FAW Group is moving to acquire a stake in GAC Group, prompting a trading suspension for GAC shares. The initiative, supported by regulatory authorities, aims to establish a joint-venture relationship between the two state-owned automotive giants through asset allocation.
The automotive sector faces significant pressure, with domestic sales dropping 20% year-on-year in the first half of 2026. GAC Group reported a net loss of ¥4.47 billion, or $600 million, in the first half of 2026, marking a 75.98% increase in losses compared to the previous year.
GAC Group saw its 2025 sales fall to 1.72 million vehicles, a 14.06% decline. Revenue dropped 10.43% to ¥95.7 billion, resulting in a net loss of ¥8.78 billion. Meanwhile, FAW Group's production decreased to 3.31 million vehicles in 2025, with NEVs representing 13.5% of output.
This consolidation follows government directives, including a March 2025 call from SASAC for restructuring to improve efficiency. On September 11, 2026, nine government departments released a plan emphasizing the necessity of mergers and cross-regional integration for the industry.
The integration process remains complex due to negotiations between local governments and central regulators. Previous attempts to merge other major manufacturers, such as Dongfeng and Changan, were unsuccessful, highlighting the challenges of such large-scale corporate restructuring.
