GM Sells Hummer Division to China's Tengzhong
General Motors announced the signing of what it calls a "definitive agreement" to sell its Hummer division to the China-based Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. The transaction price, while not divulged by either party, is estimated to be about $150 million -- well below the half-billion valuation figure that GM had previously speculated it might be worth. Under the agreement, which must still undergo final approvals by both U.S. and Chinese regulators, Tengzhong will acquire ownership of the Hummer brand, trademark and trade names, as well as specific intellectual property license rights necessary for the manufacture of Hummer vehicles and assume the existing dealer agreements relating to the Hummer dealership network. Tengzhong will purchase an 80 percent holding in Hummer through an investment entity, with the remaining 20 percent being owned by private entrepreneur Suolang Duoji.
Under the agreement, Tengzhong will contract vehicle manufacturing, key components and business services from General Motors during a defined transitional time period. GM's Shreveport assembly plant will assemble the H3 and H3T while H2 builds will be done at AM General's Mishawaka assembly plant until June 2011 with an optional one-year extension until June 2012. GM says the deal will help secure over 3,000 jobs in the U.S. related to the sale and manufacturing of Hummer vehicles, including that of the current management team headed by CEO James Taylor. In commenting on the acquisition, Taylor noted: "We are fortunate to have a partner who understands and recognizes the importance of continuing investment in Hummer's heritage as a U.S.-based and branded company with a view toward capitalizing on global opportunities. Backed by a privately owned and well-capitalized company, we are going to be able to focus on providing customers with more efficient models that deliver Hummer's promise of authentic, purpose-built design and engineering."
While hardly a mainstay on the green scene, Hummer's new owners have already gone on record as intending make serious inroads in that department. Once the sale is completed, Hummer is set to become the first automaker to offer alternative-fuel powertrains in every model it sells. The 2010 H3 and H3T will be E85 FlexFuel capable and certification work is being finalized on a diesel-powered H3 to be sold outside of the North American market. The new owners plan to continue improving fuel efficiency of all future Hummer models by adopting more efficient gasoline, diesel and alternative fuel engines, fitting six-speed transmissions and exploring the potential for hybrid Hummers.