GAC Group announced on September 14 that it has signed a letter of intent with China FAW Co., Ltd. to acquire part of the equity in a vehicle joint venture held by FAW through the issuance of new shares, according to Sina Auto. The deal, which would also involve raising matching funds, is expected to constitute a major asset restructuring and a related-party transaction, though it would not change the actual controller of GAC or constitute a backdoor listing.
Share suspension and timeline
GAC's A-shares have been suspended from trading since the market opened on September 14, with the suspension expected to last no more than 10 trading days. The company said the move is part of a broader effort to streamline its business and strengthen its position in China's increasingly competitive electric-vehicle market.
The announcement did not specify which joint venture is involved or the size of the stake. GAC operates several joint ventures with foreign partners, including GAC Toyota and GAC Honda, as well as its own EV brands such as Aion. FAW, one of China's oldest automakers, has its own joint ventures with Volkswagen and Toyota, and produces vehicles under the Hongqi and Bestune brands.
Context and implications
The preliminary agreement comes as Chinese state-owned automakers face pressure to consolidate and adapt to the rapid shift toward battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs). GAC has been investing heavily in its Aion brand, which sells BEVs and range-extender electric vehicles (EREVs), and has also been developing its own autonomous driving technology.
Analysts see the potential deal as part of a wider trend of restructuring among Chinese automakers, who are seeking economies of scale and access to new technology as competition intensifies. The Chinese government has encouraged mergers and acquisitions in the auto sector to reduce overcapacity and boost efficiency.
GAC said the transaction is still in the planning stage and requires further approval from its board and shareholders, as well as regulatory clearance. The company did not provide a timeline for completing the deal beyond the initial suspension period. Investors will be watching for more details when trading resumes.
