- The Washington Times - Wednesday, June 3, 2009

Hummer, as Arnold Schwarzenegger might say, will be back.

Bankrupt General Motors Corp., which said earlier this year that it would sell or terminate the ultimate gas-guzzler brand, tentatively agreed Tuesday to sell it to China’s Sichuan Tengzhong Heavy Industrial Machinery Co. for an undisclosed price.

GM Chief Executive Officer Frederick A. “Fritz” Henderson said in bankruptcy court documents filed Monday that the automaker initially thought Hummer was worth $500 million, but a deal could not proceed on “reasonable terms” because of the credit crunch and doubts about GM’s future.

“China’s automakers have been looking for a way to get their feet into the U.S. market, and this is the first serious attempt at that,” said Jessica Caldwell, an auto analyst for car-shopping Web site Edmunds.com.

It is the first acquisition attempt of a prominent American company by a Chinese firm since a Chinese oil company attempted to acquire Unocal in 2005. Opposition in Congress stopped that deal. The White House endorsed the Hummer deal Tuesday, saying it would preserve American jobs.

Tengzhong said Hummer, with 3,000 employees, would remain based in the United States with its current management team and production facility in Indiana at least through 2010. Hummer CEO Jim Taylor did not comment on the future of the H2 production facility in Indiana, which is owned by military contractor AM General.

The Chinese company said it would assume existing agreements with Hummer’s 160 U.S. dealers, including two in the Washington area.

Some Hummer owners said they have no problem with foreign ownership.

“I’m glad the company will remain viable. My initial reaction is that I’d rather they be owned by a Chinese company than the U.S. government,” said five-year Hummer owner Steve Nahas, 46, of Clifton.

Tengzhong said it would create new Hummer products that get better gas mileage.

“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.,” CEO Yang Yi said.

Large American-made cars are popular in China, where GM has the largest share of the market. Hummers are sold in China through a “gray market” that is not part of an official dealer network.

Mr. Schwarzenegger, the Republican governor of California, who is best known for his roles in the “Terminator” movies, persuaded AM General, maker of the military Humvee, to produce a civilian version in 1990. AM General still makes the H1 and H2 in Mishawaka, Ind., for GM.

Hummer was considered the least attractive of the three brands - the others are Saturn and Saab - that GM said it would sell or discontinue as part of its restructuring. A steep recession and still relatively high gas prices have crushed Hummer sales, which are down 64 percent this year.

GM said Tuesday that it had 16 potential buyers interested in Saturn and three for Saab.

“I think there’s always going to be a place for Hummer in this country, but definitely at a lower sales volume,” said Ms. Caldwell, of Edmunds.com.

Hummer didn’t fit with the new, more fuel-efficient image GM is trying to foster - prodded in part by the Obama administration - through marketing products such as the plug-in hybrid Chevrolet Volt, she said.

Other analysts agreed that Hummer needs refreshing.

“We can assume the Chinese want the brand and want the technology, but I think they’ll want to eventually revamp the vehicles and the brand,” said George Magliano, director of automotive industry research for North America at IHS Global Insight.

“Hummer is one of the best-known brand names in the world,” said Neil Kopit, director of marketing for the Washington-area Criswell dealerships, including Criswell Hummer in Gaithersburg.

“There’s nothing wrong with the current product. The H3 gets competitive gas mileage versus any SUV.

“Maybe Hummers become electric Chinese cars; I don’t know, but the brand recognition is there,” he said.

Privately held Tengzhong, a western China conglomerate, makes everything from heavy trucks to resins, but does not manufacture cars.

• John Krudy and Patrice Hill contributed to this report.

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