Written by: The Paddock Staff
Date: October 9, 2009

General Motors has reached an agreement to sell its Hummer division to Chinese machinery company Sichuan Tengzhong, the Detroit automaker announced Friday.

Tengzhong plans to buy Hummer through an investment company, and will hold an 80 percent stake to produce the iconic Hummer performance SUVs in China. Financial terms were not immediately available.

The transaction is now under scrutiny for approval by the U.S. and Chinese governments.

“Hummer is a strong global niche brand and this agreement signifies another important milestone in writing the next chapter for both GM and Hummer,” said Fritz Henderson, GM president and CEO. “For Hummer, the combination of its knowledgeable leadership team, vehicle design expertise and the capital financing of Tengzhong portend a successful future.”

Under the agreement, Hummer would contract vehicle manufacturing, key components and business services from GM during a defined transitional time period. For example, GM’s Shreveport assembly plant would continue to contract assemble the H3 and H3T and AM General’s Mishawaka assembly plant will continue to assemble the H2.

Both facilities will produce the specified vehicles until June 2011, with an optional one-year extension until June 2012. The deal is expected to secure more than 3,000 jobs in the U.S. related to the sale and manufacturing of Hummer vehicles.

Hummer will continue to be managed by members of its existing leadership team including James Taylor, who will remain in his current role as Hummer’s chief executive officer. Prior to joining Hummer, Taylor was General Manager of Cadillac where he oversaw a reinvigoration of the brand, leading key innovations in design and technology as well as the development of new models.

“We are fortunate to have a partner who understands and recognizes the importance of continuing investment in Hummer’s heritage as a U.S.-based and branded company with a view toward capitalizing on global opportunities,” Taylor said.

“Backed by a privately owned and well-capitalized company, we are going to be able to focus on providing customers with more efficient models that deliver Hummer’s promise of authentic, purpose-built design and engineering.”

The brand’s future product development will focus on improving efficiency and performance in current Hummer models with alternative fuel powertrains, more efficient gas engines, 6-speed transmissions and diesel engines, GM said.

“This transaction marks an exciting step for both Tengzhong and Hummer, as we invest in a business that has significant opportunity in the U.S. and around the globe,” said Yang Yi, chief executive officer of Tengzhong.

“We are excited about some of the initiatives already underway at Hummer that we believe our investment will be able to accelerate, particularly related to the creation of the next generation of more fuel-efficient vehicles to meet not only future regulations but also customer expectations.”