LOS ANGELES AND NEW YORK — A Chinese heavy-equipment maker's move to acquire General Motors Corp.'s Hummer brand has its executives and dealers excited about the possibility of overseas sales growth and more fuel-efficient models.
A day after filing for bankruptcy protection, GM said Tuesday that it had reached a preliminary agreement to sell the sport utility vehicle brand to Sichuan Tengzhong Heavy Industrial Machinery Co. Terms weren't disclosed.
Tengzhong said it was looking to increase Hummer's presence in the U.S. and abroad, particularly in China, now largely an untapped market for Hummer.
The brand "is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business," Yang Yi, chief executive of Tengzhong, said in a statement.
He said Tengzhong planned to invest in research and development to create new Hummer-branded products, including more fuel-efficient vehicles for the U.S. market.
Hummer executives concur that the unit, known for outsized, gas-guzzling SUVs inspired by the U.S. military's Humvee transport, has tremendous growth potential in several countries if the brand could spend more on product development and marketing.
"We have distribution in Hummer-friendly and gas-friendly markets like the Middle East and Russia, but to be blunt the amount of marketing attention the brand got as part of a much larger company was quite small," said James Taylor, Hummer's CEO. "With some marketing money we can see some quick upside."
Taylor sees "great" growth potential in China for Hummer, which in effect would become a local brand if acquired by privately owned Tengzhong.
But with oil prices once again surging and stricter fuel efficiency and environmental standards planned in the United States, Taylor said, Tengzhong would have to be prepared to spend on developing new Hummer vehicles.
"We need to ramp up a product development program right way. We need smaller and more fuel-efficient powertrains and have to get mileage into at least the 20s per gallon from the teens," Taylor said.
How much money the Chinese are willing to spend on product development and where Hummer vehicles would be manufactured will be among the topics discussed when Hummer officials meet with Tengzhong executives this week, he said.
