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Chinese Firm Buys Hummer, But Will Still Build it in U.S.

By KBB.com Editors on June 3, 2009 3:58 PM
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The first of GM's orphan brands has found a new parent. In a deal set to close sometime in the third quarter of this year, Hummer will be sold to the Chinese firm Sichuan Tengzhong Heavy Industrial Machinery Company. Established four years ago in Sichuan province, the privately-held company's previous vehicle-manufacturing experience has been limited to dump trucks and special-purpose road-construction equipment. While the still-undisclosed sales price is likely to fall somewhat below the $500 million figure GM had hoped for, Tengzhong has confirmed that it will keep most of the Hummer operations here and continue sourcing vehicles from the two existing plants in Shreveport, Louisiana, home of the H3/H3T, and from the AM General facility in Mishawaka, Indiana, that builds the larger H2/H2 SUT under a contract with GM. Between direct manufacturing and dealer-related functions, the sale is expected to help preserve about 3,000 jobs that would have been lost if GM had been forced to fold the franchise. The sale does not include any part of the AM General Corporation, which has and will continue to make the non-civilian H1 model for the U.S. military.

These have been tough times for one of the world's toughest vehicles. U.S. sales of this iconic on/off-roader have plummeted by over 60 percent in 2009, and were down by a similar percentage over the past two years. Although Hummer's annual sales in China have never topped 70 units, Tengzhong's CEO, Yang Yi, is undaunted by the challenges that lie ahead. He expressed enthusiasm and high expectations for the future of this acquisition, noting "The Hummer brand is synonymous with adventure, freedom and exhilaration; and we plan to continue that heritage by investing in the business." A good part of that hoped-for growth will be linked to significantly expanding the brand's international market presence, with both existing and new, more fuel-efficient models.

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