If the proposed merger between Dongfeng and Changan succeeds, the new entity created from these two companies would surpass BYD to become the largest automotive manufacturer in China.
The Chinese automotive industry, with hundreds of big and small brands vying for market share, is undergoing a significant restructuring. The country’s government aims to consolidate state-owned automakers to streamline operations, reduce redundancy, and enhance competitiveness, especially in the rapidly growing electric vehicle segment.
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According to Nikkei Asia, the State-owned Assets Supervision and Administration Commission (SASAC) – the body overseeing approximately 100 state-owned enterprises – is driving this initiative. Automotive giants such as Chongqing Changan Automobile, Dongfeng Motor Corp, and China FAW Group are within their purview. At a recent event in Beijing, the Vice Chairman of SASAC urged automakers to adjust their operations, share research and production resources, and collaborate to counter the pressure from agile private sector competitors.
Dongfeng and Changan have been in negotiations regarding a potential merger since February, as reported by the South China Morning Post. Should this merger materialize, the new entity could surpass BYD, currently China’s leading electric vehicle manufacturer, and become the largest producer of electric vehicles in the country. In 2024, Changan sold 2.68 million vehicles, while Dongfeng sold 2.48 million. However, both companies lag behind BYD in the electric vehicle segment and have fallen short of their sales targets.
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Mr. Ivan Li, a fund manager at Loyal Wealth Management, commented, “The announcements from the two companies seem to indicate a potential merger of their state-owned parents, although they did not make a clear statement on this matter. The Chinese government may view the consolidation as a way to reduce internal competition and better position the industry for long-term success.”
Meanwhile, an analyst from Morgan Stanley added, “If realized, the restructuring would be a significant step towards industry consolidation and would be of great importance to China’s automotive industry in the long run.”
Currently, both Changan and Dongfeng have joint ventures with foreign automakers. Dongfeng has partnerships with Nissan, Honda, Peugeot, and Citroen, while Changan collaborates with Ford and Mazda. These alliances could complicate potential mergers but also underscore the strategic value of both companies in the global market.
Thai Son (Tuoitrethudo)
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