ICONIC BRAND GOES FOR ONLY $150M

+ Click to Enlarge UNDER NEW MANAGEMENT: GM plans to sell its Hummer brand to a Chinese industrial machinery company, which would take over existing dealer agreements and warranties. Image: AFP

October 10, 2009
By kevin Krolicki and Bernie Woodall

General Motors has signed a deal to sell its iconic but tarnished Hummer brand to an investment partnership headed by an obscure Chinese machinery maker.

The deal with China's Sichuan Tengzhong Heavy Industrial Machinery, seen as underscoring the fast rise and global ambition of the Chinese auto industry, has capped a year-long struggle by GM to shed the military-derived SUV brand that had become synonymous with gas-guzzling excess.

The sale comes as China achieves status as the world's largest auto market and GM remains majority-owned by the US government after being driven into bankruptcy.

"The long-term game plan is to ride the China wave," said Jim Taylor, the GM executive who helped to steer the sale and will remain in Detroit as the new company's chief executive.

The deal remains subject to regulatory review in the US and China though Chinese officials have indicated that the deal would be treated favourably.

Financial terms were not announced but a person familiar with the deal said the Hummer business would be sold for about $150-million, far less than GM's early estimate of more than $500 million.

GM will continue to manufacture the existing Hummer models and provide engineering support for Tengzhong on a contract basis. That provision of the deal preserves about 3000 US manufacturing jobs until at least the middle of 2011. - Reuters