"I just can't figure it out," said Jiu Xinguang, an auto analyst based in Beijing. "Why would this company want to buy Hummer? Most Chinese auto companies don't have anything to gain from a deal like this because they don't have multinational experience."
News talk show hosts on Beijing Communication Radio, a station favored by taxi drivers, were just as puzzled Wednesday afternoon.
"This not-so-famous . . . company will be getting more famous every day now," the host said, chuckling with his guests. "Who thought, when we saw all those pictures of [Humvees] in Iraq, that they would be advertising for Tengzhong?"
The Hummer was originally built on the same platform as the military's Humvee, produced by AM General. GM bought the Hummer brand from the South Bend, Ind., company in 1998.
The Detroit automaker contracted AM General to continue to build trucks for it, and although the consumer version of the Humvee, known as the H1, is no longer made, the H2 model is still built in Mishawaka, Ind. Hummer's other model, the H3, is built by GM in Louisiana.
The brand was hugely successful for GM in the first years of this decade, peaking in 2006 with 71,524 sold in the U.S., but has collapsed since then. Last year only 27,485 sold in the nation, and through the first five months of 2009, U.S. consumers bought only 5,113.
Brand's appeal
The hulking SUVs have found acceptance outside the U.S., however. For international markets, GM manufactures the H3 in one of its plants in South Africa and contracted a Russian factory to build the H2 there starting last year.
More than anything, Tengzhong is buying the brand and intellectual property, but it also gets rights to the current network of Hummer dealers and Hummer management team.
Because Tengzhong is not buying the factories where the Hummer is built, GM said the sale would include "a long-term contract assembly and key component and material supply agreement with GM."
The Humvee produced for military use was not acquired by GM and is still made in Mishawaka.
John Zeng, a senior market analyst for IHS Global Insight, said Tengzhong should not expect any growth in the U.S. but would be stepping into a Chinese SUV market that grew 25% last year. However, that growth represented mostly smaller models such as the Honda CR-V.
"SUVs are a strong segment," Zeng said. "Hummer has a good brand image. If they can launch the right product, they might succeed."
The thought of having to share space with the four-door behemoths on Beijing's notoriously congested streets worries Wang Tao, a cabdriver.
"I wouldn't want to be close to them on the road," he said. "They are huge and not afraid of being scratched."
--
david.pierson@latimes.com
Times staff writer Ken Bensinger in Los Angeles and Nicole Liu and Joshua Frank in the Times' Beijing bureau contributed to this report.
