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Report: China May Block Hummer Sale

Posted: Jun 29, 2009 10:57 a.m.

GM's plan to sell its underperforming Hummer division to an obscure Chinese construction equipment manufacturer may have hit a snag.

USA Today reports, "China's planning agency is likely to reject a Chinese company's bid to acquire General Motors' Hummer unit, in part because its gas-guzzling vehicles conflict with Beijing's conservation goals, state radio reported." The agency, known as the National Development and Reform Commission, may also block the sale on the groups that "Sichuan Tengzhong Heavy Industrial Machinery, a maker of construction machinery, lacks expertise to run Hummer, China National Radio said late Thursday."

Kicking Tires adds, "A PR firm representing Tengzhong points out that while the state-run radio does not like the deal, that doesn't mean the NDRC will actually kill it."

General Motors, for its part, may be willing to alter the terms of the deal to push it through China's government review process. The Wall Street Journal reports, "The deal is said to be set at about $500 million in value, but analysts believe GM might agree to a lower offer."

A lower price, however, would not address the conservation issue. Kicking Tires notes, "China is adding so many new vehicles to the road so quickly that it has become a mission to emphasize fuel savings. They do so by cutting taxes on cars with smaller engines and offering incentives to companies developing hybrid and electric vehicles. Hummer, of course, is not exactly a poster child for that type of policy."

Hummer was already expected to have difficulty meeting new U.S. emissions and fuel economy mandates.

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