Could Chinese automakers Dongfeng and Changhan merge?
The two state-owned carmakers both said they are talking to other state-owned enterprises without naming the other directly. The intention to merge has thus not been confirmed. They did, however, emphasise that the reorganisation would not lead to a change in corporate ownership, though some controlling shareholders could change.
The announcements have led some to speculate that a merger is on the horizon because it would align with plans announced by the Chinese Assets Supervision and Administration Commission of the State Council (SASAC) in 2024. The latter is the government-run controller and biggest shareholder in both companies. Last year, the SASAC said it wanted to optimise state-owned entities and reduce internal competition. Instead, the goal was to focus on specific sectors, i.e. the automotive industry.
If the two companies merge, they would become the world’s fifth-largest auto group, with sales of up to 4.5 million vehicles per year across all drivetrains. They would thus overtake BYD.
Nevertheless, Chinese media outlets point out that a merger is not an easy deal, as the ownership structure for both companies is very different. Dongfeng is an independent state-owned enterprise, while Changhan is owned by CSGC, which also produces munition and electronics. It is also not clear whether a merger could sabotage the automakers’ respective product lineups, as they are very similar.
Because of their similar portfolio, Car News China suggests that Dongfeng and Changhan could thus opt for an “alliance model,” meaning a strategic cooperation in areas such as research and development, supply chains and international expansion. However, as mentioned above, there is no confirmation from either automaker at this point.
Both companies operate several sub-brands and joint ventures with Western automakers. In the case of Dongfeng, the most prominent subbrand may be Voyah. The latter sold 85,697 new energy vehicles (NEVs) in China last year – but clearly missed its target of 100,000 units. Changhan owns the subbrands Deepal and Avatr, the latter together with CATL and Huawei. The former launched its Deepal S05 electric SUV last year, while Avatr unveiled its Avatr 06 mid-size sedan.
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