GAC Group's plan to acquire all of FAW's 50% stake in FAW Toyota is set to reshape how Toyota's two Chinese joint ventures operate, according to Auto Business Review (汽车商业评论). The reorganization will split responsibilities: the former GAC Toyota side will handle research and development and supply chain, while the former FAW Toyota side will manage marketing, channels, and customer operations.
The move ends years of rivalry between the two ventures, which had separate product lines, development teams, and dealer networks. Once the deal closes, GAC will be the Chinese shareholder in both ventures, while FAW will hold a stake in GAC, creating a long-term capital link. The transaction was disclosed on September 28, and GAC's A-shares hit the daily limit up on September 29, closing at 5.60 yuan (about $0.79).
Why GAC Toyota takes R&D
GAC Toyota has built a stronger local development capability in recent years. Its Bozhi 3X, the first model developed under a local chief engineer, achieved 83,025 sales in 2025. The Bozhi 7, co-developed with GAC Group and Toyota's intelligent EV R&D center, incorporates Huawei's cockpit and Momenta's driver assistance systems. GAC Toyota has set up over 500 validation targets for battery safety and performance, showing a closed loop from product definition to engineering.
FAW Toyota, by contrast, excels in traditional sales. It has over 10 million cumulative users, more than 760 dealers, and strong sales of models like the Corolla and RAV4. In August 2026, it sold about 55,000 vehicles, but its bZ electric lineup only managed around 11,500 units in the first half of 2026, versus 51,900 for GAC Toyota's two Bozhi models. The division of labor plays to each side's strengths.
Deeper cooperation between FAW and GAC
Beyond the Toyota ventures, FAW and GAC are exploring broader collaboration. FAW has invested over 3.6 billion yuan (about $507 million) in Zhuoyu, a company spun off from DJI's automotive division, and holds about 35% as its largest shareholder. It also invested about 3.744 billion yuan (about $527 million) in Leapmotor for a 5% stake. FAW's battery platform, China New Energy (中汽新能), sold 2.96 GWh of cells in Q1 2026, up 111% year-on-year, and its lithium-rich manganese solid-liquid battery is already in Hongqi models.
GAC has invested over 67 billion yuan (about $9.44 billion) in R&D, developing its Xingling E/E architecture, Kuake e-motors, and Danxia batteries. Combined sales of FAW and GAC reached about 5 million vehicles in 2025, which could support joint procurement in batteries, chips, and ADAS hardware. However, cooperation will only materialize through concrete projects, not just capital ties.
Overseas expansion is another potential area. FAW has experience in commercial vehicle exports and KD production in Africa and the Middle East, while GAC is building EV production in Southeast Asia. The two could collaborate on certification, local sourcing, and logistics, though such plans remain speculative for now.
FAW Toyota remains profitable, with net profits of about 4.717 billion yuan (about $664 million) in 2024 and 4.234 billion yuan (about $596 million) in 2025, according to GAC's unaudited disclosure. After the deal, GAC will consolidate these earnings as investment income.
