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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Automotive News [sub] cites two reports that Hummer will be puchased by Sichuan Tengzhong Heavy Industrial Machinery Co of Chengdu, Sichuan Province, China. Sichuan Tengzhong does not currently build cars or trucks, focusing on road and maintenance equipment. No word yet on the agreed-upon price. Meanwhile, GM tells the AP that it is currently entertaining offers from no fewer than 16 interested parties for its Saturn brand. Hey, I want Saturn too . . . better make that 17.

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?

So it’s the evaporation of easy credit that caused carmageddon? Don’t tell that to the Chinese. China became the world’s largest car market (as of the first quarter of 2009) with the bulk of its people paying cash for their cars. Until 2004, getting a loan for a car was more or less unheard of in the Middle Kingdom. Even after 2004, one could only finance a maximum of 80 percent of the price, and it was a straight loan for a maximum term of 5 years. To this day, “residual value” is not part of the Chinese language. Interest rates were high, twice that of a mortgage on a home. About 16 percent of cars sales were on credit after the rules were relaxed in 2004. Did that number improve while the world went on a credit binge? No way: In 2008, the number of cars financed had dwindled to 8 percent. There have been attempts to increase that number as part of the government stimulus package, but to no avail. Consumer credit “traditionally hasn’t been the Chinese way,” says the Wall Street Journal. Quite the opposite:

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Automotive News [sub] is reporting that Beijing Auto’s bid for Opel “came too late for the government to assess it in depth,” according to German Finance Minister Peer Steinbrück. Thanks for playing! Now how good did that offer have to be for the German government to have to avoid looking at it all together?

Today is—how do they put it at AA?—the first day of the rest of the life of Opel. Or not, as the saying goes around here. Today, everybody who has anything to say about Opel’s fate will get together in Berlin. The papers that will take away GM’s daughter Opel and make it a child of the state and parties yet undecided are already written up and are waiting for the signatures, says Die Welt. Klaus Franz, head of the Opel workers council has seen the paperwork, “and it looks good, everything is going in the right direction,” Franz said.

Present at the meeting will be Chancellor Angela Merkel, Freiherr von und zu Guttenberg, the premiers of the four states that are home to Opel factories, GM Europe chief Carl-Peter Forster, someone from RenCen, along with an anonymous representative of GM’s owner, the US government. Principals only. They will quiz the managers of the companies interested in Opel: Fiat, Magna, Richwood. The one with the most points wins.

Again, or not . . .

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Whoever has been on the inside of Volkswagen knows that they are devout skeptics when it comes to alternative energies. Sure, they do some token research into hydrogen and hybrids to give the blue VW logo a greener hue, but deep in their hydrocarbon pumping hearts, they are devoted pistonhardheads. The aggressive incremental improvement of internal combustion has been their true strategy. Under the “BlueMotion” moniker, they tweak existing technology to wring every last drop of gas (or diesel) out of it. So far, the conservative (and conserving) strategy has succeeded: The new BlueMotion Golf VI, fitted with a peppy 1.6L TDI oil-burning engine, gets 61.9 mpg, handily beating the 2010 EPA 51/48/50 mpg numbers of Toyota’s third gen Prius (YMMV, as you well know.) Suddenly, Wolfsburgologists are registering a change in VeeDub’s secretive Forschung und Entwicklungs Abteilung (R&D Dept., see picture above.)

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Clunker culling is spreading faster than the swine flu. Throughout the world, governments are putting bounties on aging autos. Of course, all for the noble cause of greening the planet. China has come out with a surprising new twist. On May 19, the Chinese government had announced the mother of all clunker culling initiatives. They would not only give cash to consumers who replace their old cars. No, they also offered money for the replacement of washing machines, TV sets, and additional abominable atmosphere attacking appliances. Today, China’s government issued a new edict: Buyers of small cars may not apply. Cash for clunkers is only handed out if you trade in your ancient ride for a new car with a displacement of 1.6 liters or larger, Gasgoo reports. Anything, as long as it’s bigger than 1.6 liters.

Shen me? (Excuse me?)

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Have a polluting vehicle? Then give Beijing a wide berth. You are no longer welcome here. Starting in June, any vehicles driving into China’s capital must carry an “Environmentally Friendly” label issued by their local authorities, Gasgoo reports. Environmental oinkers will be banned from driving inside the 5th Ring Road of the capital. From October 1, vehicles not meeting the standard can’t enter the capital’s areas inside the 6th Ring Road—a monster more than 100 miles long surrounding Beijing well outside the city proper. Part of a far-reaching plan to clear the air in China’s capital.
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In March 2008, China’s Shuanghuan (SH) Auto presented the Noble to the Greek media. The two-door may look like Daimler’s Smart, but there are crucial differences. The three meter long Chinese vehicle can can carry up to four people; Daimler’s mini (not MINI) mobile seats two. The Noble is a front-engined, front wheel-drive car with a unibody structure; the Smart’s engine is underfloor with a rear-biased drivetrain, built around a “Tridion” safety cage. Yes, well, in April 2008, Daimler’s crack legal team moved quickly to prevent import and sales of the [alleged] Chinese Smart clone. This week, a judge struck down Daimler’s case.

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Rick Haglund at MLive wonders aloud if the Chrysler treatment would be an option if it were a Chinese firm assuming the Fiat position. He’s been talking to pundits working on closer Michigan-China business ties, and they claim that a tie-up with a Chinese firm would be better for Chrysler than the Fiat deal already in progress. “They’re not putting in any cash, which is what Chrysler needs,” argues former AMC Chairman Gerald Meyer. And there’s no doubt that Chinese firms have cash. But, “there’s a xenophobia that’s clearly there,” argues Tom Watkins. And he’s right.

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The Chinese “home grown” automaker Geely had been widely rumored to be highly interested in snapping up Volvo or Saab. Or both. They either have lost interest. Or they employ the stratagem usual in a Chinese market: Shout “Tai gui le!” (too expensive), make an indignant face, and walk away. If they run after you, the next round of haggling ensues.

Geely “has not submitted, and has no plans to submit, any bids concerning the takeovers of ‘Volvo’ or ‘Saab’ as stated in recent press articles,” said Geely in a notice to the Hong Kong stock exchange, and their stock price promptly jumped 13.6 percent, Gasgoo writes. It doesn’t mean they were not or are not interested. They just didn’t hand in a—formal—bid. They sure had been talking.
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Yesterday, we had a post about far-reaching plans of GM. They wanted to sell exactly 17,335 made-in-China cars in the U.S.—by 2011. And triple that audacious number (51,546) by 2014. Or so they say in a (supposedly) confidential 12-page presentation to members of Congress. Trouble is, nobody really knows who will make the cars.

Gasgoo says today, “Shanghai Automotive Industry Corporation (Group) (SAIC), GM’s Chinese partner, said it hasn’t got such information from GM yet.” Mei you! Never heard of it. Could it be that someone just wants to rattle the UAW’s cage? If that’s the case, then the colleagues in Shanghai blew their cover. Or, less sinister, but more likely, does the left hand have no knowledge of the actions of the right? Or maybe, the cuts are so deep that they sent the P.O. by slow boat to China?

China’s new car sales come roaring back. After a strong first quarter, China’s passenger car sales, including minivans, rocketed up a whopping 44.5 percent in April from a year earlier. Shen me? (Excuse me?)

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No, really. The Detroit News reports that prior to its Chapter 11 filing, Chrysler sought to sell off parts of the company to everyone. “Chrysler sent letters to parties, primarily in China, whom we thought would be potentially interested in purchasing our assets,” writes ChryCo’s Tom LaSorda in a bankruptcy filing affidavit. “Over the next two months, several companies, including Beijing Automotive Industry Holding Co., Tempo International Group, Hawtai Automobiles, and Chery Automotive Co., expressed interest in purchasing specific vehicles, powertrains, intellectual property rights, distribution channels and automotive brands.” But guess what? Not even these ambitious firms were tempted to spend a dime on Chrysler’s alleged assets. And the major OEMs in the global auto game? Chrysler’s efforts to form alliances with Nissan, GM, Volkswagen, Tata Motors, Magna, GAZ, Hyundai, Honda and Toyota “have been determined and undertaken in good faith but have met uniformly without success,” admits LaSorda.

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