HUMMER Deal Falls Through, Brand to be 'Wound Down'
In a dramatic flip-flop of what most automotive industry watchers had predicted would happen, the deal to sell HUMMER to Sichuan Tengzhong Heavy Industrial Machines Co., Ltd has fallen through. This comes on the heels of today's announcement that the unexpected sale of Saab to Dutch exotic car company Spyker had been completed without a hitch, thanks to the approval of loans from the European Investment Bank.
The sale of HUMMER had been a foregone conclusion since it had first been announced in the summer of 2009. Sichuan Tengzhong Heavy Industrial Machines Co., Ltd, a Chinese industrial conglomerate appeared to have all of the financing and government backing it needed to tie up any regulatory details. However, after the purchase agreement seemed to be stalled for several months, with each side extending deadlines to sign on the final dotted line and delaying closure until well into 2010, it became clear that things had not been proceeding as smoothly behind the scenes as was previously thought.
Several factors appear to have played into the untimely death of the HUMMER sale. For starters, Sichuan Tengzhong has never actually produced an automobile, let alone built a commercial network for distributing vehicles, which in the face of heavy Chinese competition undoubtedly threw up red flags in its domestic market. The bigger problem, however, has been the HUMMER brand's status as an ecological pariah, brought on by its vehicle lineup's heavy fuel consumption and emissions output. It appears as though the Chinese government intervened explicitly due to its desire to keep this type of environmentally-unfriendly image out of the Chinese automobile market. Given that the entire industry in China is still in its infancy, the desire on the part of regulators is to point it in a greener direction without importing the bad habits of another brand's failed offerings.
What will now happen to HUMMER? Much like Pontiac and Saturn, the brand will be 'wound down,' with General Motors remaining responsible for all warranty claims and replacement parts required for current vehicles. A timetable has yet to be proposed for the exact end date of HUMMER's existence, but unlike Saab it appears unlikely that any savior is waiting in the wings, eager to scoop up a luxury SUV builder whose name has been sullied and reputation damaged over the past several years of falling sales.