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GM's Hummer sale tanks

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GM's Hummer sale tanks

Chinese heavy equipment maker backs out

BY DAN STRUMPF

ASSOCIATED PRESS

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NEW YORK -- Hummer, the off-road vehicle that once symbolized America's love for hulking SUVs, has hit a dead end after its sale to a Chinese heavy equipment maker collapsed late Wednesday.

Sichuan Tengzhong Heavy Industrial Machines pulled out of the deal to buy the company from General Motors. Tengzhong failed to get clearance from Chinese regulators within the proposed timeframe for the sale, the Chinese manufacturer said Wednesday.

GM said it will honor existing Hummer warranties.

"We are disappointed that the deal with Tengzhong could not be completed," said John Smith, GM 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 signed a deal with Tengzhong in October. However, resistance from Chinese regulators, who have been putting the brakes on investment in the fast-growing Chinese auto industry, 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 Sunday deadline. That plan, along with other options, was unsuccessful, according to a person close to the situation. The person declined to be identified in order to speak more freely.

"There's no way forward with that," this person said. "We're out of time."

GM spokesman Nick Richards said the automaker would still hear last-minute bids for the brand.

"In the early phases of the wind-down, we'll entertain offers and determine their viability, but that will have to happen in pretty short order," he said.

Hummer, which traces its origins to the Humvee military vehicle built by AM General 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 gasoline prices spiked above $4 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% from the previous year, said Autodata.

Sticker prices start at more than $42,500 and run to about $63,000, according to data posted on Hummer.com. The H3, the most fuel-efficient vehicle in Hummer's lineup, averages about 16 m.p.g. The vehicles are built at GM's factory in Shreveport, La.

Under the initial agreement to sell Hummer, Tengzhong would have received an 80% stake, while Hong Kong investor Suolang Duoji, who indirectly owns a big stake in Tengzhong, would have gotten 20%. The investors also would have owned Hummer's nationwide dealer network.

Financial terms of the sale were not disclosed, although a person briefed on the deal at the time said the sale price was around $150 million. GM's bankruptcy filing last summer said that the brand could bring in $500 million or more.

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Just a minor rant...

Sales peaked at 71,524 in 2006. But in December 2009, only 325 Hummers were sold, down 85% from the previous year, said Autodata.

OMFG! Sales went from 71,524 to 325! No wonder nobody wants to buy it. GM had a colossal failure... as usual!

I really wish they didn't write stuff like this for sensationalism... its easily misinterpreted and not a apples to apple comparison.

In the end, everybodys sales went down... and cars companies with uncertain futures crashed harder.

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