Following the filing of bankruptcy last Monday, GM announces the advanced negotiations with Tengzhong Heavy Industrial Machinery Company of China about the possible sale of the Hummer brand.
The American car manufacturer has announced the inevitable fate of the Hummer brand mid of last year. Hummer suffered primarily because of the recession brought about by the global credit crunch. Sales also dropped due to growing concerns about the environment.
The two parties have signed a memorandum of understanding. The talks might enter the closing phase by the third quarter of 2009 where GM and the Chinese company will agree on the regulatory approvals.
Sealing the deal will mean about 3000 jobs in the US manufacturing sector, car dealerships, and engineering. The Tengzhong has also plans of injecting massive funding into the Hummer brand including production of a compact H4.
Upon execution of the memorandum of understanding, Tengzhong will be taking over the Hummer brand and have sets on the operations and senior management team. The Chinese firm will have a long term tie-up with GM as the key material supplier.
Hummer will still be headquartered in the United States and be led by its current leadership team. The brand is looking to expand its target market to include emerging ones like China.
Year in, year out the May 2009 sales of Hummer is about 62% lower with overall sales dropping by as much as 40% for Q1 and Q2. Dealers are not so pleased with how GM handled the situation but are hoping that the new brand owner will be able to get Hummer out of the deep hole it is in right now.
More GM Corporate news at GM Auto Blog.
[...] GM discussing sale of Hummer with Tengzhong of China [...]
[...] GM confirmed last week that one foreign company is interested in the Hummer sale. Tengzhong, a Chinese company manufacturing industrial machinery, has already sat down with GM to sign a memorandum of agreement [...]