After months of speculation the China-based Sichuan Tengzhong Heavy Industrial Machinery Co Ltd is now the new owner of General Motor's Hummer brand. The deal needs final approval from both the Chinese and US Governments, but executives on both sides are confident this will happen by the end of the year.
The change of ownership is unlikely to affect its Australian operations in the short term. Spokesman Scott Whiffin, says Hummer remains a strong part GM Premium Brands, which includes Saab. "At this stage it's absolutely business as usual," he says. "There is no change to the dealer network or the distribution channel. "In Australia there are no changes for customers or dealers to sales and service arrangements. Likewise warranty agreements will continue to be honoured."
GM-Holden is believed to have brought in consultants to look at the ongoing viability of both Hummer and Saab. Tengzhong will acquire ownership of the brand, trademark and trade names, as well as license rights necessary to build Hummers. GM builds three different Hummer models, the military-based H1 and H2 and H3 but only the H3 is sold locally. H3 sales locally have halved this year as buyers retreat from the gas-guzzling off-roader because of speculation over its future. Just 403 H3s have found buyers compared to 923 for the same period last year.
As part of the agreement, Tengzhon will maintain existing dealer agreements with the dealership network but it's not sure what this means for Australia's 20-odd dealers. Tengzhong will hold an 80 per cent stake in Hummer through an investment entity. Suolang Duoji, a private entrepreneur with holdings that include the Hong Kong-listed mineral producer Lumena, will hold the remaining 20 per cent.
Details of the agreement were not disclosed but sources have said the deal is worth about $170 million. GM president and CEO, Fritz Henderson says Hummer remains a strong global niche brand. "This agreement signifies another important milestone in writing the next chapter for both GM and Hummer," he says. Henderson says the combination of Tengzhong financing and Hummer's knowledgeable leadership team was a good fit.
Under the agreement, Hummer will contract vehicle manufacturing, key components and business services from GM during a transitional period. The deal is expected to secure more than 3000 jobs in the US. Hummer's existing leadership team remains in place and James Taylor continues as chief executive officer. "We are fortunate to have a partner who understands and recognises the importance of continuing investment in Hummer's heritage with a view toward capitalising on global opportunities," Taylor says.
Tengzhong will accelerate more efficient powertrains for the brand and new six-speed transmissions. From next year Hummers will have E85 FlexFuel engines on its H3 models. A turbodiesel engine is also on the cards. The Chinese deal follows the off-loading of GM's other premium brand, Saab, to Swedish sportscar maker Koenigsegg. Hummer first came to prominence in the 1990 Gulf War as a military vehicle.