The merger of Dongfeng and Changan will create the largest automaker in China.
Chinese automakers Dongfeng Motor and Chongqing Changan Automobile
are in advance discussions to combine their operations, the New York Times reported on Tuesday, citing people with knowledge of the matter.
The two companies, both controlled by the central government, have conducted detailed discussions on how to merge their operations and informed their foreign partners of the merger discussions, the report said.
The proposed merger aligns with Beijing’s broader strategy of consolidating its sprawling car sector to create more competitive and efficient entities.
Dongfeng has a market capitalisation of $4,89 billion, while Changan Auto is valued at $15.65 billion, according to data compiled by LSEG.
Dongfeng and Changan, despite being relatively unknown outside of China, are among the country’s most significant automobile manufacturers. Each company produces a substantial number of vehicles under their own brands as well as through joint ventures with international automakers.
Their combined annual output stands at approximately five million vehicles, surpassing Ford Motor’s global production and closely rivaling that of General Motors and Stellantis, the parent company of Fiat, Chrysler, and Peugeot.
Information about the forthcoming merger appeared in the media back in February, after the companies announced a possible restructuring and change of controlling shareholders.
The potential merger would create a powerhouse in both civilian and military vehicle manufacturing. While the deal is expected to enhance the companies’ scale and competitiveness, it also raises questions about its impact on their existing partnerships with American and Japanese car manufacturers.
Ford and Nissan, both of which have longstanding joint ventures with the Chinese automakers, could face strategic and operational challenges if the merger proceeds.
This development reflects China’s ongoing efforts to streamline its vast state-owned enterprises, particularly in the automotive industry, where fierce competition and the transition to electric vehicles are pushing companies to seek greater efficiency. According to The New York Times, the discussions between Dongfeng and Changan have been extensive, though no final agreement has been reached.
