“It’s another Hummer humming down the highway,” proclaims the chorus of a song by singer-songwriter David Rovics. However, starting today and until a sale is finalized by the Chinese company, Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd, new Hummers will not be humming along the assembly line, reports Jalopnik. In October, GM reached an agreement with the Chinese company to buy the Hummer brand.
GM Chairman and CEO Ed Whitacre “indicated that the Hummer deal faces a Jan. 31 deadline to close,” according to the Detroit Free Press. CNBC reported that GM China Group President Kevin Wale said Chinese officials are “debating whether to grant approval to the deal, which will add another player to the country’s already overcrowded auto sector.” Wale also said that GM is “hopeful it will be decided in the very near future,” but that it’s uncertain.
According to a Tengzhong press release, the Chinese firm would hold an 80 percent stake in Hummer. A private entrepreneur, Suolang Duoji, would hold the remaining 20 percent.
Tenzhong would “acquire the ownership of the HUMMER brand, trademark and trade names, as well as specific IP license rights necessary for the manufacture of HUMMER vehicles. In addition, Tengzhong would “assume the existing dealer agreements relating to HUMMER’s dealership network.” Hummer would contract vehicle manufacturing, key components and business services from GM “during a defined transitional period.” The existing leadership team would continue to manage Hummer.
The press release also said that the deal is “subject to customary closing conditions and regulatory approvals and/or review by government agencies in the U.S. and China.”
Chinese buyers purchasing U.S. businesses
Chinese investment in U.S. companies is greater than U.S. “purchases of Chinese entities,” a recent USA Today article said. Last year, Chinese investors bought $3.9 billion worth of U.S. assets, almost four times the amount in 2008. U.S. investors bought $3 billion of Chinese assets, an 80 percent decrease from 2008.
The USA article also said:
It’s too early to tell whether this pattern will hold. Chinese buyers represented only 3% of the $118.7 billion in U.S. foreign investment last year. Yet China ranked as the ninth-largest foreign investor in the U.S., and among the minority that increased its stake amid a sputtering global mergers-and-acquisitions market.
China is now the world’s top auto market and is “expected to edge out Japan as the world’s second largest economy behind the U.S.”