GM may have found a buyer for Saturn, but lost one for Hummer
Jun 5th 2009 11:00AM
Updated Dec 4th 2009 1:52PM
Now comes word from China that experts have raised questions about the plans of Sichuan Tengzhong, a little-known private maker of industrial vehicles, to acquire GM's Hummer business. No financial details were released about the sale when it was first announced. Military versions of the Hummer, which are widely used in the conflicts in Iraq and Afghanistan, are excluded from the deal.
Bloomberg News reported that Tengzhong needs to persuade at least two Chinese government agencies that it can turn Hummer into a profitable company to get clearance for the deal, something that appears doubtful. GM has estimated that Hummer is worth about $500 million.
"China is unlikely to approve the Hummer deal, state-owned Shanghai Securities News reported yesterday, without saying where it got the information," Bloomberg reported."The government is encouraging companies to buy overseas partsmakers rather than automakers, added the newspaper, which is affiliated with state-controlled Xinhua News Agency."
Meanwhile, the bankrupt Detroit-based automaker also announced some good news. The Wall Street Journal is reporting that GM has reached a preliminary deal to sell its Saturn distribution network to Penske Automotive Group, the second-largest U.S. dealer network. Cars from other companies, such as Renault SA, will fill out Saturn's lineup, the paper said.
The road to solvency is not going to be easy. GM, once a symbol of American industrial might, accumulated more than $172 billion in debt after failing for decades to meet the changing needs of consumers. For example, as Bloomberg notes, sales for the Hummer H3 dropped 51 percent in 2008 and 67 percent through April.
GM has already gotten more than $23 billion in government assistance. Questions abound about whether Uncle Sam is throwing good money after bad. Though it took decades for GM to run itself into the ground, President Obama wants to see progress sooner rather than later.
Otherwise, the name General Motors will fade into the American subconscious like Eastern Airlines, AMC and Montgomery Ward.