GM Hummer Division to be Sold to Chinese Defense Contractor?

GM is talks with a Chinese firm to sell off its Humvee division with financing from a private equity firm.

A Chinese company is said to be in advanced talks with General motors over the $100million (£69.4million) takeover of Hummer - the fuel-thirsty, four-wheel-drive vehicle modelled on the US military's Humvee.

News of the unnamed bidder's interest came days after it emerged that another big Western carmaker, Volvo, may be sold to the Chinese.

Ford is in talks to sell Volvo to Chinese tycoon Li Shufu's Geely carmaking business. insiders say a private-equity firm is also involved in the proposed Hummer deal but would not reveal its identity.

The buyer is likely Dongfeng Motor Company, a Chinese defense contractor.

Like car companies globally, Dongefeng is faced with slowing sales, and in the commercial vehicles sector where Dongfeng is concentrated, the story is even worse.

However, its overall vehicle sales fell 19 percent in January to 72,483 units, as sales of commercial vehicles slumped about 60 percent to fewer than 10,000 units, the source added.

Industry analysts blamed Dongfeng's weak commercial vehicle sales, mostly medium to heavy duty trucks, on a slowing economy as well as stricter emission standards imposed in July last year.

Why, then is any Chinese car company in talks to take over Hummer?

Why is DongFeng likely the buyer?

Because of the Dongeng EQ 2050, which looks like this:

That's right, Dongfeng makes Hummer knock offs. And who's buying these knockoffs?

The People's Liberation Army, aka. the Chinese military.

According to Sinodefence.com, the chassis and several parts of the engine come from GM, would the PLA want to rely on foreign companies to supply its potentially main vehicle? Probably not. Im not sure how realiable this information is, seeing as the US and Europe (and most of the capitalist world) has a ban on exporting weapons technology to China for use within weapon systems.

The Dongfeng humvee has a V8 AMG Diesel engine, with 200BHP and a price tag of 250k RMB I’m sure the PLA boys will have a great time playing with this bad boy. The body has only basic protection from small arms fire but looks like it could be upgraded, as could the whole body, to carry missiles, or gun mounts etc. Check out the pictures in the more info section.

Anyway, there are two companies in China that are producing Humvee copies, and both are undergoing road testing with the PLA.

That's right, GM is likely selling its Humvee division complete with the machines needed to produce the engines and chassis to a company that wants to supply the Chinese military with the model. (And it's not just the Chinese military buying them, Dongfeng has been selling military vehicles to the Sudanese government, where they are used in Darfur.)

Did they seriously think that no one would notice?

As easy as it is to scream and yell at GM management about this, the truth is that when a company goes bankrupt they sell assets to people who will buy them. And if that's a Chinese automaker that may or may not be acting as a front for the PLA in order to subvert laws prohibiting the export of military material to China, so be it. That's the way things work when you put making money over the national interest.

And at least in part, blame for this falls on the Congress for keeping Detroit hanging buy a string. And, GM seems to be aware that threatening to go into bankruptcy can compel action.

While filing for bankruptcy may be the best way for GM to cut costs and revitalize, if the company chooses that option it may include politically unpalatable moves to sell off assets and cut more jobs.

Both are unfolding right now.

The UAW just walked out of talks where the company took a hard position on retiree health care. Remember that many, if not most UAW retirees are veterans, so if they lose coverage they're going to be going to the VA to get medical treatment.

And, it's only a matter of time before the buyer of Humvee is revealed. Imagine the public response when we all learn that while Wall Street can't find money to loan to GM to keep the company afloat, they can find funds to ship off dual-use manufacturing assets to China. Where they will likely be used to modernize the Chinese military at a time when stoking nationalism is a powerful way for the CCP to redirect anger generated by the economic collapse unraveling in that country at the United States. Not to mention that ramped up military production puts people to work.

We live in a dangerous world, and in these hard times, our government needs to take steps to ensure that the means to cause us harm do not fall into the hands of nations who bear us ill will.

The easiest means to this end is nationalization, complete with a dedicated fund to take public possession of technology, manufacturing assets, and the firms owning them that may be of military use to hostile states. And in the case of the auto industry, the most feasible means to accomplish this is the outright nationalization of the US auto industry.

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Comments

might forward your post link to Lou Dobbs

This is the kind of story that goes right across party lines....it hits national security as well as labor issues and will assuredly generate outrage across the political spectrum.

Reading this, I'm starting to think you are right and ya know, how could the UAW do worse in terms of corporate executive management than these guys? I know they are labor only but I'm starting to believe they could manage the company so much better.

Maybe turn it into a DARPA/NASA type of organization but with a advanced manufacturing, DoD supplier focus. I have no idea but this story just takes the cake in terms of stupidity. We create the innovation, the technology then....just plain hand it over to the Chinese. This has happened over and over again and not only is it destroying the United States economy and making China the dominant economy, they are putting our national security at complete risk.

No wonder the top spy just said the biggest threat to the United States is economic.

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IF you forward this to Lou

Dobbs they need to get the details of what's being sold.

Right now, AFAIK, GM holds the intellectual property rights for the platform, which is one of the parts that the Chinese have had difficulty making.

For a vehicle like the Hummer, the chassis is important, because you're asking a lot from not that much metal. So there's a lot of engineering involved in it.

I think that in some sense, this deal is GM's way of acting out, given the treatment that they got in DC. It certainly ups the ante for providing more loans, doesn't it?

And at $100 million?

Not to mention that the Chinese have trouble getting their hands on these parts because of the arms embargo.

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I actually hope they sell the Humvee to the Chinese!

Yeah, you read that right, I hope the "Chicoms" get this disaster on wheels. The military is already on the way to replacing the Hummer with at least two vehicles, the Joint-Light Tactical Vehicle (JLTV) and the Mine Resisted Ambush Protected vehicle (MRAP...they seem to not include the "vehicle" part). Now yes, the points made above are good but here's why am for the sale:

1) The Hummer is a money loser for GM, nobody wants it on the consumer side.
The company tried looking for other buyers, so unless the tax payer wants to own the brand and company, let it go. The age of gas guzzlers is over, and unless they can come up with one that is fuel efficient and "cool to buy", it will only hamper it's owners.

2) Security

Now you may think, ok, now the Chinese military will know even more of what it may not of the hummer design. If they're already making knock-offs, then eventually they'll make the perfect copy right down to where a specific bolt would go. Buy purchasing the Hummer, they will replace their cheapo knock off with a genuine design. Sure they may make an alteration here or there, but guess what, we already know where the weak points on that thing is. There's only so many ways to arm and protect that thing, and we already know about it.

This reminds me of when our atomic secrets made it to the Russians. Everyone was worried, and rightly so. But, and forgive me I forgot his name, someone said basically that now we know where the Russian's starting point would be on atomic weapons. The same will be here for the Humvee.

3) Lighting the fire

If RO's article is any indication, then this will open the eyes to what our trading partner/military rival is up to, in the eyes of the public. There will be outcry, and maybe we'll finally get a real look at dual-use technology that we export. You know, as Naomi Klein's book kept reminding us, it takes shock/surprise to get our asses in gear. This will be no different. Either the sale is stopped, or we scream about coming up with some thing better like the JLTV or what have you.

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On the bright side of #2

With vehicles- it can really pay on a conventional battlefield if your enemy is using the same vehicle equipment you are. It means that during and after the battle, there will be a hell of a lot of spare parts lying around to get you out of the danger zone.

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Maximum jobs, not maximum profits.

Hummer Sale

Actually the Hummer is not a big money loser for GM. The profit margin on the larger vehicles is much more than that of a smaller vehicle like the Saturn brand.

As for fuel economy, you may be surprised that they are not the worst vehicles for fuel economy. They can be better than the F250 that we drove before the Hummer.

Finally, the consumer models are not made identical to the military use Hummers. The H1 is not sold to the public unless you happen to find a used model. Even then, it is not the same grade as a military model.

Try driving an H3 or H3T. I did and it is GREAT. I will keep mine as collectibles!

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Hummer

The commercial Hummer and the military Humvee are two different vehicles. The Hummer is built on the Suburban platform. Nothing to worry about regarding military secrets!

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