GM to shut down Hummer after deal collapses
Last Updated: Wednesday, February 24, 2010 | 6:32 PM ET
The Associated Press
Hummer, the off-road vehicle that once symbolized America's love for hulking SUVs, has hit a dead end after its planned sale to a Chinese heavy equipment maker collapsed late Wednesday.
Heavy equipment maker Sichuan Tengzhong Heavy Industrial Machines Co. pulled out of the deal for Hummer, known for its military-like SUVs, because it was unable to get clearance from Chinese regulators within the proposed deal timeframe, the manufacturer said in a separate statement.
A long row of unsold H3s sit at a Hummer dealership in Castle Rock, Colo., in 2008. (David Zalubowski/Associated Press)
GM said it will continue to honour existing Hummer warranties.
"We are disappointed that the deal with Tengzhong could not be completed," said John Smith, GM's vice-president of corporate planning and alliances.
"GM will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner."
GM has been trying to sell the loss-making brand for the last year and found a suitor in Tengzhong, but resistance from Chinese regulators created difficulties from the start.
As recently as Tuesday, private investors were trying to set up an offshore entity in a last-minute effort to complete the acquisition ahead of a Feb. 28 deadline.
Hummer, which traces its origins to the Humvee military vehicle built by AM General LLC in South Bend, Ind., acquired a devoted following among SUV lovers who were drawn to the off-road-ready vehicles.
But they drew scorn from environmentalists and sales never recovered after U.S. gasoline prices spiked above $4 US a gallon in the summer of 2008.
Sales peaked at 71,524 in 2006. But in December 2009, only 325 Hummers were sold, down 85 per cent from the previous year, according to Autodata Corp.
Hummer is the second brand after Saturn that GM has failed to sell as part of its restructuring. GM sold Swedish brand Saab to Dutch carmaker Spyker Cars NV earlier this year. Pontiac is being discontinued.
GM is focusing its efforts on its four remaining brands: Chevrolet, GMC, Cadillac and Buick.
