GAC Group has confirmed it is in talks to buy part of a vehicle joint venture held by China FAW Group, a deal that would make FAW its second-largest strategic shareholder, according to Chinese automotive outlet Gasgoo.
On the evening of September 14, GAC (601238.SH, 02238.HK) announced it had signed a letter of intent with FAW to acquire, via a share issuance, part of the equity in a vehicle joint venture owned by FAW, while also raising supporting funds. The company's A-shares have been suspended from trading since September 14 and are expected to remain halted for no more than 10 trading days, with Hong Kong shares suspended in tandem.
The announcement said the target asset involves an overseas-listed company, so its specific name is being withheld for now and will be disclosed in a restructuring plan later. GAC stressed that the letter of intent is preliminary, that no formal transaction documents have been signed, and that the deal still requires internal corporate approvals and regulatory review, meaning its completion is far from certain.
Consolidation among state-owned giants
The move is the latest sign of resource consolidation among China's centrally and locally owned state auto groups. Market speculation had already circulated about a possible "cross-shareholding" arrangement between FAW and GAC, and the new policy direction in China's 15th Five-Year Plan explicitly encourages mergers and restructuring among automakers. The signing of the letter of intent has drawn attention to how state-owned auto groups may further integrate.
Industry sources cited by Gasgoo suggest the foreign partner in the joint venture involved is likely Toyota, which operates two separate ventures with FAW and GAC - FAW Toyota and GAC Toyota. If confirmed, the deal would give GAC a stake in a Toyota-linked venture while FAW gains a strategic position in GAC.
GAC, headquartered in Guangzhou, is one of China's largest state-owned automakers, with joint ventures including GAC Toyota and GAC Honda, as well as its own brands such as Aion, which sells BEVs (battery-electric vehicles). FAW, based in Changchun, is a major central state-owned enterprise whose ventures include FAW Toyota and FAW-Volkswagen.
What happens next
During the suspension, GAC said it will advance intermediary work and apply to resume trading after its board reviews the restructuring plan. The company warned investors to be mindful of investment risks given the uncertainty.
The deal, if completed, would reshape the shareholding structure of two of China's most prominent state-owned auto groups and could set a precedent for further consolidation in the sector. Analysts will be watching for the identity of the joint venture and the terms of the share issuance, which are expected to be revealed in the restructuring plan.
