General Motors announced this week that its agreed-upon sale of the HUMMER brand to China’s Sichuan Tengzhong Heavy Industrial Machines Co. Ltd. has suddenly collapsed.
As a sale cannot be consummated, GM will proceed to shut down HUMMER’s operations.
“We have … considered a number of possibilities for HUMMER along the way, and we are disappointed that the deal with Tengzhong could not be completed,” said John Smith, GM vice president of corporate planning and alliances, in a statement.
“GM will now work closely with HUMMER employees, dealers and suppliers to wind down the business in an orderly and responsible manner.”
As most of the 3,000 employees who work on HUMMER are now allocated to other vehicles, GM at this time cannot estimate the number of jobs affected by the shutdown.
The Chinese communist government reportedly blocked the sale of HUMMER to Tengzhong, on the basis that its vehicles—gas-guzzling and military-style—does not fit the vision it has for China’s auto industry.
The company was “unable to obtain clearance of the transaction from the Chinese regulators within the proposed deal time frame,” according to a statement from Tengzhong.
At the time, Tengzhong, a heavy equipment maker, lacked the governmental approval to build cars—but filed an application shortly after the sales accord.
In a statement this week, China’s Assistant Minister of Commerce Wang Chao reportedly denied that the government blocked Tengzhong’s bid to purchase HUMMER. At a news conference on Wednesday, Wang said that the ministry has not received an application from Tengzhong.
Reuters reported this week that the Commerce Ministry blocked the sale, according to people familiar with the negotiations.
The sale to Tengzhong would have brought GM about $150 million as reportedly at the time of the agreement last year.
GM decided to sell HUMMER in June 2008, a year prior to the company’s much-publicized government-assisted bankruptcy. GM chose to keep four core brands—GMC, Chevrolet, Buick, and Cadillac—and shed its HUMMER, Pontiac, Saturn, Saab, and European operations in Opel/Vauxhall.
GM later decided to keep Opel/Vauxhall as the operations had strategic importance in the Western European market.
But HUMMER doesn’t fit the bill for any company, not in the age dominated by number crunching in fuel economy and heightened awareness to environmental-friendliness. According to AutoData Corp., sales of HUMMER peaked in 2006 with more than 71,000 vehicles delivered. That figure dropped to a meager 9,000 in 2009.
But for a span of a few years, HUMMER achieved almost cult-status for its brash and bright SUVs derived from the military-style Humvee built by AM General. But as gasoline prices exceeded $4 per gallon, sales fell off a cliff and never recovered. As of 2009, HUMMER built two vehicles—the large H2 and a slightly smaller H3. The H1 ceased production in 2006.
HUMMER is the second brand for which a sale was in place but fell through in the end. GM had an agreement to sell its Saturn brand to a group of investors led by Penske Automotive, but the deal collapsed in September 2009.
GM has said that it would continue to honor all warranties and will seek to sell portions of HUMMER’s operations.
As a sale cannot be consummated, GM will proceed to shut down HUMMER’s operations.
“We have … considered a number of possibilities for HUMMER along the way, and we are disappointed that the deal with Tengzhong could not be completed,” said John Smith, GM vice president of corporate planning and alliances, in a statement.
“GM will now work closely with HUMMER employees, dealers and suppliers to wind down the business in an orderly and responsible manner.”
As most of the 3,000 employees who work on HUMMER are now allocated to other vehicles, GM at this time cannot estimate the number of jobs affected by the shutdown.
Government Blocked Sale
The Chinese communist government reportedly blocked the sale of HUMMER to Tengzhong, on the basis that its vehicles—gas-guzzling and military-style—does not fit the vision it has for China’s auto industry.
The company was “unable to obtain clearance of the transaction from the Chinese regulators within the proposed deal time frame,” according to a statement from Tengzhong.
At the time, Tengzhong, a heavy equipment maker, lacked the governmental approval to build cars—but filed an application shortly after the sales accord.
In a statement this week, China’s Assistant Minister of Commerce Wang Chao reportedly denied that the government blocked Tengzhong’s bid to purchase HUMMER. At a news conference on Wednesday, Wang said that the ministry has not received an application from Tengzhong.
Reuters reported this week that the Commerce Ministry blocked the sale, according to people familiar with the negotiations.
The sale to Tengzhong would have brought GM about $150 million as reportedly at the time of the agreement last year.
HUMMER Not in GM’s Plans
GM decided to sell HUMMER in June 2008, a year prior to the company’s much-publicized government-assisted bankruptcy. GM chose to keep four core brands—GMC, Chevrolet, Buick, and Cadillac—and shed its HUMMER, Pontiac, Saturn, Saab, and European operations in Opel/Vauxhall.
GM later decided to keep Opel/Vauxhall as the operations had strategic importance in the Western European market.
But HUMMER doesn’t fit the bill for any company, not in the age dominated by number crunching in fuel economy and heightened awareness to environmental-friendliness. According to AutoData Corp., sales of HUMMER peaked in 2006 with more than 71,000 vehicles delivered. That figure dropped to a meager 9,000 in 2009.
But for a span of a few years, HUMMER achieved almost cult-status for its brash and bright SUVs derived from the military-style Humvee built by AM General. But as gasoline prices exceeded $4 per gallon, sales fell off a cliff and never recovered. As of 2009, HUMMER built two vehicles—the large H2 and a slightly smaller H3. The H1 ceased production in 2006.
HUMMER is the second brand for which a sale was in place but fell through in the end. GM had an agreement to sell its Saturn brand to a group of investors led by Penske Automotive, but the deal collapsed in September 2009.
GM has said that it would continue to honor all warranties and will seek to sell portions of HUMMER’s operations.
