Future of HUMMER still on rocky ground

(China Daily)
Updated: 2009-11-13 11:28

Tengzhong Heavy Industrial Machinery Company and General Motors (GM) last month announced the companies had signed a definitive agreement over the premium all-terrain HUMMER brand.

The Sichuan-based company will acquire the ownership of the brand, trademark and trade names, as well as specific rights to manufacture Hummers.

The buyer will also assume the existing dealer agreements relating to Hummer's dealership network. The deal is awaiting approval from the Chinese and United States governments.

Hummer, based on the US military's off-road Humvee vehicle, was born in 1992, when the H1 model hit the streets. Subsequent H2 and H3 models have less off-road capability but increased comfort, luxury and fuel efficiency, making the brand a symbol of wealth in the US.

GM purchased the Hummer brand in 1999 but sales volume fell to just 7,230 in the US in the first half year of this year, due to the unpredictable future of HUMMER and GM at that time.

US consumers have turned away from HUMMER and other SUVs due to high fuel prices during the global financial crisis. HUMMER has also come under constant attack from environmental protection groups.

In June last year, Hummer was put up sale and GM applied the bankruptcy protection shortly after.

Tengzhong announced a memorandum with GM to purchase Hummer on June 2 and negotiations lasted for four months.

Opinion about the deal among the public has been divided, while the Chinese government's stance has also been largely unclear.

The definitive agreement was achieved on Oct 9 in Detroit, Illinois.

The exact details have not been released but it is estimated the deal is worth around $150 million.

Yang Yi, chief executive of Tengzhong, said on Oct 10 an application to the Chinese and US governments had been prepared and they would try their best to get permission. Tengzhong, said in October that it hoped to close the deal to buy HUMMER from GM late this year or in early 2010.

However, Yao Jian, spokesman for the Ministry of Commerce, said on Oct 15 that no application had been received regarding the transaction.

METRO