China Kills Hummer Deal

Hummer is officially dead. Probably. General Motors announced that it would begin winding down the firm yesterday once the news came that Chinese regulators would not approve Sichuan Tengzhong Heavy Industrial Machines Co.'s acquisition of the company. But is Hummer really finished?

Here's what GM says, according to the Associated Press:

GM said it will continue to 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."

Well that sure sounds final. But remember what happened with Saab? There, GM's initial sale failed and it looked like Saab would be wound down. At that time, I quoted this passage from a Bloomberg article:

GM has a contingency plan for Saab similar to a process being used to wind down Saturn, the person said. Saab owners would continue to be covered by GM warranties and be assigned to a new dealership for service, the person said.

Sound familiar? But two months later, GM managed to complete a deal with another firm to ensure Saab's survival after all. Could that happen here?

Maybe, but it might be harder this time. Sichuan Tengzhong was only going to pay a measly $150 million for Hummer in the first place. Saab's original deal was for $600 million. How much less would GM accept? It's pretty clear that no one is willing to pay much for a company that's business focuses on stamping out big fuel hogging SUVs. After all, Chinese regulators clearly didn't want one of their companies taking it on. With the auto industry running in the opposite direction of such vehicles, it's hard to blame them.

But who knows. Maybe GM will find some random dark horse buyer yet, like it managed to for Saab. But at this point, Hummer lovers should probably prepare for the worst.