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Could GM Shut Hummer Down?

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Could GM Shut Hummer Down?

General Motors has agreed to sell its Hummer division to Chinese construction equipment manufacturer Sichuan Tengzhong Heavy Industrial Machinery, but there are some signs that the deal might not go through. If the two companies can't work out a sale, what will happen to the iconic SUV-builder?

Time Magazine reports, "GM CEO Fritz Henderson is under pressure from GM's new board of directors to turn around the company's fortunes quickly, and he has indicated the automaker is prepared to drop Hummer if it can't finish the deal relatively soon." Hummer officials are continuing to plan the company's future as if the sale will take place. Reuters reports, "Hummer plans to invest $9.4 million over five years and take advantage of tax credits to set up a Michigan headquarters after China's Tengzhong acquires the brand." Hummer spokesman Nick Richards told Reuters last week "that GM and Tengzhong were making progress in the negotiations, which would then have to go through a regulatory process."

But GM apparently has a Plan B in place. The Wall Street Journal notes that there isn't much left of Hummer at GM headquarters. "Because Hummer has been run from Detroit as a division of GM, the brand has had very few employees exclusively devoted to running it. Many of its employees have transferred from assignment to assignment within the GM universe, spending stints at Hummer in addition to other GM brands."

Time reports, "GM, which was considering abandoning Hummer even before its financial meltdown, pulled its advertising in the spring and then shut down a Hummer production line in South Africa. Hummer sales have dropped 64% so far this year, more than any other brand in what overall has been a disastrous year for new-vehicle sales." Ridding itself of the Hummer dealership network might be a costly option for GM, but with sales as slow as they are, it's probably inevitable if the Tengzhong sale falls through. An unidentified "GM Official" told Time "If it doesn't get sold, we'll close it."

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