General Motors has announced it will wind down its Hummer SUV line after failing to complete a deal to sell the brand to China's Sichuan Tengzhong Heavy Industrial Machinery Co.
AFP - General Motors said Wednesday it was unable to complete the sale of its Hummer brand to China-based Tengzhong and would wind down operations of the brand of military-style sport utility vehicles.
"We are disappointed that the deal with Tengzhong could not be completed," said John Smith, GM vice president of corporate planning and alliances, without elaborating.
"GM will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner."
GM said it would continue to honor Hummer warranties, and provide service support and spare parts to current owners around the world.
The plan to sell Hummer to the Chinese maker of heavy equipment was first announced in June as the US automaker underwent a massive bankruptcy restructuring with support from the US and Canadian governments.
The companies said in October a deal had been "finalized" in which Tengzhong would acquire an 80 percent stake and Suolang Duoji, a private entrepreneur with holdings that include the Hong Kong-listed industrial chemical producer Lumena, would hold the remaining stake.
Last month, Tengzhong said it had agreed with GM to extend an original deadline of January 31 by one month to the end of February, as the company sought the go-ahead from Chinese regulators.
But the Wall Street Journal on Wednesday quoted an unnamed source close to Tengzhong as saying the firm's application for approval apparently "isn't going anywhere."
The report said Tengzhong was "weighing different options", including the possibility of using an offshore investment vehicle to handle the deal.
Hummer represented for some a symbol of GM's glory days but was also pilloried as an example of wasteful opulence. The gasoline-guzzling vehicles were adapted from the military Humvee and launched commercially in 1992.
GM acquired full ownership of Hummer in 1999 and expanded production of the original Hummer or H1 and H2. In 2005 GM introduced the H3, which was a mid-sized version but still more fuel-thirsty than most vehicles on the road.
Celebrity owners have included California Governor Arnold Schwarzenegger, star of the "Terminator" movies.
But as fuel prices rose and economic conditions worsened, buyers turned away from the Hummer. In 2009, GM sold just 9,000 Hummers, a 67 percent drop from a year earlier.
GM has been moves in fits and starts in reorganizing its global operations. A deal struck last year to sell its Opel brand, the jewel of its European operations, was scrapped and GM decided to keep its European division.
After plans to sell the Swedish nameplate Saab fell apart, GM said it would end that brand. But a last-minute deal was struck to sell the operations to Dutch-based Stryker in a deal completed this week.
In the United States, GM decided to end its Pontiac and Saturn brands, focusing on four remaining core brands -- Chevrolet, Buick, Cadillac and GMC.
Date created : 2010-02-24