How GM wanted to sell Hummer to Tengzhong
From China Car Times:
From China Car Times:
On February 26nd, GM announced that the sale of Hummer to Tengzhong Heavy Industries was dead due to a deal not being made within the allotted time frame. GM announced that they would be winding down the Hummer business over the course of the year, but they said the same of Saab which ultimately was saved at the last minute by Spyker, so could it be that Hummer gets saved from the hangman’s noose at the last minute as well?
Actually, from early 2008 GM was actively courting Beijing Automotive Industry Corporation (BAIC) to take over the Hummer brand, it would have been a match made in heaven with BAIC desperately seeking a foreign brand to buy and also having a large light weight truck manufacturing set up, and the fact that they are already an active supplier of light weight SUV’s to the Peoples Liberation Army. For whatever reasons, BAIC or GM ended the plan for a BAIC-Hummer takeover, and the deal fell into Tengzhong’s lap.
Chinese consumers were largely happy to hear of the news that Humvee’s would seen be produced in China thanks to Tengzhong, but Humvees remain a very different beast from the civilian editions, however civilian Hummers such as the H2 and even H3 may have some application for remote outposts such as Tibet, Xinjiang and even along the mountainous southern Chinese border with China’s south Asian neighbors.
Hummer shared its factory production line with various Chevrolet SUV and pick up models, and didn’t really have its own independent factory and production line, especially the Hummer H2, which coincidentally shared a lot of parts with GM produced pick up trucks.
Humvee’s were never up for sale, the tech for Humvees was never sale, all that GM was offering was a Chevy Truck with a new shell. The sale of Hummer never included the rights to the technology or the production lines as the tech was shared with Chevy trucks, so there was no way that Hummer could be sold as a stand alone product.
In fact, the only thing that GM was offering for sale was the Hummer design, branding, supply chain network, dealership network, as well as the burden of retired workers and paying into existing workers retirement schemes. Also, as soon as a company took over Hummer they were expected to continue operating the American factory for a minimum of three years. Although the Hummer brand is well known, its fame has changed from fame to infamy over the past 20 years, the images of Marines liberating Kuwaitis from their Humvees disappeared from our screens practically overnight and were replaced with stories of 21 year old frat boys with chrome wheeled H2’s struggling to afford gas for their H2. As a result, the Hummer brand became the ultimate bad boy for the Green lobby, and just as China was trying to flex its Green muscles, Tengzhong announces to the world its planning to buy Hummer.
BAIC pulled out of the Hummer deal in late 2008, but by June 2009 Tengzhong and GM were deep in talks, GM were apparently keen to point out to Tengzhong that the sale of Hummer was just a concept at that stage, talks continued until a memorandum of understanding was signed, but this ultimately died off in February 26th 2010 due to a lack of a final agreement being reached.
It has been said that the Chinese government were not keen to support the Tengzhong purchase of Hummer due to its lack of green credentials, but it could have been that Tengzhong realized they weren’t getting much for their purchase from GM, after all who wants to buy an empty factory, and a SUV that fell from grace, and be responsible for pensions? Tengzhong might have delayed the purchase and ultimately let the blame fall on the government for not giving them investment approval to buy out Hummer.
Hummer might not actually die off, it could be that a third Chinese buyer rears its head at the last minute. The Hummer H3 and the forthcoming H4 were both steps in the right direction for Hummer, the H3 being a smaller more practical version of the H2, and the H4 being a much more fuel efficient version when compared to the rest of its clan.
Apparently, there are still only 60 unsold Hummer H2’s in China, compared to the USA where a reported 2500 units remain unsold and unloved in factory parking lots. The Hummer H3 is more apparently more rare in China with only around 100 H3’s expected to be officially imported this year. However how rare, Chinese consumers will still have a chance to buy the Hummer in China at least for another year or so.
China’s official Hummer importer, Wu Zhao Automotive, has a lot of competition from gray imports of second hand Hummers which appeared in small numbers last year when the price of gasoline sky rocketed and Hummer owners fled to Ebay to rid their driveways of gas guzzling beasts at rock bottom prices. A new Hummer H3 will cost the Chinese consumer 1.28 million RMB, which is about $187,000USD, a Hummer H3 will cost around 750,000rmb or $110,000USD which only makes them affordable to the super rich in China, and as a result they can quite easily afford the fuel for them as well.