Tengzhong, a little-known Chinese machinery maker that has agreed to buy GM's Hummer brand, aims to close the deal by early 2010 and has begun to seek regulatory approval for the purchase.

Sichuan Tengzhong Heavy Industrial Machinery's lack of experience in the auto industry had stirred doubts over the deal, while state media said the Chinese government could harbor objections to taking over a gaz-guzzling SUV brand.

Tengzhong, which first announced its intent to buy Hummer in June, has been in touch with the Chinese government after signing the landmark deal to acquire the brand last week, a spokeswoman from Tengzhong said on Monday.

We have started communicating with the relevant regulatory bodies and will continue to support the application process in accordance with the requirements, she said, adding Tengzhong hoped to close the deal late this year or early 2010.

The purchase agreement with General Motors Co, signed on Friday, underscores the fast rise and global ambitions of the Chinese auto industry, populated by a wide range of fast-growing, aggressive car makers such as Geely Automobile <0175.HK>, SAIC Motor Corp <600104.SS> and BYD <1211.HK>.

A source close to Tengzhong previously told Reuters the Hummer business would be sold for about $150 million, far less than GM's earlier estimate that the brand could fetch more than $500 million. Tengzhong will gain a globally known brand, intellectual property, a trademark and manufacturing expertise with the deal.

The Tengzhong spokeswoman did not specify which government bodies Tengzhong had contacted for approval of the deal.

China's Ministry of Commerce has authority over the deal while the National Development and Reform Commission would have to approve any new major investment in the country, such as building a new manufacturing base.

Tengzhong also needs to get vehicle-production license from the Ministry of Industry and Information Technology.

A spokesman from the Ministry of Commerce said the ministry had yet to receive an application for the deal.

The Tengzhong spokeswoman said the company would explore opportunities to set up a Hummer manufacturing base in China targeting the Chinese market.

The deal must also be approved by U.S. regulators.


Initial sentiment toward the sale was negative in China, with many questioning why a Chinese firm with no experience running a major Western brand would want to buy a struggling name known for its large gas-guzzling vehicles.

But the mood has turned more neutral since then, with regulators saying such purchases should be allowed when they make commercial sense.

Still the lack of details could prove a troubling sign for the deal and its future down the road, said John Zeng, an analyst with consulting firm IHT Global Insights.

All we know is that it owns the Hummer brand and the right to use the technologies, and that by itself does not sound like a good deal as some of the existing models like H2 model is a gas guzzler that is going downhill, he said.

The deal marks the first time that Chinese investors have stepped in as major buyers into the distressed U.S. auto industry, and comes after China surpassed the United States to become the world's largest auto market.

Under the deal, Lumena Resources Corp <0067.HK> Chairman Suolang Duoji would hold 20 percent of the investment vehicle buying Hummer. Tengzhong would hold the remaining 80 percent.

Analysts have said the new Hummer -- which will be headed by GM executive Jim Taylor -- will face a difficult task of revamping a macho brand associated with the excess of the past economic boom in the United States.

Provisions of the deal also preserve about 3,000 U.S. manufacturing jobs until at least the middle of 2011.

Hummer has its origins in a multipurpose vehicle known as the Humvee that was used by the U.S. military. GM bought the brand in 1999 and its sales peaked in 2006, but they have been hit hard since then by a slumping U.S. economy and higher gas prices.

Through September, its U.S. sales were down 64 percent this year.

(Editing by Edmund Klamann and Valerie Lee)