China may block Hummer takeover

China’s national planning agency is likely to reject Sichuan Tengzhong Heavy Industrial Machinery Corporation’s bid to acquire the petrol-guzzling Hummer sports-utility brand from the American carmaker General Motors (GM), the Associated Press reported, citing state radio. The National Development and Reform Commission also is likely to say that Tengzhong lacks the expertise to run Hummer, China National Radio said.


The Hummer is said to conflict with China’s conservation goals. A heavy automobile, based on US military vehicles, it can weigh more than three tonnes and is not fuel-efficient. Soaring petrol prices have eroded its sales in the United States.


Tengzhong, based in Chengdu, emerged as a surprise buyer at the beginning of June after GM sought court protection from its creditors. No bid price was revealed. Analysts in the auto industry questioned how Tengzhong, which makes construction vehicles such as cement mixers and tow trucks, could succeed with Hummer. In China, it is known as “Han Ma” (Bold Horse).


“Some people may have views and speculation but the Chinese government has a process that we respect,” a Tengzhong statement said. “We do not yet have a definitive agreement, but are developing our proposals with GM and Hummer and we will continue to engage with the appropriate authorities in an appropriate manner.”


The Chinese government is seeking to promote conservation and use of more fuel-efficient vehicles. It has reduced sales taxes on cars with smaller engines and is urging automakers to develop electric and other alternative-energy vehicles. While encouraging companies to expand abroad to diversify the Chinese economy, the authorities also have urged caution.


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