General Motors, seeking to shed assets to emerge from bankruptcy, has agreed to sell the Hummer brand to China's Sichuan Tengzhong Heavy Industrial Machinery.
Tengzhong would assume Hummer's dealer agreements and a senior management team, the companies said. GM and Tengzhong also plan to form a long-term contract assembly andsupply agreement.
Hummer is worth US$500 million, according to bankruptcy court documents filed by GM. The sale will secure more than 3000 US jobs and help GM move towards a goal of offloading four US brands to exit bankruptcy as a leaner, more profitable company.
The deal may also help Tengzhong grow in China's SUV market, which surged 25 per cent last year on rising affluence.
"There are a lot of new rich in China who like niche brands, such as Hummer," said Ricon Xia, a Daiwa Institute of Research analyst in Shanghai. "A lot of private companies like Tengzhong have emerged because of the economic boom and they will strike more surprising deals like this one."
GM has court approval to sell assets as soon as July after collapsing under US$172.8 billion in debt and failing to adapt to demand for cars that use less fuel. GM also plans to sell Saturn and Saab and wind down the Pontiac line.
For Tengzhong, a privately owned maker of special-use vehicles, structural components for highways and bridges, and construction machinery, buying Hummer would add a brand with cachet it could use to expand in emerging markets, said Desmond Wong, head of Sino Strategies Group in Chicago.
"This is a good acquisition for Sichuan Tengzhong and a good sale for GM. They can do the manufacturing and marketing in the US, but in addition to that they can produce Hummer elsewhere for markets such as China, India and the Middle East."
