GM may not win China's approval for Hummer deal

General Motors Co failed to win approval from Chinese regulators to sell its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co, said two people briefed on the deal.

A government agency indicated that it won’t provide approval for Chengdu, China-based Tengzhong to purchase the Hummer line of sport-utility vehicles from GM in China, said the people, who asked not to be identified because the decision hasn’t been made public.

A rejection would mark the latest hurdle for Tengzhong as it seeks to tap into China’s expanding market for passenger vehicles. The government is promoting small cars by reducing the sales tax on those with 1.6 litre engines or below, compared with the military-style Hummer that can weigh as much as 7,600 pounds (3,400-kilograms).

“It’s only normal for the Chinese government not to approve the deal,” said Lin Huaibin, a Shanghai-based analyst for IHS Global Insight. “To allow this type of vehicle on a large scale isn’t in line with government policy.”

Reports that China’s government blocked Tengzhong’s bid to buy GM’s Hummer unit are “not accurate”, Wang Chao, assistant commerce minister, said at a briefing in Beijing. China’s Ministry of Commerce has not yet received an application for the acquisition, Wang said.

The commerce ministry vets all overseas investments worth more than $100 million.