Wednesday June 3, 02:24 PM
China to play major role in Hummer future: buyer
SHANGHAI (AFP) - The Chinese firm planning to buy the Hummer brand from struggling US auto giant General Motors (NYSE: GM - news) said Wednesday the market in China is likely to play an important role in its global strategy.
General Motors announced Tuesday it had reached a tentative deal to sell the brand to privately held Sichuan Tengzhong Heavy Industrial Machinery Co, a day after filing for bankruptcy.
"The company's strategy is to bring the Hummer brand global and that should certainly include the Chinese market," an official with the public relations agency of Tengzhong told AFP. The agency asked not to be identified.
"It's not just a China-centred goal," the official said when asked if production of the gas-guzzling sports utility vehicle will be transferred to China.
Tengzhong said in a joint statement with General Motors on Tuesday that it will retain Hummer's senior management and operational team, while the sale could save 3,000 jobs in the United States.
"The team intends to expand Hummer's dealer network worldwide, particularly into new and under-served markets such as China," it said.
Tengzhong, based in Chengdu city in southwestern Sichuan province, manufactures heavy machinery equipment for use in road and bridge construction, and in the energy industry.
The company, mainly operating in China, currently has no overseas plants and exports only accounted for a small portion of its revenue, according to the official, who declined to provide more details.
Analysts said the niche brand is likely to appeal to a growing group of newly rich Chinese who are interested in upscale SUVs with heavy-duty capabilities.
"In urban China, the market share of vehicles with sporty looks, which had been rare in the country, is rising rapidly over recent years," said Ricon Xia, a Shanghai-based analyst with Daiwa Institute of Research.
"Hummer will belong to the luxury segment of China's auto market. It features a military style that the existing SUVs in China do not have. Some high-income individuals who want cross-country ability will just like it."
Vehicle sales in China, which overtook the United States as the world's biggest auto market, hit a monthly record of 1.15 million units in April as Beijing's policy incentives continue to boost demand.
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