DETROIT — General
Motors said on Wednesday that it would shut down Hummer, the
brand of big sport utility vehicles that became synonymous with the
term gas guzzler, after a deal to sell it to a Chinese manufacturer
fell apart.
Paul Sakuma/Associated
Press
A Hummer dealership in
Burlingame, Calif.
Tim Boyle/Bloomberg News
A Hummer H3 on display.
The
buyer, Sichuan Tengzhong Heavy Industrial Machines, said in a
statement that it had withdrawn its bid because it was unable to
receive approval from the Chinese government, which was trying to put
a new emphasis on limiting China’s dependence on imported oil
and protecting the environment.
Tight financial markets also
hurt the deal. When the commerce ministry did not bless the
transaction, the well-capitalized Chinese banks became reluctant to
lend money to Tengzhong, even though it tried to set up an overseas
subsidiary to buy Hummer. That left Tengzhong trying to borrow money
from Western banks that have been curtailing their lending even to
established borrowers, much less a little-known company from western
China.
A spokesman for Hummer, Nick
Richards, said G.M. had no specific timetable for completing its
wind-down, but left open the possibility that G.M. would be open to
new bids.
“We just reached this
decision today, so we’re just beginning the process,” Mr.
Richards said. “Typically, winding down a brand can take several
months. If there are viable alternatives for part of the brand or all
of the brand during the process, we’ll consider them.”
G.M. had been trying to sell
Hummer for nearly two years, and struck a preliminary deal with
Tengzhong in June. The two companies had planned to complete the $150
million deal by the end of January, then delayed the deadline by a
month in the hopes of receiving approval from China.
“We have since considered a
number of possibilities for Hummer along the way, and we are
disappointed that the deal with Tengzhong could not be completed,”
John Smith, G.M.’s vice president for corporate planning and
alliances, said in a statement. “G.M. will now work closely with
Hummer employees, dealers and suppliers to wind down the business in
an orderly and responsible manner.”
Over the years, Hummer
shifted from a brawny status symbol that drew attention on the road
into an automotive pariah. Gov. Arnold
Schwarzenegger of California helped the brand become popular and
once owned a fleet of Hummers, but more recently, he described the
brand as prime evidence of the Detroit automakers’ failings.
Still, dealers and fans were
optimistic that Hummer could live on.
They expected to see smaller,
more fuel-efficient
models introduced under Tengzhong that would help the brand “get
away from people just thinking it was a big gas hog,” said Danny
Hill, the general sales manager at Classic Hummer in Grapevine, Tex.
“It is a great, great
vehicle that really does anything you want it to do,” Mr. Hill
said. “It had a great concept to it. It’s a real shame that it’s
going away, because the people who own Hummers, they just love them.”
It was the third time since
G.M. emerged from bankruptcy protection last year that a deal to sell
one of its unwanted brands collapsed. The company is shutting down
Saturn,
and it began to halt operations at Saab
after a deal with Koenigsegg in Sweden was called off. G.M. later
reached an agreement with a Dutch company, Spyker Cars; that deal was
completed on Tuesday.
G.M. is also closing Pontiac,
but it never tried to sell that brand. The carmaker is focusing on
its Buick, Cadillac, Chevrolet and GMC brands as it works to recover
from bankruptcy.
G.M. said it would honor
Hummer warranties and provide service and parts to Hummer owners
worldwide. Hummer has nearly 400 dealerships globally, including 153
in the United States.
The announcement was
celebrated by environmentalists, who have long pressed G.M. simply to
kill the brand, which was born from military Humvees in 1992. G.M.
acquired it in 1999.
“Closing Hummer
simultaneously improves the health of G.M., China and the planet,”
said Daniel Becker, director of the Safe Climate Campaign at the
Center for Auto Safety in Washington. “Hummer should rest in
pieces.”
About 3,000 jobs in the
United States could be affected by the shutdown, including positions
at G.M. and dealerships. A factory in Shreveport, La., that builds
the Hummer
H3 and H3T, as well as other G.M. trucks, already was scheduled
to close by 2012.
The larger H2 was built for
G.M. by A. M. General in Mishawaka, Ind., until December, when
production was temporarily halted to allow the sale process to
conclude.
Mr. Richards said Hummer
dealers in the United States had about 2,500 vehicles in their
inventories. In January, the brand sold just 265 units in the
country. Hummer sales plunged 67 percent in 2009, to a total of
9,046.
The deal would have made
Tengzhong the first Chinese company to sell vehicles in North
America, though it planned to keep Hummer’s operations in the
United States.
“Tengzhong worked earnestly
to achieve an acquisition that it believed to be a tremendous
opportunity to acquire a global brand at an attractive price,”
Tengzhong said in its statement.
Its bid for Hummer was an
audacious move, particularly by Chinese standards. The company is
privately held, so it did not have the connections that many
government-owned enterprises enjoy; by contrast, government agencies
own part or all of China’s 10 largest automakers.
Tengzhong concluded the
initial deal with G.M. in June and was supposed to close the deal by
September. Some in Detroit were furious that the Chinese review
process then dragged on for eight months, during which the American
auto industry showed few signs of recovery and the potential value of
Hummer continued to decline.
The timing of Tengzhong’s
bid was bad from the beginning. High oil prices in the summer of 2008
led to a broad move by the Chinese government to improve energy
efficiency and limit oil imports.