Economy

GM's plan to sell Hummer to Tengzhong delayed

(Agencies)
Updated: 2010-02-02 10:49

DETROIT: General Motors' plan to sell the hulking, once-hot Hummer line to a Chinese heavy equipment maker has been delayed by a month, officials said on Monday.

General Motors Co and Sichuan Tengzhong Heavy Industrial Machinery Corp said they are extending the deadline to complete the transaction until February 28 pending final approval by the Chinese government. The previous deadline was January 31 for a definitive agreement to sell the line once synonymous with America's love for big off-road vehicles.

Hummer spokesman Nick Richards said the deal has cleared US regulatory hurdles. He called it a complex agreement but said both companies are "optimistic the deal will be completed" by month's end.

Sichuan Tengzhong said in a statement it's cooperating with the approval process.

Financial terms weren't disclosed, but Hummer has been estimated to be worth about $150 million. GM's bankruptcy filing last summer said that the brand with its born-in-the-military cachet could bring in at least $500 million.

Hummer hit the streets for civilian use in 1992 while owned by AM General LLC, which makes Humvees for the US Army. Actor Arnold Schwarzenegger, now the governor of California, was among the first customers.

The brand, whose smallest model gets 16 miles per gallon in combined city and highway driving, sold well until the middle part of the last decade when fuel prices began to rise. Sales peaked at 71,524 in 2006.

GM is selling Hummer to focus on core brands Chevrolet, Cadillac, Buick and GMC.

GM signed a deal last week to sell its Saab brand to small Dutch automaker Spyker Cars NV for $74 million in cash plus $326 million worth of preferred shares in Saab. It hinges on a $550 million loan from the European Investment Bank.

The sale came after an earlier attempt to sell Saab to another Swedish automaker fell through, and after GM's bid to sell the Saturn brand also collapsed.