General Motors has completed an agreement to sell its Hummer truck brand to Sichuan Tengzhong Heavy Industrial Machinery for $150 million. GM will continue to manufacture the vehicles until no later than 2012, when Tengzhong will take over.
With Hummer, Tengzhong hopes to create a stable of trucks that are more fuel-efficient and environmentally friendly than the current lineup. This would not be diffiicult. The Hummer is seen worldwide as the prime example of America’s addiction to gas-guzzling sport-utility vehicles. The company is working to develop a diesel powered Hummer to sell outside North America. Indeed, it is oft suggested that the first letter be changed.
Tengzhong will buy the Hummer brand, trademark and intellectual-property rights, and Hummer dealers will continue to operate under the contracts they had in place with GM.
Such potential deals highlight Chinese companies’ global ambitions, but a question remains as to whether companies like Tengzhong will be able to revitalize troubled auto brands — and the Hummer is a troubled brand — given executives’ limited experience running global operations.
Hummer’s turnaround will likely prove a challenge, especially in the US, where the market for SUVs has fallen in recent years. Hummer sales are down 64% so far this year, compared with the same period a year ago, and GM in September sold just 426 of the vehicles nationwide. This is not a promising scenario.
Wall Street Journal reports that Tengzhong is buying 80% of Hummer, with local tycoon Li Yan acquiring the rest through Lumena Resources. The 46-year-old is chairman of Lumena, one of the biggest makers of sodium sulphate, which is used in detergents, glass and pharmaceutical products.