GM’s Hummer being sold to the Chinese

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Sichuan Tengzhong Heavy Industrial Machinery, which has plans to enter auto production, has entered into a preliminary agreement with GM to buy out its Hummer brand of sports utility vehicles and pickup trucks.

The deal is worth less than $500 million according to industry analysts. However, the vehicles will still be made and sold in America. Yang Yi, the chief executive of Tengzhong, said in a statement, “The Hummer brand is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business, allowing Hummer to innovate and grow in exciting new ways under the leadership and continuity of its current management team. We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S.”

Though GM earlier refused to confirm the buyer’s identity, later it did so after it was reported in the press. The White House was not involved in the deal, but welcomed it saying 3,000 Americans would be able to keep their jobs, two plants would be operational and more than 100 Hummer dealers would stay in business.

Under the terms of the agreement, which has been vetted by the Chinese government, GM will continue to manufacture the vehicles, under contract for the company, which will be marketing them. Later the company may shift extra production from a plant in South Africa to Shreveport.

Tengzhong may eventually sell the vehicles in China, though the government will levy a 40% tax which it does as part of import duties on heavy vehicles or those with engines of over 4 liters.

The brand will be under research and development by the Chinese company and may later sell trucks fueled by diesel, ethanol and other alternative fuels. The US government will make sure that there is no transfer of sensitive technology or information to China.