FAW Group has taken a stake in GAC Group, becoming the latter's second-largest shareholder, according to an announcement on September 14 that sent GAC's shares soaring before trading was suspended. The deal, reported by Chinese outlet Huxiu, is being read as a precursor to closer cooperation between the two automakers' respective Toyota joint ventures, often referred to as "north and south Toyota."
The equity move comes as China's state-owned automakers accelerate restructuring amid intensifying competition in the electric-vehicle market. FAW, based in Changchun, and GAC, headquartered in Guangzhou, both operate joint ventures with Toyota—FAW Toyota and GAC Toyota—which have long competed for sales in China. The announcement did not detail the exact shareholding or financial terms, but industry speculation has centered on a possible merger or deeper collaboration between the two Toyota ventures, following the precedent set by Mazda's two Chinese ventures combining in 2021.
Shifting fortunes at the Toyota ventures
The sales balance between the two Toyota ventures has flipped repeatedly in recent years. In 2023, GAC Toyota led FAW Toyota by about 100,000 units, but FAW Toyota regained the lead in 2024 through aggressive price cuts, holding a roughly 30,000-unit advantage into 2025. That trend reversed again in the first half of 2026, with FAW Toyota sales falling 27.4% year on year to 233,700 units, while GAC Toyota rose 3.29% to 356,000 units, according to Huxiu.
The divergence is starkest in electric vehicles. FAW Toyota sold just 11,500 battery-electric vehicles (BEVs) in the first half of 2026, a fraction of what even struggling startups manage. GAC Toyota's bZ series, by contrast, accounted for over 15% of its sales, with the bZ3X alone moving about 46,000 units in six months. Yet GAC Group posted a net loss of 4.467 billion yuan (about $629 million) in the first half, despite revenue growing 9.13%, underscoring the difficulty of making money on EVs—GAC Toyota's per-vehicle profit fell to about 4,000 yuan (about $563), versus 9,100 yuan (about $1,282) for FAW Toyota.
The logic of the FAW-GAC tie-up extends beyond Toyota. FAW has been on a buying spree to acquire EV technology, investing 3.6 billion yuan (about $507 million) in autonomous-driving firm Zhuoyu Technology in November 2025, and 3.7 billion yuan (about $521 million) for a 5% stake in Leapmotor in December 2025. In August, FAW and Leapmotor expanded their cooperation to ten areas including EV manufacturing, intelligent driving, batteries and robotics. GAC brings its own strengths, including its Quark e-motor technology, which has been placed on China's export-restricted technology list, and a range of hybrid and plug-in hybrid (PHEV) systems proven in its Aion, Hyptec and Trumpchi brands.
A new industry giant takes shape
Analysts cited by Huxiu estimate the FAW investment could inject around 20 billion yuan (about $2.82 billion) into GAC, helping it bridge the gap between R&D spending and profitable mass production. The deal also creates a combined entity that would rank as China's largest automaker by sales volume, on par with global groups like Hyundai-Kia or Stellantis.
How the two companies will integrate their Toyota joint ventures remains unclear. A full merger, as with Mazda's ventures, is one possibility, but questions over production capacity allocation and dealer networks would need to be resolved. Cooperation on their own-brand operations may prove smoother, with shared sales channels potentially expanding both companies' reach. The FAW-GAC deal is likely to be the opening move in a broader wave of consolidation among China's state-owned carmakers, following earlier merger talks between Changan and Dongfeng, according to Huxiu.
