Hummer Sale Finalized

General Motors has signed a "definitive agreement" with Sichuan-based Tengzhong Heavy Industrial Machinery Company to buy GM's Hummer brand, as the deal first announced last June finally moves toward a conclusion. While financial terms were not disclosed, widespread media reports said Tengzhong will pay about $150 million.

GM's carefully worded statement said the agreement "will allow Tengzhong to acquire" Hummer, including ownership of the brand, trademark and "specific IP (intellectual property) license rights necessary for the manufacture of Hummer vehicles." The new owner would also assume Hummer's existing dealer franchise agreements.

In fact, it appears that Hummer eventually may be controlled by a young Chinese mining and chemical tycoon known as Li Yan on the mainland and Suo Lang Duo Ji in Hong Kong.

GM said Tengzhong, a privately owned manufacturer of mining and construction equipment, has set up a separate investment group to purchase Hummer. Tengzhong will hold an 80-percent stake in the group and Mr. Suo will hold 20 percent. GM described Suo Lang Duo Ji as a "private entrepreneur from Sichuan Province."

The Wall Street Journal described the 46-year-old Li, as he is better known in China, as a "local tycoon" who owns Lumena Resources, a company based in Sichuan and listed on the Hong Kong Stock Exchange. Lumena is the world's second largest producer of thenardite, a form of sodium sulfate that is used in laundry detergent and glass, as well as Chinese medicines.

The Standard newspaper in Hong Kong earlier this year said Li is "a key shareholder" of Tengzhong through his flagship company Huatong Investment. The Associated Press said Li maintains a luxury apartment in Hong Kong.

Tengzhong, which was formed in 2005, makes heavy industrial vehicles, such as fuel tankers, dump trucks, tow trucks, fire trucks and cement mixers, as well as oil-field and construction equipment.

GM said the deal with Tengzhong calls for contract assembly of the Hummer H2 and H3 to remain in the U.S. through June 2011, with a one-year option through June 2012. The existing Hummer management team at GM, including CEO James Taylor, will continue to manage the organization through the transition.

GM said it is certifying a new diesel version of the H3 for markets outside North America, and that future product development is focusing on six-speed transmissions, more efficient engines and alternative fuels.
Source:[edmunds.com]

Fate of Hummer to be decided Tuesday

By Tuesday, General Motors Corp. will have to decide whether its struggling Hummer brand will die a quiet death or live on with a new owner.

The wounded automaker has told the federal government that it will make the decision to jettison or sell Hummer by the end of the first quarter as part of a plan to justify the government loans on which it is living.

GM says it's still talking to several possible buyers, and many of Hummer's dealers nationwide are hoping that someone, perhaps a Chinese automaker, will come to their rescue and buy the brand, which traces its roots to rugged vehicles used for transporting soldiers.

The automaker has told dealers it will make an announcement about the brand's future on Tuesday, but until then, GM will say only that it's still negotiating with some interested parties.

"We are cautiously optimistic," about a sale, said GM spokesman Nick Richards, adding that the companies with which GM is talking are from "all different parts of the world."

Hummer dealers, many of whom sell other brands such as Cadillac, are hoping for a sale and trying to concentrate on customer service. GM put the Hummer brand up for sale in June of last year, and dealers have been in limbo ever since.

Ed Williamson, owner of Williamson Cadillac Hummer in Miami, says GM has told him only that an announcement is coming Tuesday, but he's optimistic someone will buy the brand, perhaps to use the dealer network to distribute other models not currently sold in the U.S.

"My understanding is that they've got more than one candidate," he said. "One of the best assets as part of this sale is the dealer body, 160 of the best dealers in the country," he said.

But Erich Merkle, an independent auto analyst in Grand Rapids, Mich., said that despite the deadline, Hummer's situation isn't much different than it was when GM announced the sale in June.

"I don't know what's going to make it look more attractive as time goes by," Merkle said, adding that the dealer network isn't large enough to be attractive to a foreign buyer.

Hummer's relatively poor fuel economy could hurt GM's ability to meet stricter government fuel efficiency standards that go into effect for the 2011 model year, he said.

GM has been living on $13.4 billion in government loans and has requested $16.6 billion more. Chrysler LLC, it's Detroit-area counterpart, has borrowed $4 billion and is seeking another $5 billion.

Both face a Tuesday deadline to submit completed restructuring plans to the government to justify the loans and prove they can become viable and repay the money.

President Obama is set to announce a plan Monday for the government to provide more money in exchange for tough concessions from union workers, bondholders and others.

Under a viability plan filed with the government in February, GM also plans to sell off Saturn and Sweden's Saab, as well as make Pontiac a niche performance brand. By trimming the brands, GM would focus on Buick, Chevrolet, Cadillac and GMC, spending less on product development and marketing.

More than 90 percent of GM's revenue minus variable costs comes from the four core brands, the company has said.

GM said in its viability plan that Hummer, Saab and Saturn combined post an average annual loss of $1.1 billion before taxes. It did not break out the Hummer loss.

Hummer sales were down 51 percent last year compared with 2007 as gasoline prices rose above $4 per gallon. In January and February, even with gas around $2 per gallon, GM sold only 2,275 Hummers, down 65 percent from the same period last year, according to Autodata Corp.

The H3, the only 2009 model rated for gas mileage by the government, gets 18 miles per gallon on the highway and 14 in the city when equipped with a five-cylinder engine. Hummer also sells the larger H2.

Hummer has always been a niche brand, with U.S. sales reaching a peak of 71,524 in 2006. By comparison, Toyota Motor Corp. sold more than 20,000 Camry models in February alone.

Paul Adkins, general sales manager of Independence Hummer in Charlotte, N.C., said new Hummer sales have started to rebound a bit recently with used sales holding their own or increasing month to month.

Until the announcement, all he can do is keep selling and focus on customer service, said Adkins, whose dealership sells only Hummers.

"We can take it day by day, business as usual," he said.