General Motors yesterday finalized an agreement to sell its Hummer truck brand to a Chinese manufacturer, which would mark China’s first major entry into the US auto market.
Sichuan Tengzhong Heavy Industrial Machinery bought Hummer in a deal sources estimate was worth $150 million. Under the terms, GM will continue to manufacture the vehicles until no later than 2012, when Tengzhong will take over production.
But before the deal is complete, Chinese regulators must be convinced the brand can become profitable and that the massive SUVs fit a national strategy to improve energy efficiency. Hummer’s Chief Executive, Jim Taylor, hopes to close the deal in the next 30 days.
In Hummer, Tengzhong said it wants to create a stable of trucks that are more fuel-efficient and environmentally friendly than the current lineup, which had become synonymous with America’s addiction to gas-guzzling SUVs. The company is working to develop a diesel-powered Hummer to go on sale outside North America.
Financial terms of the deal weren’t disclosed. Tengzhong will acquire the Hummer brand, trademark and intellectual property rights needed to make the vehicles. Hummer brand dealers will continue to operate under the same contracts they had in place with GM. GM provided no financing.