GM sells Hummer brand to a Chinese company

General Motors said Friday it has clinched a definitive agreement to sell its Hummer brand to Chinese firm Sichuan Tengzhong Heavy Industrial Machinery.

The deal is expected to preserve more than 3,000 sales and manufacturing jobs in the U.S. Hummer’s current management team will stay with the new company, which will be headquartered either in Detroit or suburban Auburn Hills, Mich.

Tengzhong will acquire ownership of the Hummer brand and trademarks and assume existing dealer network agreements. GM will continue to manufacture the military-styled sports utility vehicle until June 2011, with an optional one-year extension.

Financial terms were not disclosed, although a person briefed on the deal said the sale price was around $150 million. GM’s bankruptcy filing last summer said that the iconic brand could bring in $500 million or more.

Tengzhong will acquire Hummer through an investment entity in which it will hold an 80 percent stake. Private entrepreneur Suolang Duoji from China’s Sichuan Province will own the remaining 20 percent.

Signing an agreement is no guarantee a transaction will be completed — as GM learned last week when the deal to sell its Saturn unit to a U.S. auto dealership chain fell through. Tengzhong’s deal for Hummer still needs to be approved by regulators in the U.S. and China.

Selling Hummer is part of GM’s postbankruptcy plan to focus on four key auto brands: Chevrolet, Buick, GMC and Cadillac. It is closing its Pontiac division and will shut Saturn now that the deal to sell it to Penske Automotive Group is dead.

The Hummer hit hard times when fuel prices began to escalate and the economy cratered. Hummer’s smallest model gets 16 miles per gallon in combined city and highway driving. Sales took a big hit when gasoline prices topped $4 a gallon and came under renewed pressure as the economy tumbled into recession.

TIMELINE

Key events in Hummer’s history

1992 — AM General LLC, which makes Humvees for the U.S. Army, begins selling its first civilian vehicle, the Hummer.

1999 — General Motors takes over marketing rights of the Hummer brand for an undisclosed sum. AM General continues building the Hummer for GM, now known as the Hummer H1.

2002 — GM adds the H2 to the Hummer lineup. GM Hummer dealerships open.

2005 — GM adds the H3.

2006 — Peak year for Hummer brand sales, with 71,524 sold. GM stops producing the H1.

2008 — GM announces it is reviewing the brand for possible sale.

June 2009 — China’s Sichuan Tengzhong Heavy Industrial Machinery announces intent to buy the Hummer brand.

Oct. 9, 2009 — GM and Tengzhong announce that they have signed a definitive sales agreement, subject to regulatory approval.

The Associated Press