Dongfeng and Changan will become China's largest auto group

If the merger of Dongfeng and Changan is successful, the new group created from the two companies will surpass BYD to become the largest automaker in China.

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China’s auto industry, with hundreds of brands competing for market share, is facing a major restructuring. The government wants to consolidate state-owned automakers to streamline operations, reduce redundancy and increase competitiveness, especially in the fast-growing electric vehicle segment.

The State-owned Assets Supervision and Administration Commission (SASAC), which oversees about 100 state-owned enterprises, is pushing ahead with the plan, Nikkei Asia reported, with major players such as Chongqing Changan Automobile, Dongfeng Motor Corp. and China FAW Group all in its crosshairs. At a recent event in Beijing, SASAC vice chairman Zhang Junjie called on automakers to adjust operations and share research and production resources to counter pressure from aggressive private rivals.

Dongfeng and Changan will become China's largest auto group.

Dongfeng and Changan have been negotiating a merger since February, according to the South China Morning Post. If it comes to fruition, the new group could overtake BYD – currently the “king” of electric vehicles in China – to become the largest electric vehicle manufacturer in the market of a billion people . In 2024, Changan will sell 2.68 million vehicles, while Dongfeng will reach 2.48 million. However, both are far behind BYD in the electric vehicle segment and have failed to meet their sales targets.

“The announcements by the two companies seem to point to a possible merger of their state-owned parent companies, although they have not made a clear statement on the matter,” said Ivan Li, a fund manager at Loyal Wealth Management. “The Chinese government may see consolidation as a way to reduce internal competition and better position the industry for long-term success.”

Dongfeng has joint ventures with Nissan, Honda, Peugeot and Citroen, while Changan has partnerships with Ford and Mazda.

Meanwhile, an expert from Morgan Stanley bank said: "If realized, the restructuring will be a major step towards industry consolidation and will be of great significance to China's auto industry in the long term."

Both Changan and Dongfeng currently have joint ventures with foreign automakers. Dongfeng has joint ventures with Nissan, Honda, Peugeot, and Citroen, while Changan has partnerships with Ford and Mazda. These alliances may complicate mergers, but they also highlight the strategic value of both companies in the global market.

Source: https://khoahocdoisong.vn/dongfeng-va-changan-se-thanh-tap-doan-oto-lon-nhat-trung-quoc-post267733.html