BUSINESS - End of an Era, Gas-Guzzling Hummers

"GM says it will stop making Hummers" by DAN STRUMPF, AP

General Motors said Wednesday that it will shut down Hummer after its bid to sell the brand to a Chinese company collapsed.

Heavy equipment maker Sichuan Tengzhong Heavy Industrial Machines Co. pulled out of the deal for Hummer, known for its hulking, military-style SUVs, because it was unable to get clearance from Chinese regulators within the proposed deal timeframe, the manufacturer said in a separate statement.

GM said it will continue to honor existing Hummer warranties.

"We are disappointed that the deal with Tengzhong could not be completed," said John Smith, GM vice president of corporate planning and alliances. "GM will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner."

GM has been trying to sell the money-losing brand for the last year and found a suitor in Tengzhong, but resistance from Chinese regulators created difficulties from the start.

As recently as Tuesday, private investors were trying to set up an offshore entity in a last-minute effort to complete the acquisition before a Feb. 28 deadline. That plan, along with other options, was unsuccessful, according to a person close to the situation. The person declined to be identified to speak more freely.

"There's no way forward with that," the person said. "We're out of time."

One Tarrant County dealer, Will Churchill of Frank Kent Motor Co. in Fort Worth, remains optimistic that Hummer has a future.

"Hummer is a pop icon," Churchill said. "I have no doubt in mind that somebody will step up and buy it. It's a fire sale on an iconic name."

Churchill said his dealership sold three Hummers this month and has several in stock and more on the way.

Tom Durant, owner of Classic Hummer in Grapevine, isn't counting on a reprieve.

"I kind of figured this would turn out like Saturn," Durant said, referring to the auto brand that GM tried to sell and eventually shut down.

Most Hummers now being sold are the smaller H3 models built on the same platform and at the same Shreveport plant as GM's smaller pickups. The larger H2 is built with many of the same components and is roughly the size of GM's full-size pickups and SUVs.

If Hummer is closed, it will "make the ones we've got more valuable," said Durant, who has about 40 on his lot.

All Hummer dealers had to invest in new showrooms and service facilities, spending $3 million to $5 million each. Durant said GM may give dealers some compensation, "but it won't pay for what we've spent."

Hummer traces its origins to the Humvee military vehicle built by AM General LLC. It acquired a devoted following among SUV lovers who were drawn to the off-road-ready vehicles.

But the vehicles also drew scorn from environmentalists, and sales never recovered after gasoline prices spiked above $4 a gallon in the summer of 2008. The H3, the most fuel-efficient in Hummer's lineup, averages about 16 miles per gallon. GM sold just over 9,000 Hummers in 2009, down two-thirds from 27,000 the year before.

GM sold Swedish brand Saab to Dutch carmaker Spyker Cars NV this year. Pontiac is being discontinued. GM is focusing its efforts on its four remaining brands: Chevrolet, GMC, Cadillac and Buick.