In wake of deal’s collapse, GM will close Hummer

February 25, 2010 at 12:00a.m.

DETROIT (AP) — General Motors Co. said Wednesday it will shut down Hummer after its bid to sell the brand to a Chinese company collapsed.

Heavy-equipment maker Sichuan Tengzhong Heavy Industrial Machines Co. pulled out of the deal for Hummer, known for its hulking, military-style SUVs, because it was unable to get clearance from Chinese regulators within the proposed deal time frame, the manufacturer said in a separate statement.

GM said it will continue to honor existing Hummer warranties.

“We are disappointed that the deal with Tengzhong could not be completed,” said John Smith, GM vice president of corporate planning and alliances. “GM will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner.”

GM has been trying to sell the loss-making brand for the last year and found a suitor in Tengzhong, but resistance from Chinese regulators created difficulties from the start.

As recently as Tuesday, private investors were trying to set up an offshore entity in a last-minute effort to complete the acquisition ahead of Sunday’s deadline. That plan, along with other options, was unsuccessful, according to a person close to the situation. The person declined to be identified in order to speak more freely.

“There’s no way forward with that,” this person said. “We’re out of time.”

Hummer, which traces its origins to the humvee military vehicle built by AM General LLC in South Bend, Ind., acquired a devoted following among SUV lovers who were drawn to the off-road-ready vehicles. But the vehicles drew scorn from environmentalists and sales never recovered after gasoline prices spiked above $4 a gallon in the summer of 2008.

The H3, the most fuel-efficient vehicle in Hummer’s lineup, averages about 16 mpg. The vehicles are built at GM’s factory in Shreveport, La. GM sold just over 9,000 Hummers in 2009, down two-thirds from 27,000 the year before.

Hummer is the second brand after Saturn that GM has failed to sell as part of its restructuring. GM sold Swedish brand Saab to Dutch carmaker Spyker Cars NV earlier this year. Pontiac is being discontinued.

GM is focusing its efforts on its four remaining brands: Chevrolet, GMC, Cadillac and Buick.