Two Chinese state-owned carmakers may be coming together as competition heats up in the world’s single largest car market.
It’s no secret that intense competition in China has affected many legacy car brands and now many are facing restructuring, major job cuts and factory closures worldwide. Well, it has not been smooth sailing for car brands within China either. According to rumours within the Chinese car industry, state-owned carmakers GAC Group and FAW Group are both in the midst of a consolidation exercise in order to tackle the headwinds faced domestically by both. This comes as GAC Group announced a trading suspension today.
Many Malaysians are familiar with GAC Group. Their GAC brand is available locally via Warisan Tan Chong Holdings with decent electric vehicles also made available via their AION sub-brand. Domestically, GAC also markets their brand under the Trumpchi marque. Other brands offered by GAC include Hyptec, and Aistaland. GAC are also well-known for their joint ventures with Honda and Toyota in China.
FAW Group is not quite as prominent in Malaysia, but in China they were part of the Big Four state-owned car conglomerates with roots tracing back to the 1950s. They too are famed for their foreign brand joint ventures with Toyota and Volkswagen. Their own brands include Hongqi, a luxury marque which is coming to Malaysia soon under Quill, Bestune, a budget-oriented passenger car vehicle brand, and Jiefang, a trucking company.
Both company face unique struggles in the market. GAC Aion has the more modern portfolio but is in financial straits as it has been reporting losses. FAW Group has been struggling to keep up with the changes in the electrified market and would benefit from GAC’s NEV tech.
It will be interesting to observe this merger as it’s the first of its kind. State-owned enterprises have long held strong positions in the market. However, in the age of the new energy vehicle and with start-ups and privately held giants like BYD and Geely in the mix, things are complicated. We’ll be watching the situation closely to see if anything changes.
