On 14 September, GAC Group said it had signed a letter of intent with China FAW to buy part of a vehicle joint-venture stake held by FAW through a share issue, with matching funding. In practice FAW injects a JV asset and becomes GAC’s second-largest shareholder, in what both sides call a major reorganisation that does not change GAC’s ultimate controller.
The unnamed JV is widely read as Toyota. Both GAC and FAW run Toyota ventures, and pooling them is the cleanest way to free up resources. FAW-Toyota is a 50-50 venture across Tianjin, Changchun and Chengdu. GAC-Toyota is the other pillar. The timing is tight: three days earlier, on 11 September, the industry ministry and the planning body publicly backed mergers among large groups to cut duplicated research and homogeneous competition.
GAC needed a partner
GAC’s own numbers forced the move. Sales fell from 2.505 million in 2023 to 1.7215 million in 2025, and 2025 brought its first annual loss since listing, 8.784 billion yuan. The first half of 2026 steadied to 773,100 units, up 2.35 per cent, with own-brand volume up 35.69 per cent to 346,000, but the half-year net loss was still 4.467 billion. Its Japanese JVs, long the profit engine, keep ceding share as new-energy penetration rises.
FAW sold 3.302 million vehicles in 2025, but more than 2.3 million came from JVs. What GAC offers FAW is the electric side: Aion has shipped hundreds of thousands of pure-electric cars, and Guangzhou sits next to the consumer-electronics, chip and smart-hardware supply chain that now matters most for smart cars.
The next domino
The deal is the first real capital-level tie-up among China’s state-owned car groups, not just another strategy memo. With central groups FAW, Dongfeng and Changan and local groups SAIC, BAIC and GAC all running duplicate platforms and teams, the pressure to consolidate is structural. If FAW and GAC can make this work, the question becomes which group is next.
For Toyota, two Chinese JVs edging toward one balance sheet is the kind of restructuring that ripples into how it plans plants, model lines and exports across the region.
Editor’s note: This is an adapted translation of the original Chedongxi report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://chedongxi.com/p/376100.html.