GAC to Acquire 50% Stake in FAW Toyota as China's Auto Industry Consolidates

By Jiahui Huang

China's Guangzhou Automobile Group said it would acquire a 50% stake in FAW Toyota from FAW Group, in a deal where FAW would become GAC's second-largest shareholder as automakers look to collaborate amid intense competition at home.

GAC said in a statement late Monday that it signed an agreement with FAW to buy its 50% stake in FAW Toyota. Toyota Motor and its Chinese subsidiary Toyota Motor (China) Investment hold the rest of the joint venture.

As part of the deal, GAC will issue new A shares to FAW at 5.75 yuan each, equivalent to 86 U.S. cents, subject to adjustment and regulatory approval. Following the deal, FAW will become GAC's second-largest shareholder, though the deal won't change GAC's actual controller, the company said.

GAC also plans to raise additional funds through a private placement of A shares to no more than 35 investors.

"The restructuring could deliver a tangible earnings stream through FAW Toyota and establishing a broader central-local state-owned enterprises alliance rather than a one-off asset transfer," Jefferies analysts wrote in a note.

The deal comes as Chinese automakers have been facing increasingly intense competition and overcapacity amid slowing demand in the domestic market. The auto industry has started to turn to consolidation and restructuring to reduce duplication and better use their resources.

Earlier this week, Geely and NIO announced a partnership on battery-swapping technology.

"After years of fierce competition in China's auto market, we are finally seeing a potential trend of cooperation and resource sharing in the market, which we consider a good signal as it may improve the entire market's operating efficiency while creating win-win opportunities for all participants," Nomura analysts said in a note.

Earlier this month, Chinese government agencies unveiled a five-year plan to overhaul the country's auto industry, pushing for reining in capacity expansion, tighter standards for new entrants, and more support for industry consolidation.

GAC's A shares, which were suspended from trading on Sept. 14, resumed trading in Shanghai on Tuesday and closed 10% higher at 5.60 yuan.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

September 29, 2026 04:39 ET (08:39 GMT)