Tengzhong will assume Hummer's dealer agreements and a senior management team, the companies said. GM and Tengzhong also plan to form a long-term contract assembly and supply agreement. Hummer is worth an estimated US$500 million (HK$3.9 billion), GM said in bankruptcy court documents.

Selling Hummer will secure more than 3,000 US jobs, and help GM move toward a goal of offloading four US brands to exit bankruptcy as a leaner, more profitable company.

ADVERTISEMENT

The deal may also help Tengzhong grow in China's SUV market, which surged 25 percent last year on rising affluence. "There are a lot of new rich in China who like niche brands such as Hummer," said Ricon Xia, a Daiwa Institute of Research (HK) analyst in Shanghai.

Detroit-based GM has won court approval to sell assets as soon as next month after collapsing under US$172.8 billion in debt, and failing to adapt to consumer demands for cars that use less fuel. GM also plans to sell Saturn and Saab, and wind down the Pontiac line.

Tengzhong is a privately owned maker of special-use vehicles, structural components for highways and bridges, and construction machinery.

Buying Hummer will add a brand with cachet it can use to expand in emerging markets, said Desmond Wong, chief executive officer of Chicago-based Sino Strategies Group.

BLOOMBERG