It's official -- lovers of big, honkin' gas-guzzlin' all-American Detroit SUVs, get out of your foreign communist cars. Hummer belongs to the Chinese.
The Wall Street Journal reports, "General Motors Co. said it has completed an agreement to sell its Hummer brand to China's Sichuan Tengzhong Heavy Industrial Machinery Co., four months after the companies reached a preliminary deal." The deal "needed the blessing of China's government," and formal approval from Beijing may not come until next year, but Chinese officials have consented to allow Tengzhong to sign the paperwork completing the deal today -- a strong signal that the company built on an image borrowed from the U.S. Army will, in fact, be in the hands of an obscure Chinese construction equipment manufacturer soon.
Jalopnik reports, "Hummer is expected to keep its headquarters and current manufacturing in the U.S., as well as its current management and engineering teams," and the deal "won't include Hummer-related military technology or military truck production currently managed by Mishawaka, Ind.-based AM General."
But it may mean Hummer's image will take a hit. According to Car and Driver, A recent study in the Journal of Consumer Research showed that "people may choose the Hummer image of super consumption as their way of showing their ‘full-blooded American-ness.'" With Hummer sales down more than 60 percent this year, the automaker is already struggling -- and it isn't clear what Chinese ownership might do to its reputation.
The sale does mark China's long-rumored first foray into the U.S. automotive market. Auto industry analysts have expected Chinese automakers like BYD and Geely to begin an assault on the U.S. market for years, but few would have predicted that Tengzhong would be first. Autoblog notes, "Tengzhong, which only produces commercial trucks and industrial equipment, has never entered into consumer vehicles before."
General Motors' motivation appears to be to shed the Hummer brand as fast as possible. The Journal notes, "Terms weren't disclosed, but people close to the talks earlier Friday told the Wall Street Journal the price tag was $150 million." That sum would be less than a third of what GM had estimated it could get for the brand. The recent collapse of talks over selling the Saturn brand may have helped motivated GM to shed hummer at a bargain price, rather than be left trying to wind down another brand.
GM plans to close its Saturn and Pontiac brands by the end of the year, and is reportedly in talks to sell its Saab division.