The bankrupt car manufacturer General Motors has struck a tentative deal to sell its gas-guzzling Hummer brand to a Chinese company, raising the prospect of quasi-military American vehicles becoming a mainstream choice for drivers in China's rapidly industrialising towns and cities.
A day after filing for chapter 11 bankruptcy protection to shield itself from $172bn in debts, GM signed a memorandum of understanding to offload Hummer to Sichuan Tengzhong, a manufacturer of heavy industrial machinery based in the south-western Chinese city of Chengdu.
A source close to the negotiations said Tengzhong would pay between $150m and $250m for the business. It will be the first time that a Chinese company has purchased a US car brand and Tengzhong has pledged to clean up Hummer's dismal environmental image by developing models which use less petrol.
Tengzhong's chief executive, Yang, Yi, described Hummer as a name "synonymous with adventure, freedom and exhilaration". He said: "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."
Instantly recognisable for their square, tank-like shape, Hummers were originally modelled on armoured Humvees used in warzones by the US military. Loathed by environmentalists, the vehicles have suffered a plunge in popularity over the last 18 months as motorists opt for smaller vehicles in response to high petrol prices.
Worldwide sales of Hummers slumped by 61% to 5,013 during the first quarter of the year. GM recently warned that it would shut down Hummer unless it could find a buyer. The brand is one of a number of GM businesses on the auction block, alongside Sweden's Saab and Saturn in the US, as the carmaker seeks to emerge from bankruptcy in streamlined shape.
Tengzhong, which already makes commercial vehicles such as oil tankers, trucks and trailers, intends to keep production of Hummers in the US, safeguarding 3,000 jobs. Hummer's existing management will be retained.
Fans of Hummers have included California's governor, Arnold Schwarzenegger, and the England footballer Wayne Rooney. But with petrol consumption of a gallon for every nine to 15 miles, Hummers have been a target of venom for green activists since they went on sale in 1992.
A group calling itself the Earth Liberation Front set fire to several Hummer dealerships in the US during the early part of the decade. A cult website, FUH2.com, contains more than 4,000 pictures of people making obscene hand gestures at Hummers.
Nick Berning, a US spokesman for Friends of the Earth, described Hummers as "about the most highly polluting personal vehicles on the roads". He said the nationality of the brand's owners made little difference in environmental terms but added: "I hope we'll soon have a future where nobody is driving around gas-guzzling vehicles."
GM's management is anxious to close deals for its unwanted divisions as quickly as possible in the hope of emerging from bankruptcy within 60 to 90 days. The Detroit-based company has begun a concerted effort to reassure the public that it is trading as usual, despite seeking court protection from its creditors.
A website set up by the carmaker, GMreinvention.com, features a video replete with inspirational images of astronauts, racehorses and baseball players, with a voiceover declaring: "We're not witnessing the end of the American car. We're witnessing the rebirth of the American car. General Motors needs to start over in order to get stronger."
Monthly figures from the top US carmakers indicated today that vehicle sales were higher in May than in April, scotching fears that the financial crisis gripping Chrysler and GM could cause a collapse in confidence among consumers. Instead, analysts believe that motorists view the situation as an opportunity to snap up bargains.
Despite being in bankruptcy, Chrysler sold 79,010 vehicles in the US - a fall of 47% on the preceding year, but an improvement of 11% on April. GM's sales were also up 11% month-on-month. Ford, which is in better financial health, achieved a 20% rise in comparison with April, sending its shares up 5% to an 11-month high.
On a conference call with Wall Street analysts, GM's chief financial officer, Ray Young, said the company had received permission from the bankruptcy courts to continue paying day-to-day bills and was carrying on with business as usual.
"GM is open for business," said Young. "We're continuing to build cars, we're continuing to sell cars."
* General Motors
* Automotive industry
* Global recession
* United States
* China
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http://www.guardian.co.uk/business/2009/jun/02/general-motors-hummer-sale
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