General Motors and Tengzhong will begin talking with regulators this week in a bid to obtain Chinese government approval for the little known machinery maker to buy the Hummer brand by the end of September, a GM spokesman said today.
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The relatively unusual step by the two sides of engaging regulators so early in the process, before a formal agreement has been reached, reflects the widespread scepticism surrounding the deal, according to Reuters.
“We will start discussions with the Chinese government this week on the Hummer deal,” Michael Albano, a spokesman for GM’s Asia Pacific operations, told the news agency. “We can’t sign the deal unless we have approval from the government.”
Sichuan Tengzhong Heavy Industrial Machinery, with no prior experience in the car industry, raised eyebrows in June when it unveiled a tentative plan to take over Hummer.
Doubts about whether the deal would get approval from a Chinese government encouraging better fuel efficiency and consolidation in the complex and fragmented domestic auto industry have been swirling as many believe Tengzhong lacks the experience and expertise to revive money-losing Hummer’s operations.
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By GlobalDataState media has cited Hummers’ high fuel consumption among likely reasons for expected opposition from the National Development and Reform Commission (NDRC), the country’s top state planner, which must approve the sale, Reuters noted.
But the ministry of commerce, which also scrutinises all major cross-border equity deals by Chinese companies, has sounded a more positive note, saying Tengzhong’s move was normal for a company seeking to take advantage of the global downturn.
A Tengzhong representative told Reuters the company had been cooperating with Chinese regulators but declined to elaborate.
Sichuan province-based Tengzhong makes special-use vehicles, structural components for highways and bridges, construction machinery and energy equipment.
