Two of China's biggest foreign auto brands are restructuring their joint-venture operations in the same week, signalling the end of a two-decade-old "twin-car" strategy that once powered their growth in the world's largest car market.
On 14 September, GAC Group announced plans to issue A-shares to buy part of the equity that FAW holds in a joint-venture carmaker, widely believed to be FAW Toyota. After the deal, FAW would become GAC's second-largest shareholder, and GAC's A-shares were suspended from trading for up to 10 days, according to the announcement. Around the same time, reports said Audi China is redrawing the business boundaries of its two ventures: all four-ring-badged Audi models, including petrol cars, imports and PPE-platform electric vehicles, would be consolidated under FAW Audi, while SAIC Audi would focus exclusively on the AUDI letter-brand EVs without the four-ring logo. The plan is "basically settled but details are being worked out," according to the report.
The moves come as both Toyota and Audi face falling sales and internal competition between sister models. Under the twin-car playbook, a foreign brand partnered with two local companies to sell near-identical cars in the same segments through separate dealer networks. Toyota ran the system most successfully: the Corolla and Levin, RAV4 and Wildlander, Camry and Avalon each carved out big market shares, and combined sales of the two Toyota ventures peaked at over 1.7 million units a year. Audi also used the approach to become China's top-selling premium brand for years. Honda was an early beneficiary too, with the Accord and Inspire, CR-V and ZR-V, and Breeze and HR-V covering the 100,000-300,000 yuan (roughly $14,100-42,300) mainstream market; the two Honda ventures hit a record 1.627 million combined sales in 2020.
But the model's premise - a rapidly expanding market - has collapsed. As local EV brands surged and overall growth slowed, the twin-car system turned into internal cannibalisation. Toyota's Corolla and Levin fought each other in the 100,000-yuan bracket, and dealers undercut official prices to meet targets. By the first half of 2026, some trims were selling below comparable fuel cars from Chinese brands, according to the report. Audi's two ventures launched multiple models with overlapping names and price bands, and terminal discounts on some models reached nearly 190,000 yuan ($26,800), eroding the brand's premium image. Honda's twin-car system failed even earlier: in August 2026, Dongfeng Honda's CR-V sold 10,924 units - over 60% of the venture's total - while the similar GAC Honda Breeze managed only about 3,000 units.
Electrification forces consolidation
The restructuring is driven by the efficiency demands of the EV transition. In the fuel-car era, twin-car strategies let brands replicate production quickly using global supply chains. But in the smart-EV era, product cycles have shortened from four-to-five years to one-to-two, and users demand rapid updates in smart cockpits, driver assistance and local services. Running two independent R&D, production and sales systems means double communication and double validation, slowing decision-making. Toyota and Audi have concluded that maintaining two separate systems makes it impossible to keep pace with local brands, the report said.
Toyota's approach is a capital-level share swap. FAW will become GAC's second-largest shareholder, and the two sides plan to create a unified Toyota (China) sales company, with Toyota holding 50%, FAW 25% and GAC 25%. The twin-car lineup will be sharply trimmed, keeping only proven global core models, and no more duplicate launches of the same platform. GAC Toyota's BZ series - which sells under the "Platinum" nameplate and has grown faster than FAW Toyota's EVs - is likely to become the core of Toyota's electrification push in China, according to the report. Toyota's China sales fell 17.1% year-on-year to 694,700 units in the first half of 2026, with FAW Toyota down 27% and GAC Toyota down 6%.
Audi is instead splitting by brand identity. All four-ring models, including PPE-platform EVs, will go to FAW Audi, which will defend the profitable fuel-car base and handle high-end electric launches. SAIC Audi will drop the four-ring badge entirely and focus on the AUDI letter-brand EVs, leveraging SAIC's local EV expertise to build products tailored to Chinese buyers. The split does not change the equity structure of either venture or trigger large asset restructuring, but it cleanly separates responsibilities, ending the internal conflict that has dragged down both brands, the report said. Audi's pure-EV sales in China totalled fewer than 6,000 units in the first seven months of 2026, while McKinsey data cited in the report shows 50% of Chinese consumers in 2026 are unwilling to pay a premium for foreign-brand EVs, and the premium segment's share of the market fell from 13.7% in 2023 to 11.3% in January 2026.
