China’s FAW Group is moving ahead with plans to acquire a stake in GAC Group, a development that prompted GAC to suspend trading before the market opened. According to two people familiar with the matter cited by Caixin, the effort is being guided by regulatory authorities and could involve FAW obtaining equity through asset allocation. The reported structure remains unsettled, and neither company has disclosed additional details.
The possible transaction comes as China’s auto market faces mounting pressure. Domestic vehicle sales fell 20% year over year in the first half of 2026, adding strain to major state-owned automakers. GAC, headquartered in Guangzhou, reported sales of 1.72 million vehicles in 2025, down 14.06% from the previous year. Revenue declined 10.43% to 95.7 billion yuan, and the company moved from profit to a net loss attributable to shareholders of 8.78 billion yuan. That weakness continued in the first half of 2026, when net losses widened 75.98% year over year to 4.47 billion yuan.
FAW, based in Changchun, has also been working to improve performance and broaden its product mix. The group’s total production fell to 3.31 million vehicles in 2025 from 3.73 million in 2020. New energy vehicles accounted for 13.5% of output last year. In late 2025, FAW signed a strategic investment agreement with Leapmotor as part of its effort to strengthen competitiveness.
The potential combination is consistent with broader policy guidance. In March 2025, the State-owned Assets Supervision and Administration Commission called for strategic restructuring among central state-owned automakers to improve industrial concentration and resource efficiency. On September 11, 2026, nine government departments, including the Ministry of Industry and Information Technology, issued a plan for the development of the intelligent connected new energy vehicle industry that encouraged legal mergers, acquisitions, and cross-regional integration.
Analysts say the two companies may have complementary strengths. FAW Jiefang could add commercial vehicle capabilities to GAC, while their joint ventures with Toyota may offer room to optimize capacity. Toyota’s sales in China fell 19% in the first eight months of 2026. Even so, the path to integration remains complex, particularly because similar merger efforts in the sector have previously failed.
Source: CarNewsChina
