Update

[HummerMann]

Will this saga ever end?

Hummer's future in doubt, again
Posted Jun 29 2009, 01:15 PM by Kim Peterson

Filed under: GM, Kim Peterson, China

General Motors (GMGMQ) tried for months to sell its Hummer brand, but massive gas guzzlers aren't that attractive anymore. So imagine the company's relief when a Chinese firm said it wanted to buy Hummer, which is known as "Hon Ma," or Bold Horse, in China.

But now it looks like the Bold Horse is staying in the stable. The Chinese government will probably quash the bid because the Hummer conflicts with environmental conservation goals, according to The Associated Press.

It's unclear whether the interested company, Sichuan Tengzhong Heavy Industrial Machinery Corp., can overcome the government opposition. The company is privately owned, the AP reports, so it isn't subject to the heavy regulations that state-owned firms are. But the government can still stop foreign acquisitions.

GM is desperate to offload Hummer, though, and a company spokesman said Monday it will try to get the green light for the sale by the end of September.

Sichuan Tengzhong has no experience in the car industry, which reportedly is another reason the Chinese government is concerned. If GM couldn't make Hummer work, how will a small firm with no expertise?

[sleeve]

Chinese National Radio recently reported that Tengzhong wouldn't be allowed to purchase Hummer due to environmental concerns. The company released a statement after that news broke saying that while there was no "definitive agreement," the CNR report wasn't based on facts from the government regulatory body in question, and Tengzhong is still working on the deal.

Last week, in a report titled "Tengzhong may get green light from the regulators for its acquisition of Hummer," CNR's take on where things appears to back up Tengzhong's view that the game is not yet played. The company's discussions with the National Development and Reform Commission (NDRC) and the Ministry of Commerce -- it needs approval from both parties -- have begun, and three options for concluding a deal were proposed.

If Tengzhong can convince the authorities of its expertise and business blan, and gets approval from both parties, it wants to set Hummer up in Sichuan province. If there is resistance to setting Hummer up directly, Tengzhong could try to base the company in one of China's ten bonded areas -- harbor points where the vehicles aren't officially "in" the country until taxes and fees are paid -- but this could impact the company's ability to sell Hummers in China. Or, the company could simply become a foreign investor in Hummer.

It isn't clear whether those options are Tengzhong's take on the purchase, or if that was just more speculation from CNR. Hummer had no comment on the matte