GM inks deal for sale of Hummer

STAFF/WIRE REPORT

Hummer, the off-road vehicle that once epitomized America’s love for hulking trucks, is now in the hands of a Chinese heavy-equipment maker.

General Motors Co. and Sichuan Tengzhong Heavy Industrial Machinery Corp. finally signed the much-anticipated deal to sell the brand Friday.

Greg Greenwood, who owns the Hummer dealership in Austintown, said dealers previously agreed to be franchisees of the new company upon completion of the sale.

He said he expects to hear from the new owners soon about their plans for Hummer. Among the questions are how will Hummer models be priced, what type of lease deals will be offered and how will they be marketed, he said.

Greenwood said he wonders how local consumers will react to Chinese ownership but added that the company will be managed by Americans, and GM is to continue making Hummers in Louisiana for a time.

The car dealer owns an adjacent Chevrolet dealership on Mahoning Avenue.

Tengzhong will get an 80 percent stake in the company, while Hong Kong investor Suolang Duoji, who indirectly owns a big stake in Tengzhong through an investment company called Sichuan Huatong Investment Holding Co., will get 20 percent.

Financial terms were not disclosed, although a person briefed on the deal said the sale price was around $150 million. The person did not want to be identified because the terms were being kept private. GM’s bankruptcy filing last summer said that the iconic brand with military roots could bring in $500 million or more.

Suolang Duoji also is the controlling shareholder and chairman of Lumena Resources Corp., a Hong Kong listed mining company.

GM and Tengzhong said in a statement that the transaction still must be approved by the U.S. and Chinese governments, although Chinese regulators initially expressed reservations about Tengzhong’s ability to run such an enterprise.

Hummer’s current management team will stay with the new company, which will be headquartered either in Detroit or suburban Auburn Hills, Mich.

James Taylor, the GM executive who has run Hummer recently, will remain as its chief executive.

Hummer, whose smallest model gets 16 miles per gallon in combined city and highway driving, sold well until the middle part of this decade when fuel prices began to rise. Sales peaked at 71,524 in 2006.

But only 8,193 Hummers have been sold in the U.S. through the first nine months of the year. That’s down 64 percent from a year earlier. And only 426 Hummers were sold nationwide last month, according to Autodata Corp.

GM, which spent 40 days in bankruptcy protection during the summer and has received about $50 billion in U.S. government aid, also plans to sell its Saab brand and scrap Pontiac and Saturn as it tries to streamline its operations.

With backing from a well-capitalized company, Hummer will now focus on improved efficiency and performance and include alternative fuels, more-efficient gas engines, six-speed transmissions and diesel engines.

GM said its assembly plant at Shreveport, La., would continue to assemble the commercial Hummer H3 and H3T pickup trucks on a contract basis until June 2011, with a one-year option until June 2012. The military H2 version will continue to be assembled by AM General in Mishawaka, Ind., under the same terms.

The Shreveport GM plant is slated to close by June 2012. For the time being, the plant also is assembling the Chevrolet Colorado and GMC Canyon pickup trucks.

CEO Taylor said GM has agreed to make the H3 models under contract through 2012, but he expects the manufacturing relationship to end when production of other products made in Shreveport ends.

He sees a potential for a manufacturing relationship to continue with AM General, he said.