The sale of Hummer to Sichuan Tengzhong Heavy may run afoul of the government, Bloomberg reports. The Chinese government. After Hummer hit the wires on Tuesday, there were increasing rumors in Beijing that China’s central government is not particularly thrilled. The acquisition runs contrary to two of China’s declared goals.

Yi, China wants fuel efficient vehicles and not hydrocarbon hungry Hummers.

Er, China wants to desperately consolidate its more than 100 (nobody is really sure) automakers to a manageable number. The goal is to merge China’s 14 largest automakers into 10 by 2011, and let the others fade away. A new entry, and one that is supposedly owned by a mining baron is all they need.

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When trying to buy VW with the proceeds of derivatives instead of plain old money, Porsche bit off too much it can chew. And they are choking. Volkswagen performed a Heimlich maneuver to the tune of a €700 million loan to save Porsche from extinction by bankruptcy. That loan is not enough, and it’s short term, 6 months max. Porsche was then able to secure a €10 billion bank loan, but had to put the crown jewels of the Porsche family in hock. The €10 billion loan was used to pay off a previous €10 billion loan. The adroit derivatives player turns more and more into someone who uses a credit card to pay off credit card debt. Porsche needs more money. They went to “Germany’s dumbest bank.”

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It has been commented widely (and it doesn’t take a tall IQ to do so) that Magna might get problems with its parts customers (a.k.a. OEMs) when Magna starts competing with them through Opel. Didn’t take long: “Volkswagen AG said Wednesday Canadian auto parts supplier Magna International Inc. will face conflicts of interest following the planned takeover of General Motors Corp.’s (GM) Adam Opel GmbH unit,” Dow Jones Newswire reports from Germany. The threats are carefully worded:
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The sale of the Hummer brand to a widely unknown maker of cement mixers and bridge pontoons, located in China’s wild west of Chengdu, left many questions open.

Like, how much did they pay?

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Sick of sinking car sales? Two choices: Relocate to Germany. Or go to China. In both countries, #4 and #3 on the world’s GDP ranking, cars are flying off dealer lots at breakneck speed.

In Germany, Abwrackprämien-powered new car registrations rose nearly 40 percent in May, compared to May 2008, Automobilwoche [sub] reports. Forty friggen percent! And we thought 19.4 percent in April was strong. In the first 5 months, 1.63 million units were sold to Deutschland’s motorists. In the beginning of the year, everybody in Germany was worried that sales could be less than 3 million cars for the whole year. Now, im Gegenteil: 2009 looks like a record breaker.
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Magna expects to consummate the marriage of Opel by September. This doesn’t surprise; it just so happens that the German elections are on 9/27/2009. In the meantime, Deutschland develops distinct doubts about the deal. “The German government made it clear that the door remains open to rival bidders,” Reuters reports. “The process is still open to all the bidders,” government spokesman Ulrich Wilhelm told reporters in Berlin. The German government keeps repeating that other bidders, including Fiat and China’s BAIC, still have a shot if they improved their bids. Doubts reach all the way to the top . . .

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As the news of Hummer’s sale to a widely unknown Chinese maker of cement mixers and bridge pontoons hit the wires, James Taylor was on a plane to Chengdu, China. The city, close to the golden triangle was hitherto more famous for its illicit substances and certain kinds of clubs. Now, it will be Hummer Central. Hummer CEO James Taylor (no relation to Sweet Baby James), went to Chengdu to shake hands with his new employers. They’ll keep him for now.

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The—mind you, tentative—agreement of Government Motors to sell Hummer to China’s Sichuan Tengzhong Heavy Industrial Machinery has people worried. No, it’s not the Americans who are scared of military secrets escaping to China. “The deal has observers in China worried,” writes Forbes. And worried they should be. The deal as it is makes little sense for a Chinese manufacturer. Especially for a manufacturer that has never built passenger cars. Tengzhong makes heavy industry vehicles, highway and bridge components, construction machinery and energy equipment.

What worries the Chinese is exactly what made GM so happy: According to the Memorandum of Understanding, Tengzhong will keep Hummer’s core management and operations team and existing dealership network. Reuters reports GM saying that “the buyer of Hummer would contract to build the H3 model SUV and the H3T pickup truck at GM’s plant in Shreveport, Louisiana — through at least 2010.” Why, oh my?
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Government Motors is expected to make an imminent announcement on the sale of its Hummer brand, says Reuters. Note that the revelation comes from Kevin Wale, president of GM China Group. Just another attempt to disseminate more feel-good news in its second largest market? Or an indication of the location of the buyer?

Government Motors is launching a barrage of press releases in an attempt to shock and awe all naysayers. All is fine with its Asian operations, they are insulated from the bankruptcy of the mother ship, it’s great business as usual. As far as China (GM’s second largest market behind the United States) is concerned, business never has been better! It seems everybody is counting on the Chinese consumer to bail out the US government’s bailout. Bankruptcy filing in New York? Never heard of it. It ain’t us. There’s no such thing. Suan Le Ba! Fuhgedaboutit.

“It’s not something we would bring up on our own, and we don’t know enough about the restructuring plan,” Toyota’s President Katsuaki Watanabe told a small group of reporters, one of them writing for Reuters. Ever so polite, they would never suggest something like that on their own. But . . . “If some talk about supporting GM comes up, we would like to consider it earnestly.” Fritz Henderson, two magic words: Tasukete kudasai. Help me, please.

US SecTreas Timothy Geithner quickly got out of DC for the Monday curtain call of the artist now known as Government Motors. Geithner went as far as Beijing to distance himself from the performance. Keeping a distance didn’t mean keeping his mouth shut. From Chrysler and GM, “we want a quick, clean exit as soon as conditions permit,” Geithner told students at Peking University in Beijing. Reuters took notes. “We’re very optimistic these firms will emerge from restructuring without further government assistance.” Strangely, everybody shares his optimism . . .

For more than ten years, every word a certain high executive of Volkswagen uttered in public was pure BS. I wrote his speeches. I wrote articles under his name. I even ghostwrote a book for him. I studied his mannerisms, his way of thinking and talking. He slowly but surely slipped into the role for which I wrote the script. He’s retired now but still a sought-after speaker on the conference circuit.

He liked to live and work on the edge, and I gladly walked him there. We had a strange symbiotic relationship. His trust in me bordered on the obscene. Even before major strategy announcements, his brief for the speech usually amounted to: “You know what to write.” He rarely did read the speech before giving it. He always delivered it with great aplomb and usually to thundering applause. I could put practically any word into his mouth. Power that had to be used wisely. Tell that to a usually reckless BS . . .

It was a long night again. Not as long as the disastrous Wednesday/Thursday meeting. And it didn’t end in invectives. At 2:15 in the morning, Finance Minister Peer Steinbrück stepped outside Chancellor Angela Merkel’s offices and reported: “I can tell you that a deal has been reached.” If you looked hard enough, you could see holy white smoke rising into Berlin’s night sky.

On the A4 Autobahn near Friedewald, Germany. The police is on the ass of an obscure vehicle: Banged-up, holes in the bodywork, huge rivets everywhere. Highly suspicious in a country that doesn’t have HOV-2 lanes: A puppet sits in the right hand seat. Germany’s finest pull him over. Highly embarrassing: They caught themselves a prototype of a yet to be launched BMW. Supposedly a 535d. Even more embarrassing: There is a video of the whole affair, brought to you by BILD Zeitung. Knowing that the test driver will be punished at the factory, the police let him go.