There was no way that a Chinese car company was going to be announced as the buyer of GM’s Hummer division. For one, an industry trying to build its future on some sort of green credentials could scarcely take on the poster child for American gas guzzling and automotive overextravagence; one highway, zero city, as the TV cartoon show The Simpsons once described the Hummer’s fuel consumption rating. For another, Chinese car companies had all passed on the division when GM’s bankers started shopping it around last year.
There is some sort of industrial logic to Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd buying Hummer, as it is now in talks with GM to do. The Chengdu-based engineering conpany would get a U.S. distribution network and the management to run it. It also gets a distribution network in regions where there is an attractive mix of wealth and lots of new infrastructure construction.
Though the Hummer has fallen from fashion in the U.S., it still finds a market in the blingier parts of Russia and the Middle East, and to a lesser extent Africa, where a bit of armour plating doesn’t do much to the overall weight. There is a thriving grey market in the first two in particular, and which has even reached China (which the deal, if completed, will turn into a white market).
Tengzhong already makes construction machinery and special-use vehicles, like cement mixers and tipper trucks, to which the Hummer brand could be appended (replacing the Mercedes-reminiscent three pointed star badge). That would take Hummer back closer to its roots as an all-terrain vehicle, which it was for the U.S. Army before GM bought a licence in 1999 from AM General to turn the Army’s Humvee it into a monstrous (3,400 kilogram) $140,000 SUV for civilian road use. (The Humvee military business is not included in the deal with Tengzhong, as that is not GM’s to sell.)
Tengzhong’s roots as an engineeing company stretch back 40 years, but it has grown rapidly by acquisition since 2006 when it adopted its current name. GM valued Hummer at $500 million when it first put it on the block. No price for the sale has been announced (indeed final details are still being negotiated), but Tengzhong is likely to be paying a lot less than that for its latest acquisition.