June 3, 2009

Buyer: No plans to make Hummer in China

China's Sichuan Tengzhong Heavy Industrial Machinery says it has no plans to make General Motors' Hummer vehicles in China.

The private Chinese firm plans to buy the heavy-duty sport utility vehicle brand from the U.S. automaker, which is now in Chapter 11 bankruptcy.

Rather than setting up a plant in China, Tengzhong will use the current facilities including their employees in the United States, spokesman Zhao Xiaolu told Xinhua.

Tengzhong, with headquarters in southwest China's Sichuan province, is a leading maker of road, construction and energy industry equipment, the Chinese news agency said. It came into being in 2005 after a number of mergers and currently employees about 4,800 people.

In the Hummer deal, Tengzhong plans to retain its management, operational team and 3,000 of its employees, Xinhua said. The company also will assume existing Hummer dealer agreements.

In an earlier statement, Tengzhong Chief Executive Officer Yang Yi was quoted as saying the company will allow Hummer to innovate under the leadership and continuity of its current management team.

This transaction, if successful, will allow us to embark on a more aggressive global expansion, ensuring a successful future with our new partners, Hummer Chief Executive Officer James Taylor said.

Zhao said Tengzhong will use internal funds and bank loans to finance the transaction.

Recent auto purchases by Chinese companies include Shanghai Automotive Industry Corp.'s acquisition in 2004 of a 48.9 percent stake in South Korea's Ssangyong Motor, and the 2005 acquisition of Britain's MG by Nanjing Automotive, Xinhua said.

This March, China's independent car maker, Geely Automobile, purchased Drivetrain Systems International, the world's second-largest auto transmission supplier.