Chinese company wants to buy Hummer brand from GM

DETROIT -- A Chinese manufacturing company is poised to take over General Motors' Hummer brand, the two companies said Tuesday, marking the first foray by a Chinese company into the U.S. auto market.

"We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S.," said Yang Yi, CEO of Tengzhong.

The deal is expected to close in the third quarter of this year; the purchase price was not released Tuesday. GM on Monday filed for bankruptcy-court protection, so the deal will need approval from the bankruptcy court.

While many industry watchers expected a car company to buy Hummer, Asian makers of heavy equipment have a history of breaking into the car business. Mitsubishi and Fuji both made heavy equipment before entering the passenger car market.

The Hummer brand has been a lightning rod for U.S. environmental activists who say the brand shows that GM is out of touch with consumers, who want greener technologies. The brand sold around 5,000 vehicles this year, down 64% from a year ago.

Still, the sturdy and off-road-capable Hummer has the potential to make sense in developing countries that lack good roads, says Jim Hall, managing director of 2953 Analytics. He says the new owner will need to develop a clean diesel engine for Hummer trucks and focus on developing smaller Hummers.

"Hummer is sized wrong for markets outside of the Middle East," Hall says. "And they'll need to find a partner for clean diesels, because GM won't be able to help them with that."