Although the Chinese government takes much of February off for New Year festivities, GM’s deal to sell HUMMER to Sichuan Tengzhong has exactly one week left before a self-imposed deadline for completion arrives. The deal is being held up by China’s Commerce Ministry which has publicly said that it wants the Chinese auto industry to consolidate and become “greener,” two goals that are severely at odds with Sichuan Tengzhong’s HUMMER aspirations. Now, the Financial Times reports that Tengzhong may be trying to pull an end-around on the Chinese government by pursuing a purchase via an offshore investment vehicle. This would (in theory) evade the requirement for the Commerce Ministry’s approval. In reality …
Ayiahhhhh! Whether they buy Hummer in Hong Kong, the Caymans, or the Isle of Man: To produce in China, you need the big red chop from the government, and you will have used up your last bit of guanxi in China at that point. Come to think of it, they might tell the foreign entity: “Laowei (foreigner), find yourself a Chinese joint venture partner.-”
HUMMER’s production has been shut down until the deal concludes, and HUMMER sources tell us that dealers are “hanging on by their fingernails,” surprisingly calling for the company to resume production of the H2. Our source is optimistic about both the deal and HUMMER’s long-term chances, comparing halting progress on the deal to the Ford-Geely-Volvo deal, a comparison that Reuters rejects. Because the plan is to continue HUMMER’s 70-30 US-abroad sales mix, an offshore deal could keep the lights on at HUMMER… but it will have to happen quickly before dealers lose hope. And before declining sales reach the point of no return.
Sheesh, let’s play taps, already.
Though to be honest, I’d already buried Saab in my mind – and it came back, so I guess one never quite knows what the future holds.
But at least Saab has some redeeming qualities.
I mean, other than Prius and Subaru, where are the leftist ex-hippy Birkinstock wearing east coast professors going to buy their cars if Saab goes tits up? (tongue in cheek, in case you didn’t figure it out)
Volvo?
Last I read, GM has roughly enough Hummers in inventory to last the rest of the 2010 model year, maybe longer. No point in keeping Hummer around for another model year if the regulatory approval and the financing don’t happen by summer. Also, what’s the point of Chinese ownership if neither Chinese production nor Chinese money is in play? Notice Chinese ownership is the last resort for dead car companies and brands? MG Rover, Volvo, almost Saab, Hummer…American, European, Korean and Japanese banks aren’t exactly lining up to help. I think she’s dead.
Jalopnik claims that the deal is dead.
http://jalopnik.com/5478192/hummer-deal-halted-by-chinese-government
Now what?
ferrariman: Stay away from Jalopnik. They should come with a federally mandated warning label.
Shanghai Daily reports today, WEDNESDAY (it already is Wednesday in China): “Tengzhong Explores Hummer Options”
This soap will go on forever. Ed is right on the money.
Sometimes, the snark is awesome, but when they do actual reporting, I have to facepalm.
BS, what are the chances of Tengzhong working with a plant in Uzbekistan? Just curious about the Chinese-Uzbekistan relations. Thanks.
That was so yesterday Bertel, today, the WSJ reports: “Sichuan Tengzhong Heavy Industrial Machinery Co. has been told that the Chinese government won’t clear its deal to buy General Motors Co.’s Hummer unit, a person close to the situation said Wednesday.”
Wait, Walter, I’m just typing today’s (still Wednesday) episode of Ho-Hummer. Coming right up! Preview: WSJ OBE.