Sichuan Tengzhong Heavy Industrial Machinery, currently in talks to buy Hummer from bankrupt General Motors, may shift some production to China, state media has reported.
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Tengzhong has previously said it intends to keep Hummer operations largely intact, including its suppliers, dealer networks and management, Reuters noted.
“In the future, it’s very likely (for us) to build up a Hummer production base in China,” Yang Yi, Tengzhong’s general manager was quoted saying by state-run China Central Television.
He said, however, the company would not seek to change Hummer’s production in the United States for the time being.
Yang gave no financial details of the deal with GM as negotiations were still under way. He said only it was “a quite reasonable price.”
Market players have told Reuters Hummer could fetch about US$100m in cash in addition to other commitments.
The Sichuan-based heavy machinery maker will not take on any of Hummer’s debt, Yang said. “This acquisition will not undertake any debts. They bear no relations to the new Hummer and Tengzhong Heavy Machinery,” he said.
Tengzhong has said previously it will enter into a long-term contract assembly and key component and material supply agreement with GM. Yang said those contracts will last until 2012.
Tengzhong has the capability to purchase major U.S. brands at current low prices, he said, without saying how the company will finance the deal. He said Hummer would develop a new power system in order to the improve the fuel efficiency of its vehicles, Reuters added.
Hummer’s ‘small’ H3 model has been assembled in South Africa for right hand drive export markets.
