General Motors (GM) has completed an agreement to sell its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery. This marks a Chinese company's first major entry into the US auto industry. The amount although not disclosed, is rumored to be about $150-million. Tengzhong will purchase an 80-percent stake in Hummer, while mining tycoon Mr. Suolang Duoji will hold the remaining 20-percent stake.
Part of the deal was that GM would still continue to manufacture vehicles, key components and provide business services until June of 2011 with a one-year extension option until June 2012. This provision is expected to secure more than 3,000 jobs in relation to sales and manufacturing of Hummer vehicles. The present Hummer management will continue to run the company during the transition period.
The brand has indicated that future product development will focus on improving efficiency and performance with alternative fuel engines, more efficient gas engines, 6-speed transmissions and introduction of diesel engine powered variants.
"We are excited about some of the initiatives already underway at Hummer that we believe our investment will be able to accelerate, particularly related to the creation of the next generation of more fuel-efficient vehicles to meet not only future regulations but also customer expectations," said Yang Yi, chief executive officer of Tengzhong.
The task is now up to Tengzhong to convince regulators in Beijing with regards to the brand's viability and China's national auto strategy in improving energy efficiency of vehicles.