Chinese automakers Dongfeng Automobile and Changan Automobile announced on Sunday night restructuring plans of their controlling shareholders, both of which are centrally administered state-owned enterprises (SOEs).
Dongfeng Automobile said in a filing that its indirect controlling shareholder Dongfeng Motor Corp is planning a restructuring with other central SOEs, which could result in a change in its indirect controlling shareholder, without affecting its actual controller.
The restructuring arrangement is subject to procedures and approval by the relevant authorities, it said, adding that the restructuring will not have a significant impact on the company's normal production and operations.
On the same day, Changan Automobile released a similar announcement regarding its indirect controlling shareholder China South Industries Group Corp's restructuring plan.
As of press time on Monday, shares of Dongfeng Automobile surged to the daily limit. Meanwhile, shares in Changan Automobile had climbed 4.73 percent, according to Chinese financial data provider Tonghuashun.
"This move is seen as a key step in deepening state-owned enterprise reform and accelerating resource integration in China's automotive industry," Zhang Xiang, secretary-general of the International Intelligent Vehicle Engineering Association, told the Global Times on Monday.
Changan Automobile has 12 global manufacturing bases and a cumulative sales volume of 25 million vehicles under its own brand, while Dongfeng Motor has an annual sales volume of more than 2.4 million vehicles with an asset scale of more than 500 billion yuan ($68.4 billion), chinanews.com reported on Monday.
The automobile market is undergoing the transformation of new energy and intelligence, and pressure on traditional carmakers is increasing. Integrating the resources of centrally administered auto enterprises can optimize the layout of the industrial chain, form scale effects and reduce research and development and production costs, Zhang said.
Although the two automakers did not reveal further details, Reuters reported on Monday that the restructuring statements triggered speculation on Chinese social media that the two companies may be merged.
In 2024, the total sales of Dongfeng Motor and Changan Automobile are expected to exceed 5.16 million vehicles, exceeding BYD's 4.272 million, SAIC Group's 4.013 million and China FAW's 3.2 million, according to China Business Journal on Monday.
Currently, the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council directly supervises three centrally administered automotive enterprises: FAW Group, Dongfeng Motor Corp and Changan Automobile, China Media Group (CMG) reported on Monday.
In the past two years, the three automotive enterprises have accelerated their transition to new energy, investing nearly 36 billion yuan in new-energy vehicles (NEVs) in 2023, with the investment proportion exceeding 60 percent, according to the CMG report.
Since 2024, the SASAC has frequently signaled its intent to accelerate the development of NEVs, offering support in areas such as assessment, innovation and industry integration, the CMG reported.
Zhang Yuzhuo, chairman of the SASAC, said in March 2024 on the sidelines of the "two sessions" that the commission would adjust policies to conduct separate assessments of the NEV operations of the three state-owned automakers. The assessment criteria would include technology, market share and the future development of the enterprises, according to caixin.com.
Gou Ping, a vice chairman of the commission, said that the SASAC will encourage and support central SOEs to carry out high-quality investment and mergers and acquisitions, as well as specialized integration, in order to strengthen control over core industrial resources and key technologies.
Faced with changes in the global economic structure and the demand for domestic industrial upgrading, more central SOEs may join the restructuring, in order to enhance their market competitiveness and innovation capabilities through resource integration and complementary advantages, ultimately achieving higher-quality development, Zhang, the expert, said.