Hummer deal may faces hurdles

Analysts are talking about hurdles Tengzhong have to face after it gets the ironic Hummer brand.

A report in China Daily quote Jia Xinguang, an auto analyst based in Beijing, as saying: "Why would this company want to buy Hummer? Most Chinese auto companies don't have anything to gain from a deal like this because they don't have multinational experience."

Analysts are concerned that the Hummer is at odds with Beijing's policies encouraging small cars and new fuel-sipping or alternative-fuel technology, such as electric propulsion. And it also runs against government's intention to accelerate consolidation of the country's highly fragmented auto industry.

However Yang Yi, the chief executive of Tengzhong, is very optimistic. "We believe Hummer has great potential and future," he said. "Plus, we are very confident in the prospect of the auto industry in the global market, including the China market, as well as the development of the SUV market in China."

Mr. Yang noted that despite the financial crisis, sales of SUVs in China are growing rapidly. SUVs are especially popular in mining and farming regions, such as Sichuan.