Edited by Asiautos Auto Part
Dongfeng leads the reorganization! ? The reason is not that the sales of new energy vehicles lead Changan
The reorganization of Dongfeng Motor and Changan Automobile has attracted much attention because both parties are central state-owned automobile enterprises. Automakers with central state-owned enterprise backgrounds once almost monopolized China's automobile industry, but in today's rapid development of new energy vehicles, automakers with central state-owned enterprise backgrounds are facing the dilemma of lagging behind in technology and lagging behind the leading private automakers in new energy transformation.
The reorganization of Dongfeng and Changan opened the curtain for the reorganization of central state-owned automobile enterprises, and people can't help but wonder who will be the next to enter the ranks of reorganization?
Among many speculations, the potential reorganization of FAW and GAC has become a hot topic.
01GAC 2024: The worst year in recent years
Looking back at the development trajectory of GAC Group in recent years, the fiscal year 2024 is undoubtedly a trough in its development history.
From the perspective of financial data, this year can be called the worst fiscal year for GAC Group in recent years. Its 2024 annual performance forecast shows that the net profit attributable to the parent company's owners is expected to be 800 million to 1.2 billion yuan, a decrease of 72.91% to 81.94% compared with the same period last year; the net profit after deducting non-recurring gains and losses is expected to be a loss of 3.3 billion to 4.7 billion yuan. Such a decline in performance has cast a heavy shadow on the development of GAC Group.

An important factor contributing to this situation is the decline in automobile sales. In 2024, GAC Group's automobile production will be 1,916,615 units, a year-on-year decrease of 24.21%; sales will be 2,003,058 units, a year-on-year decrease of 20.04%. Among them, the production of new energy vehicles will be 436,229 units, a year-on-year decrease of 23.86%, and the sales will be 454,725 units, a year-on-year decrease of 17.26%.
GAC Group also performed poorly in the traditional fuel vehicle market, with GAC Toyota and GAC Honda both seeing sales fall by more than 20% year-on-year in 2024.
Entering 2025, GAC Group had a bad start: in January, the production of vehicles was 116,345, down 26.13% year-on-year; sales were 98,437, down 25.41% year-on-year; and the sales of new energy vehicles were less than 10,000, only 9,905, a sharp drop of 47.22% year-on-year.

02Why GAC?
Compared with BAIC and SAIC, GAC Group is in a more difficult situation and needs change the most.
As one of the leading companies in the domestic automobile industry, SAIC has a solid position in the industry with its deep technical accumulation, extensive market channels and diversified product layout. Its overall development trend is good. Although it faces strong challenges from new energy vehicle companies such as BYD, it does not have a strong need for restructuring in the short term.
BAIC benefits from Beijing Benz, a stable "cash cow". The continuous cash flow makes it not under much pressure in terms of performance for the time being, and its motivation for restructuring is relatively insufficient.
Faced with the dual dilemma of sales and performance, GAC Group urgently needs to find new breakthroughs and development paths. Restructuring may become an important option for it to reverse the situation.
03Who will restructure GAC?
It was once widely rumored that Liu Changqing, assistant to the general manager of China FAW Group and vice president of the Hongqi Brand Operation Committee, went to GAC in the south. His important mission may be to pave the way for the restructuring of FAW and GAC.
This is also reasonable from a logical point of view. FAW is a central enterprise, and GAC is a state-owned enterprise. The reorganization of the two is like the reorganization of Dongfeng and Changan. There is not much controversy over who is dominant, which may become the premise for the reorganization of the two.
Although there is no news about Liu Changqing's move to GAC, and GAC Group was eventually taken over by Feng Xingya, an insider, but from the market performance of FAW and GAC, FAW's reorganization of GAC has certain rationality.
In terms of maintaining the market share of joint venture cars, in 2024, FAW-Volkswagen fell by 13.1% year-on-year, and FAW Toyota increased by 0.02% year-on-year. In 2024, when joint venture cars generally fell, FAW-Volkswagen's performance was normal, while FAW Toyota was an outlier. Although the growth was only 181 vehicles, it also showed a certain market stability and resilience of joint venture cars under China FAW.
The sales of GAC's joint venture brands, such as GAC Honda and GAC Toyota, both saw a significant year-on-year decline in 2024. GAC Honda's production fell by 36.10% year-on-year, and its sales fell by 26.52% year-on-year. GAC Toyota's production fell by 22.53% year-on-year, and its sales fell by 22.32% year-on-year, with serious loss of market share.

In terms of the growth rate of independent brands, FAW's Hongqi brand has developed rapidly in recent years, gradually gaining a foothold in the high-end market, and its sales have continued to grow. In contrast, although GAC's independent brands have bright spots, there is still a gap between their overall growth rate and market influence and FAW. For example, GAC Aion's sales in 2024 fell by 21.9% year-on-year, and its development trend is not optimistic.
In 2024, China FAW's overall sales fell by only 2.97%, and only FAW-Volkswagen's brand fell year-on-year. Looking at GAC Group, except for GAC Trumpchi's year-on-year increase of 1.99%, the other three major brands all fell by more than 20% year-on-year, and the overall sales fell by 20.04%.
In terms of corporate nature and level, FAW is a central enterprise directly under the management of the State-owned Assets Supervision and Administration Commission of the State Council; GAC is a state-owned enterprise, and the reorganization of the two is less inconsistent in terms of level than the reorganization model of Dongfeng and Changan.
This difference makes FAW likely to occupy a dominant position in the reorganization, reducing the integration barriers caused by level issues and providing a certain degree of feasibility for the reorganization of the two.
The previously circulated rumor that Liu Changqing went south to GAC has added some credibility to this reorganization speculation, perhaps paving the way for the reorganization of FAW and GAC.
This also explains to some extent why FAW, also a central enterprise, did not participate in the restructuring of Dongfeng Changan.
More importantly, if FAW and GAC are restructured, complete integration is in line with the SASAC's goal of "promoting strategic restructuring" and "reducing competition in the same industry", and is also in line with the principle of strong alliance and learning from each other's strengths, but there are many integration problems involved behind it.
Some industry insiders also told the electric car industry that although FAW Toyota performed better than GAC Toyota and FAW also had the strength to restructure GAC, Feng Xingya just replaced Zeng Qinghong as the chairman of the company at the beginning of this month. If he can quickly lead GAC Group out of the current predicament, it is not impossible to avoid being restructured: "It's just that it's too difficult to lead GAC out of the steep upward curve. More importantly, it depends on how much time the competent authorities give him to reshape GAC?"
In the future, whether FAW and GAC can work together to achieve resource integration and complementary advantages, we will wait and see.
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