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August 25, 2009

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Home » Business » Auto

Tengzhong waits for nod on Hummer

SICHUAN Tengzhong Heavy Industrial Machinery Co is still waiting for government approval for its proposed purchase of General Motors' Hummer sport-utility vehicle business after a media report said it has won the green light for the deal.

The Ministry of Commerce is demanding that the Sichuan-based specialty car maker offer details on the purchase plan before it makes its decision, Xinhua news agency said yesterday, citing an official from the ministry.

"We have received Tengzhong's application to buy the Hummer brand, but it didn't specify if it intends to also buy Hummer's patent for its technologies," the official said.

The government response came after a media report yesterday said the ministry has approved Tengzhong's plan during an internal meeting last week because the acquisition only involved purchasing the brand.

Tengzhong, a relatively unknown firm, beat its competitors and signed a memorandum of understanding in early June with United States-based GM to take over the money-losing Hummer unit.

The preliminary deal allows Tengzhong to keep the management and operations team along with the Hummer brand. The Chinese buyer will also assume Hummer's dealership network in the US.

But industry analysts said the deal is likely to face official obstacles on concerns that buying the gas-guzzling Hummer SUVs conflicts with China's promotion of energy efficient vehicles and also that Tengzhong lacks experience in managing an international brand.

Xinhua said Tengzhong did not specify in its application to the National Development and Reform Commission that it would produce Hummers in China, or acquire Hummer's assets or stake in parent company GM.

A Tengzhong spokeswoman yesterday declined to comment on the report.

Bloomberg News yesterday said Tengzhong executives may arrive in Detroit this week for detailed talks and a deal is likely to be sealed.


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