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NEWS: Hummer’s fate sealed by Chinese construction company

GM, working to cut its U.S. brand count in half as it recovers from bankruptcy, today completed an agreement to sell the Hummer SUV brand to China’s Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd

108_7_lThe companies did not disclose financial terms in announcing the deal. News reports Thursday said Tengzhong would pay $150 million.

The accord moves GM a step forward in its effort to remake itself by selling brands it had taken on over the past two decades. Last week, a deal to sell Saturn to Penske Automotive Group collapsed a day before it was expected to close.

Tengzhong will purchase Hummer through an investment entity, in which it will hold an 80 percent stake. Entrepreneur Suolang Duoji, whose holdings include Chinese chemical maker Lumena, will control the other 20 percent.

Tengzhong is scheduled to buy the brand, its trademarks and licensing rights to make vehicles and will assume U.S. franchise agreements. GM had 158 Hummer franchises at the start of the year. Tengzhong will also get manufacturing, business services and some components from GM during a transitional period, which was not defined.

GM had said in June that it expected to sell Hummer to the Chinese heavy machinery maker, which has no experience in the auto industry. Hummer’s 64 percent sales decline through September from year-earlier levels was the steepest of any volume brand in the United States.

Hummer’s U.S. sales peaked at 71,524 in 2006, before demand was choked by gasoline prices that soared above $4 per gallon last year. Sales through September of this year dwindled to 8,193.

GM had estimated in the summer of 2008 that the sale of Hummer “might realize $500 million or more,” CEO Fritz Henderson said in documents filed during the automaker’s 39-day bankruptcy.

Source: Automotive News

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