GM Unloads Hummer to Chinese Company
During GM’s bankruptcy hearings, the company estimated it’s iconic Hummer brand to be worth somewhere in the ballpark of $500 million.
According to the latest estimates, China’s Sichuan Tengzhong Heavy Industrial Machinery Co. will acquire the brand for about $150 million, though official financial terms have not been released.
GM’s press release says the Chinese company gets “ownership of the Hummer brand, trademark and tradenames, as well as specific intellectual property license rights necessary for the manufacture of Hummer vehicles.” The buyer also gets access to the existing dealer network.
Considering all that, the price is a relative bargain; even when Hummer’s free-falling sales numbers are taken into account.
The press release goes on to say,
Under the agreement, HUMMER would contract vehicle manufacturing, key components and business services from GM during a defined transitional time period. For example, GM’s Shreveport assembly plant would continue to contract assemble the H3 and H3T and AM General’s Mishawaka assembly plant will continue to assemble the H2. Both facilities will produce the specified vehicles until June 2011, with an optional one year extension until June 2012. The deal is expected to secure more than 3,000 jobs in the U.S. related to the sale and manufacturing of HUMMER vehicles.
So far, the sale looks like good news for fans of the Hummer brand and for the Americans who build and sell them. (Though I’m sure Saturn and Pontiac people are shaking their collective heads in disbelief.)
Yang Yi, Chief Executive Officer of Tengzhong, said this about his company’s acquisition:
We are excited about some of the initiatives already underway at HUMMER that we believe our investment will be able to accelerate, particularly related to the creation of the next generation of more fuel-efficient vehicles to meet not only future regulations but also customer expectations.
While I would have rather seen the Pontiac brand saved, it looks like the Hummer brand has a real chance at surviving well into the future; if it isn’t driven directly off a cliff by its new owners.
Can Hummer succeed in America under foreign ownership? Is the sale smart or should the brand have been left to die?