Chinese Tengzhong to acquire GM’s Hummer

As a part of the agreement, Tengzhong, specializing in manufacturing of heavy-duty construction trucks, will take over not only the Hummer’s dealer agreements but its management team as well.

Tengzhong’s plan vis-à-vis Hummer
Yang Yi, chief executive of Tengzhong, said of the strategy, “We plan to allow Humer to innovate and grow in exciting new ways under the leadership and continuity of its current management team.”

He added that the deal "will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S."

One of China’s major privately owned engineering companies, Tengzhong, intends to forge a long-term assembly and supply partnership with the Detroit based GM.

Ricon Xia, a Daiwa Institute of Research (H.K.) Ltd. analyst opined, “There are a lot of new rich in China who like niche brands such as Hummer. A lot of private companies like Tengzhong have emerged because of the economic boom and they will strike more surprising deals like this one.”

Deal from GM’s perspective
For GM, the deal provides an opportunity to shed assets and emerge from bankruptcy.

Exuding confidence, Troy Clarke, president of GM North America, said, “I'm confident that Hummer will thrive globally under its new ownership. And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive automaker."

Desmond Wong, chief executive officer of Chicago-based Sino Strategies Group, aptly described the agreement, “This is a good acquisition for Sichuan Tengzhong and a good sale for GM.”

As a part of the restructuring process, GM will shed not only the Hummer brand, but also its Pontiac, Saturn and Saab brands. The Hummer sale is likely to be completed by the end of the third quarter.

The once mighty automaker will also cut its 6000 strong dealership network by a third to 2000 dealers by next year.