FAW lines up stake in GAC as Beijing kicks off state-owned carmaker consolidation

GAC Group halted trading in its Shanghai-listed shares on Monday as reports emerged that FAW Group is preparing to take a stake in the Guangzhou-based automaker. Caixin, citing two people familiar with the situation, says the plan was initiated by regulators and could see FAW obtain equity through an asset allocation, effectively tying the two state-owned groups together in a joint-venture-style structure. Neither company has confirmed any details, and the eventual shareholding split remains unsettled.

The timing reflects how much pressure both groups are under. Domestic car sales in China fell 20 percent year on year in the first half of 2026. GAC sold 1.72 million vehicles in 2025, down 14.06 percent, while revenue slid 10.43 percent to 95.7 billion yuan and the group posted a net loss attributable to shareholders of 8.78 billion yuan; its first-half 2026 loss widened 75.98 percent year on year to 4.47 billion yuan. FAW, meanwhile, saw output drop to 3.31 million vehicles last year from 3.73 million in 2020, with NEVs making up just 13.5 percent of the total, and it struck a strategic investment deal with Leapmotor in late 2025.

Official backing for consolidation is explicit. SASAC called in March 2025 for central state-owned automakers to pursue strategic restructuring, and on September 11 this year nine departments led by the Ministry of Industry and Information Technology issued a five-year plan for the intelligent connected NEV sector that encourages legally grounded mergers, acquisitions, and cross-regional integration.

Analysts point to clear complementarities. FAW Jiefang's strength in commercial vehicles could shore up GAC's offering there, and with Toyota's China sales down 19 percent over the first eight months of 2026, the two groups' parallel Japanese joint ventures are candidates for capacity consolidation. But the path is risky: cross-regional restructuring demands painstaking negotiation among local governments, central regulators, and the companies, and an earlier attempt to merge Dongfeng and Changan ultimately fell apart.