"China buys all-American Hummer for $150 million"

Discussion in 'General Motoring' started by Michel, Oct 10, 2009.

  1. Michel

    Michel Guest

    comments at http://www.washingtontimes.com/news/2009/oct/10/chinese-firm-closes-hummer-deal/comments/

    China buys all-American Hummer for $150 million

    William Ehart

    Nothing was more American than the Hummer.

    It was Schwarzenegger, cigars and swagger, laughing in the face of
    scornful environmentalists.

    Only now the Chinese are laughing.

    General Motors sold the military-inspired off-road brand to China's
    Sichuan Tengzhong Heavy Industrial Machinery Co. for a reported $150
    million on Friday, consummating a deal announced in early June.

    Tengzhong, a sprawling conglomerate with no car-building experience,
    will own 80 percent of the company. Hong Kong investor Suolang Duoji,
    who in turn is a major investor in Tengzhong, will own the rest. They
    will assume existing agreements with Hummer's 160 U.S. dealerships,
    including two in the Washington area.

    In its June bankruptcy filing, GM estimated that Hummer was worth $500
    million. The deal requires regulatory approval in both Washington and

    GM said it will continue to make the Hummer at least until June 2011,
    with an option to continue another year. Hummer's management team will
    stay in place, and company headquarters will be located in the Detroit

    After GM's attempts to sell its Saturn brand failed last week,
    analysts called the deal a victory for GM despite the low price tag.

    "It's good news for General Motors, they actually got some money out
    of it versus having to spend money to wind it down, as they have to do
    with Saturn," said Michelle Krebs, an analyst with auto information
    site Edmunds.com.

    Back in February, while seeking more federal aid, GM said that it
    would sell or close its Hummer, Saturn and Saab divisions in an effort
    to succeed as a leaner, more profitable company.

    Concern about Hummer's sale to the Chinese was muted.

    "Yeah, it feels a little weird," said Anthony Cancel, new car sales
    manager at Moore Cadillac Hummer in Chantilly.

    "But Americans are still going to build these cars" for a while, Mr.
    Cancel said. "That's going to employ 3,000 Americans."

    He noted that even with Hummer's future in doubt, his dealership was
    still selling 15 of the vehicles a month, down from a peak of 75. GM
    has not produced the car for six months, he said.

    "It came at a pretty good time, we only have two left. From the time
    they turn the factory on it takes four weeks for us to get cars," Mr.
    Cancel said.

    Ms. Krebs said the Chinese are following the lead of the Japanese and
    Koreans, but not by building the cars on their own.

    "The Chinese are achieving a global presence by acquisition rather
    than introducing their own brands," she said. "They're buying low
    right now."

    Beijing Automotive Industry Holding Co. has joined a Swedish
    consortium led by Koenigsegg seeking to complete the purchase of Saab
    this month. China's Geely Automobile was interested in buying Opel
    from GM and is bidding to buy Volvo from Ford Motor Co.

    "It's the same with the Indians, with Tata [Motors] buying Jaguar and
    Land Rover," Ms. Krebs said.

    The Financial Times reported this week that Geely's bid for money-
    losing Volvo was worth $2 billion but that Ford had concerns about
    protecting its technology. The London newspaper reported that a U.S.
    consortium led by former Detroit executives has also placed a bid.

    Independent auto analyst Tom Libby said trade is so interconnected now
    that Chinese ownership of Hummer is unlikely to diminish its macho

    "I have always held that the Hummer brand has value in this market and
    I consider it a viable competitor to Jeep," he said.

    The Jeep had its origin in the U.S. military, he said, and still
    benefits from "sort of a patriotism connection."

    The Hummer is derived from the Humvee, the U.S. military's successor
    to the Jeep.

    California Gov. Arnold Schwarzenegger, a Republican and former action-
    movie hero, persuaded military contractor AM General to make a
    civilian version of the Humvee in the early 1990s. AM General of South
    Bend, Ind., continues to make the military Humvee.

    The challenge for Hummer, with fresh capital from Tengzhong, will be
    to reinvent the brand, which has suffered in recent years from its gas-
    guzzling image. The company will improve efficiency and performance
    and branch out to alternative fuels and diesel engines.

    There's no image problem in China, though.

    "I think it works for China," Ms. Krebs said. "I have been to China
    and Hummers are real popular there, even though they are only sold on
    the gray market. I've seen them on the streets of Shanghai.

    "They're popular in the Middle East and there are opportunities
    elsewhere, such as Russia," she said.
    Michel, Oct 10, 2009
  2. Michel

    rob Guest

    after 2011 the Chinese are on their own.

    October 9, 2009 - 1:08 pm ET
    UPDATED: 10/9/09 3:45 p.m. ET

    DETROIT -- General Motors Co., working to cut its U.S. brand count in
    half as it recovers from bankruptcy, today completed an agreement to sell
    the Hummer SUV brand to China's Sichuan Tengzhong Heavy Industrial Machinery
    Co. Ltd. The companies did not disclose financial terms in announcing the
    deal. News reports Thursday said Tengzhong would pay $150 million.

    The accord moves GM a step forward in its effort to remake itself by
    selling brands it had taken on over the past two decades. Last week, a deal
    to sell Saturn to Penske Automotive Group collapsed a day before it was
    expected to close.

    Tengzhong will purchase Hummer through an investment entity, in which
    it will hold an 80 percent stake. Entrepreneur Suolang Duoji, whose holdings
    include Chinese chemical maker Lumena, will control the other 20 percent.

    Hummer spokesman Nick Richards said it was too early to say when the
    sale will close. The next step is getting approval from U.S. and Chinese

    "It's ready when it's ready," Richards said. He called media reports
    that the Chinese government might reject the deal "speculation."

    Brand, trademarks

    Tengzhong is scheduled to buy the brand, its trademarks and licensing
    rights to make vehicles and will assume U.S. franchise agreements. GM had
    158 Hummer franchises at the start of the year. Tengzhong will also get
    manufacturing, business services and some components from GM during a
    transitional period, which was not defined.

    As an example, the companies said GM's assembly plant in Shreveport,
    La., will make the H3 and H3T, and military-vehicle maker AM General LLC's
    factory in Mishawaka, Ind., will produce the H2 until June 2011. The deal
    includes an optional, one-year extension for the factories to make the
    vehicles until the following June.

    Hummer CEO James Taylor, formerly head of Cadillac, will remain in his
    current position with the new company.

    GM had said in June that it expected to sell Hummer to the Chinese
    heavy machinery maker, which has no experience in the auto industry.
    Hummer's 64 percent sales decline through September from year-earlier levels
    was the steepest of any volume brand in the United States.

    GM bought the Hummer brand in December 1999 from AM General, which has
    also continued to make versions for the armed forces.

    Sales history

    Hummer entered the civilian market in 1992. Non-government Hummer
    sales were averaging between 800 and 1,000 units annually when GM bought the

    Hummer's U.S. sales peaked at 71,524 in 2006, before demand was choked
    by gasoline prices that soared above $4 per gallon last year. Sales through
    September of this year dwindled to 8,193.

    GM had estimated in the summer of 2008 that the sale of Hummer "might
    realize $500 million or more," CEO Fritz Henderson said in documents filed
    during the automaker's 39-day bankruptcy.

    GM's agreement to sell Saturn to Penske, the nation's second-largest
    auto retailer, fell through after Penske's arrangements to get vehicles from
    Renault SA was rejected by Renault's board. GM is now winding down Saturn
    and its dealer network.

    In addition, GM has an agreement to sell its Swedish Saab brand to
    supercar maker Koenigsegg AB. Koenigsegg has said it expects to finish the
    deal by the end of this month.

    GM is dropping Pontiac and keeping Chevrolet, Buick, GMC and Cadillac.

    Reuters contributed to this report
    rob, Oct 10, 2009
  3. Michel

    News Guest

    Cheap price for AM General military-grade IP.
    News, Oct 10, 2009
  4. Quite.

    Has the Lenovo lost any of its IBM appeal?


    To send an e-mail directly replace "spam" with "schmetterling"
    Dori A Schmetterling, Oct 10, 2009
  5. Michel

    News Guest

    IBM Thinkpad EZ-Serv isn't what it used to be.

    News, Oct 10, 2009
  6. Michel

    QX Guest

    This country is going down the road to hell, and Mr. Obama is yelling
    full steam ahead all the way.
    QX, Oct 11, 2009
  7. Michel

    MoPar Man Guest

    And Bush was different?

    What did he do in 8 years, besides send thousands of US troops to their
    death at a price of a trillion dollars and counting?
    MoPar Man, Oct 11, 2009
  8. Michel

    News Guest

    News, Oct 11, 2009
  9. Michel

    Joe Pfeiffer Guest

    My impression is it's just the Hummer brand, which no longer even
    includes the original civilianized Hummer.
    Joe Pfeiffer, Oct 11, 2009
  10. Michel

    rob Guest

    the hummer as it stands now is just a Chevy Tahoe with a different body on
    rob, Oct 11, 2009
  11. Michel

    News Guest

    "Tengzhong needs approval from the Chinese government, including the
    Ministry of Commerce, which industry and government officials say holds
    the ultimate authority over the deal.

    Chinese officials have signaled that the deal would be treated
    favorably, Jim Taylor, the GM executive who has helped steer the sale,
    said on Friday.

    A completed deal would mark the first major acquisition of distressed
    U.S. auto assets in the global downturn by Chinese firms seeking to
    acquire higher profile names and */more advanced technology/*."
    News, Oct 11, 2009
  12. In what way?

    (I am a Toshiba man, though Lenovo would be my 2nd choice probably.)


    To send an e-mail directly replace "spam" with "schmetterling"
    Dori A Schmetterling, Oct 11, 2009
  13. Michel

    SteveT Guest

    You might as well ask, what did FDR and Truman do besides sending thousands
    of US troops to their death at a price of <whatever number of current
    dollar-equivalents was spent in the execution of WW II>)? But I expect
    everyone gets your point, you believe it was a waste. Millions of
    now-free-from-Ba'ath-domination Iraqis, Iranians and Kuwaitis threatened by
    their formerly bellicode neighbor and Israelis would almost certainly
    disagree with you.
    SteveT, Oct 12, 2009
  14. Michel

    CF Guest

    I only use "real" IBM machines, ones built before the Lenovo takeover.
    My oldest IBM is a PS/2, 9556, and two refurbished desktops, a 6579
    PIII, and an 8303 P4.
    CF, Oct 12, 2009
  15. Michel

    News Guest

    Timeliness, reliability of work, tracking, for starters.

    News, Oct 12, 2009
  16. What does that mean in the context of computers?


    To send an e-mail directly replace "spam" with "schmetterling"
    Dori A Schmetterling, Oct 12, 2009
  17. Michel

    News Guest

    Laptop turnaround is days longer than guaranteed, immediately has to go
    back to fix unworked problems, then goes missing completely, for days.

    News, Oct 13, 2009
  18. Michel

    satyr Guest

    Iraq hasn't been so much liberated as Bosniafied. Shiite and Sunni
    segregation is complete and the Christians have mostly fled. As soon
    as we leave, the bloodbath will commence.

    Iran certainly is pleased that Sunni control of Iraq is over. I can
    see a great friendship between the two nations as soon as Iraq has
    been ethnically cleansed of Sunnis. At least that is one possible

    On a bad day, Israel is as bad as anyone else in this godforsaken holy
    satyr, Oct 13, 2009
  19. Michel

    Bill Putney Guest

    You are obviously devoid of judgement.
    Bill Putney, Oct 13, 2009

  20. You really think WW II was the same? Iraq was no threat to us,
    period, and Bush either knew it or should have known it.
    Yet poll after poll shows the Iraqis resent our presence there and
    want us out. Explain why something that had no bearing on us was
    worth 4000 American lives, $1 trillion, and loss of US reputation the
    world over.

    Now the threat is Iran (which Iraq held in check) and terrorists
    recruited by American actions in Iraq.
    erschroedinger, Oct 13, 2009
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