political side: there is a middle class in China because it works for the government not because it is free market, or any freedom of choices, exception of Hong Kong.

Shanghai GM is a sale leader in passenger car in China? thanks to the Chinese government and people in power in their surrounding.

So my point: Some business peoples from our democratic countries are trying to sell us the idea that we are doing business as usual with a friendly country (China), so we can sleep during the night, cold war is over. Works for them and us, for now.

It is hard to know exactly what is going on in China and what is their plan. I don't suggest boycotting them as we did with Cuba, but being concerned with China's growing power as a communist and non democratic country is fair.

However, that is my  :2c: and I probably oversimplify the situation, it is just a gut feeling. I hope that the Chinese population will sooner or later fire the communist government and shift to a democratic system.

 

[Antoine]

By the way, an interesting book in that matter is:

Velasquez M.G. Business Ethics: Concepts and cases, 6th ed, NJ: Pearson Education, Prentice Hall, 2006.

 

[Fishbone Jones]

Rhetorical question: How are you going to boycott them when they own so much industry and real estate in our own country?

 

[Antoine]

Exactely, boycott will not work with China, I agree.

The fact that they own so much is a serious concern if it cost us freedom of speech and action as Canadian or American on our planet. Economic goes with politic, whatever buisness people are trying to make us beleive, and buying is voting, so we made our choice.

However, I believe that by contributing in the economical growth of China with a diplomatic work, we can help the population to shift slowly toward a democratic and healthy country. By doing buisness with them and including them in our global trade, I hope that the population will get richer and more comfortable, they will see the benefit of our system and they will looking for freedom of speech, life and business, we could also help them to reach this goal. 

However, that is just some thought ( :2c: ), how to proceed in details to reach those goals, I don't know. 

Cheers !

 

[Michael OLeary]

If we had a plan, there would be expectations that it be completed by the "current administration" (whoever that might be), it would then be changed every time the Government changed, making it worthless for achievement of any long term goals.

If the Chinese have a plan, they probably wrote it 30 years ago, and acquiring North American auto industry brands was on the list somewhere after ensuring that most electronics and clothing manufacturing was moved to Asia.

PROTIP: Learn to use chopsticks for when our new Overlords appear.    >

 

[Antoine]

The picture is awesome, it is worth a thousand words. (adage from an old Chinese proverb according to Wikipedia).

I hope my previous posts did not seem to suggest any conspiracy theory or "yellow peril", as it was not my intention.

OK, I stop here because I feel a bit redundant!

 

[Xiang]

I'm not sure I understand China's motives behind purchasing this brand.  In an age where big gas guzzling vehicles are sitting in the sales lots at the sale of smaller, more gas efficient vehicles, the age of the Hummer is, in my opinion, coming to an end.

The Hummer brand is considered an aspect of GM's current failure.  They aren't selling.

However, I heard that the Chinese BYD Auto company is currently in R&D on an electric engine for the vehicle.  BYD Auto is leading the world in electric car technology right now.

 

[GAP]

I suspect that the Chinese purchase of the Hummer Brand is about status as much as anything else......the up and coming Chinese are as status conscious, if not more so, than any other chest beating wannabe....

 

[Antoine]

From my junior R&D emplyee point of view and trying to keep up to date as much as possible in my field, overall, there is not a lot of R&D in China but more C&D which mean: Copy and develop.  ;D

Ask to our CSIS !

 

[Xiang]

True.  China's previous knock off of the Hummer, the Dongfeng EQ2050 was a near straight copy, however when it comes to BYD Auto, the company is actually an industry leader when it comes to hybrid/electronic engines.

 

[Colin Parkinson]

Gaz was making a copy of the Hummer as well, except they used a decent engine in theirs. I look forward to the driver's manual, should make excellent reading!  ;D

 

[CougarKing]

An update:Goodbye Hummer.

Seems the plan to sell Hummer to a Chinese company didn't quite work out.

GM to Shut Hummer After Sale Collapses


By NORIHIKO SHIROUZU And SHARON TERLEP

General Motors Co.'s beefy Hummers will join its Pontiac and Saturn in the scrap yard of failed brands after a $150 million deal to sell the line to a Chinese equipment maker collapsed.

Sichuan Tengzhong Heavy Industrial Machinery Wednesday failed to win approval from Chinese regulators for its bid. GM said it would wind down Hummer operations after concluding Tengzhong would not be able to finalize the deal.
"We are disappointed that the deal with Tengzhong could not be completed," said John Smith, GM vice-president of corporate planning and alliances. GM sold just 9,046 Hummers in the U.S. last year, down from more than 71,000 in 2006.

The Detroit auto maker's efforts to sell its Saturn brand unexpectedly collapsed last year. Later the company reversed plans to sell its Adam Opel European unit after months of intense negotiations failed to produce a favorable deal.

Wednesday's decision follows months of uncertainty about Tengzhong's bid, which was first announced last June and accepted by GM in October. Around the time of the June announcement, Tengzhong applied for approval from the provincial government of Sichuan, where it is based, according to a person familiar with the matter. From there, the application was supposed to be sent to the National Development and Reform Commission, the central government's top planning agency, and to the Ministry of Commerce, among other agencies.

But it is now clear that the application made little or no headway in the intervening eight months. On Wednesday, Assistant Commerce Minister Wang Chao said his ministry never received an application from Tengzhong, echoing other comments from the ministry in recent months. An official in the foreign affairs department of the NDRC said the commission also hasn't received any application.

"It looks like no one took responsibility" for the deal inside the bureaucracy, said the person. But since Tengzhong's application "was never formally received" by regulators, "it's not going to be formally rejected." The person said that officials didn't give a specific reason for withholding approval but that it's "reasonable" to assume—as analysts have speculated since the deal's announcement—that Hummer's reputation for "not being green" doesn't fit with Beijing's efforts to promote fuel efficiency and green technologies in its auto industry.

Lawyers and others involved with deals in China say the failure of the Hummer bid reflects in part a regulatory process that remains remarkably opaque despite China's enormous economic clout and its status as one of the world's biggest sources and recipients of global capital.
"The official approval process is a big barrier to getting a deal through" in China, said Antony Dapiran, a China-based partner at law firm Freshfields Bruckhaus Deringer LLP who advises Chinese companies investing overseas and foreign companies investing in China. Mr. Dapiran said one of the first questions investors ask about deals is what they can do to boost their chances of approval. But "there's not a lot of concrete advice, guidance or steer you can give clients," he said, citing a "fairly low degree of transparency on how decisions are made."

In addition to approvals from the provincial government, the NDRC and the Commerce Ministry, deals as big and prominent as the Hummer bid may need clearance from other agencies, such as the Ministry of Industry and Information Technology and the State Administration of Foreign Exchange, which would have to approve any conversion of Chinese yuan into dollars. or other foreign currency that most global deals involve.

China's murky approval process has also affected foreign investments coming into the country, such as Coca-Cola Co.'s $2.4 billion bid for China Huiyuan Juice Group Ltd., which was rejected last March on antitrust grounds after a lengthy wait. The process has even hobbled well-connected government companies. State-owned China Development Bank, for instance, had to abandon its planned multibillion-dollar investment in Citigroup Inc. in early 2008 after the government rejected it.

Tengzhong and its main co-investor, Sichuan tycoon Li Yan, had intended to make Hummer, currently focused on North America, a more global brand, expanding its reach into mostly untapped markets such as Australia and Russia and especially China, where it currently sells very few vehicles.

To reinvigorate the brand, whose sales have languished in recent years because of high gasoline prices, Tengzhong had hoped to add a manufacturing plant in China that could export vehicles to Russia and Australia and set up a network of dealers to quickly expand sales here, executives have said.
—Liu Li

Wall Street Journal link
 

 

[a_majoor]

Hardly a big deal:

1. The AM General design (Military HMMVW) is well past its best before date, and is being replaced by various "MRAP" class vehicles.

2. The H2 and H3 designs were essentially SUV's built from the GM parts bin, and never really great sellers. I suspect most of the parts are now obsolete, and the US market evaporated in 2008 during the great spike in oil prices.

3. People who want big honking trucks still have lots of choices without Hummer.

GM's business strategy seems to have been devised by the US Post Office since effective nationalization. The have closed one of the few profitable divisions (Saturn), fumbled selling Hummer, almost botched the sale of SAAB and have seens a sustained sales decline in their remaining brands.

Of course the US government is now attacking Toyota (and is it really coincidence the government effectively owns GM or that 31 of the House members "investigating" Toyota have received contributions from the UAW?), which should be the big story. The sooner the Canadian government unloads its 12% share in GM the better.

 

[Spencer100]

As I revive this thread,  GM is reviving the HUMMER! 

As an Electric pickup.

https://www.autonews.com/cars-concepts/gm-revive-hummer-name-electric-pickups-suvs?utm_source=daily&utm_medium=email&utm_campaign=20200110&utm_content=article2-headline

I can't wait.  Who wants a Tesla when you can have Hummer!