China’s government, which is focused on cutting down the breadth of its auto industry by focusing on fuel efficient vehicles, is apparently unlikely to approve the sale of General Motors’ Hummer unit to Sichuan Tengzhong Heavy Industrial Machinery, according to reports out of the Asian nation.
With more than 100 automakers operating in China – comparable to the young industry in the U.S. about 100 years ago – the government says it needs to reduce the number of players to ease up on competition. For relative unknown Sichuan Tengzhong to buy Hummer from GM, as the Detroit-based automaker says is the plan, it will require convincing China’s Commerce Ministry that the country needs another automaker.
“It is a business decision,†Chen Rongkai, a media officer at China’s Ministry of Commerce, told Bloomberg. He declined to comment further, however.
Tengzhong has to convince at least two Chinese government agencies that it can turn Hummer around, leading analysts to suggest that the chances of the deal going through are slim.
“A new entrant in the car industry is not something they’re looking to see,†said Chip Chaikin, managing director of Shanghai-based Blue Point Capital Partners Asia. “It’s pretty unlikely.”
