The maker of Cadillac and Chevrolet is near an agreement to sell its Hummer SUV business to China's Sichuan Tengzhong Heavy Industrial Machinery Co. for a measly $150-million. That is is considerably below the $500 million that GM estimated in its bankruptcy filings.
Battered by fallout from the global market crash, and the unwieldy size of its global networks, General Motors is looking to sell brands to keep it afloat after emerging from bankruptcy. The fact that a Chinese buyer is first in line for the Hummer prize speaks volumes for China now being the engine of world growth; compared with the developed economies of the US, Japan and Europe, it handled the worst financial crisis since the Great Depression with enviable ease.
It comes as no surprise that GM sold a record number of cars in China last month, and that sales for the first nine months of the year rose 55%, to 1.3-million vehicles. Earlier in 2009, China overtook the US as the world’s biggest car market, making it a battleground for vehicle manufacturers who have watched demand in primary European and US markets plunge. GM’s market share is 13% in China, with Volkswagen in top spot, and, together with its Chinese partners sold a total of 181,148 vehicles in September. First-time buyers in China’s smaller cities were the driving force behind this surge in sales, and China has also helped car sales by cutting taxes and subsidising drivers to shift to greener, more fuel-efficient cars..
In another sign of the desperate straits that GM has found itself in, the man who headed up Cadillac’s revival as a luxury brand is leaving the company. GM said in a statement that it is taking aggressive actions and moving quickly to transform its culture into one that is truly customer focused. The parting of ways with Mark R. LaNeve, most recently GM’s vice president of sales in the US, shows just how aggressive GM thinks it needs to be. Tough times indeed.