BUSINESS

Automaker FAW to Take Stake in GAC in Government Consolidation Push

Published: Sep. 14, 2026 3:28 p.m. GMT+8

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China FAW Group Co. Ltd. is planning to acquire a stake in Guangzhou Automobile Group Co. Ltd. (GAC) as part of a government-backed push to consolidate the country’s underperforming state-owned carmakers as competition in the world’s largest auto market heats up, two sources familiar with the matter said.

The potential tie-up highlights a renewed effort by the Chinese government to merge underperforming state-owned automakers, aiming to reduce excess capacity and create stronger national champions amid a grueling domestic market slump.

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FAW Group plans to acquire a stake in GAC under government-backed consolidation of state-owned automakers.
GAC swung to an 8.8 billion yuan net loss in 2025; losses widened 76% in H1 2026.
Proposed tie-up would fill FAW's mid-to-low-tier market gap and boost GAC's commercial vehicle operations.

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Who’s Who

China FAW Group Co. Ltd.: China FAW Group Co. Ltd., a state-owned automaker based in Changchun, Jilin, is planning to acquire a stake in GAC under a government-backed consolidation push. Its production fell to 3.3 million cars in 2025 (NEV 13.5%). Owning Hongqi and FAW Jiefang, it lacks mid-to-low-tier passenger presence and recently invested in Leapmotor.

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What Happened When

2025：: A senior local government official with a background at FAW brokered discussions between FAW and GAC as FAW sought to expand beyond Northeast China.

2025：: GAC swung to a net loss of 8.8 billion yuan ($1.3 billion) with revenue falling 10.4% year-on-year to 95.7 billion yuan; sales volume dropped 14.1% to 1.7 million vehicles; core vehicle manufacturing gross margin fell to negative 7.35%.

March 2025：: The State-owned Assets Supervision and Administration Commission proposed the strategic restructuring of state-owned automakers.

June 2025：: A document released by Changchun's industry and information technology bureau noted FAW's vehicle production fell from 3.7 million cars in 2020 to 3.3 million cars in 2025, with new-energy vehicles making up only 13.5% of output.

Late 2025：: FAW signed an agreement to take a stake in electric vehicle startup Zhejiang Leapmotor Technology Co. Ltd.

First half of 2026：: GAC's net loss widened 76% year-on-year to 4.5 billion yuan.

First eight months of 2026：: Toyota's China sales fell 19% year-on-year.

As of September 2026：: The Ministry of Industry and Information Technology and eight other government departments issued the 15th Five-Year Plan for the Intelligent Connected New-Energy Vehicle Industry, encouraging mergers, acquisitions, and cross-regional integration.

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