FAW takes a stake in GAC, and the two Toyota joint ventures in northern and southern China are merged into one.
On the morning of September 14, trading of GAC Group's A-shares was suspended, and its H-share opened 8.64% higher before market trading.
Taking this opportunity, everyone is speculating that FAW may form a de facto joint operation relationship with GAC through asset allocation and equity participation; in the next step, it may also send senior management to GAC. However, GAC's after-hours announcement clearly states that it has signed a "Letter of Intent" with China First Automobile Co., Ltd., planning to purchase part of the equity of a complete vehicle joint venture held by FAW by issuing shares, and raise supporting funds...
Does this message mean that the outside world should stop random speculation, or that the fact is not what everyone thinks?
Obviously, given the current market situation and the current operating status of GAC and FAW, no matter how the official responds, mutual benefit of resources is always clear. As China's automobile industry is trapped in in-depth involution, as the absolute leaders of the automobile industry, FAW and GAC do not want to drift with the tide passively in this fierce battle.
"Survival" is never the ultimate goal of central enterprises and state-owned enterprises. When Chinese automobile groups such as Geely, BYD and Chery point out the direction for the future development of the domestic industry on the one hand, and spread the Chinese footprint all over the world on the other hand, which automobile group can stay out of the affair?
The rise of Chinese automobiles requires the momentum of all people striving for success, not the temporary pleasure of fighting alone.
Over the past two years, has GAC realized its own problems?
If you only look at the loss of 8.7 billion yuan in 2025 and the loss of 4.4 billion yuan in the first half of 2026, you will feel that GAC is in a somewhat awkward situation today.
But if you have learned about the development history of Aion and Trumpchi, the past path of the joint venture sector, and the determination to restart cooperation with Huawei, you will understand that as a group that once made a profit of 10 billion yuan and easily sold more than 2 million vehicles a year, GAC is not incapable, but just underestimated the difficulty of "a giant turning around".
Around the Spring Festival in 2025, there were already rumors in the industry that "GAC and FAW will be integrated" and "FAW's leadership will move south". However, because too many uncertainties emerged at once, the relevant content was suppressed.
At this moment, according to the announcement issued by GAC Group, if FAW Toyota can really be brought under its control, the combined power of the northern and southern Toyota will be considerable. Relying on Toyota's strategic determination and forward-looking layout in China, GAC will definitely be the beneficiary party.
GAC looks forward to reform, and even more to rebirth
How has GAC been doing in the past two years? The outside world always has a strong perception. This is not only because the rise of the new energy industry has created new cracks in the enclosed Chinese automobile market, and the entry of new players has broken the old order, but also because when the existing system makes GAC inefficient in the industrial torrent, the resulting pain has spread to the whole body, and all these changes have put forward new requirements for GAC.
In July 2022, Stellantis Group and GAC Group announced the termination of the operation of GAC FCA, a joint venture, and the orderly suspension of the local production of the Jeep brand;
In October 2023, GAC Mitsubishi officially stopped production and was restructured, and then completed industrial and commercial changes, with Japanese shareholders withdrawing, marking Mitsubishi's complete withdrawal from the Chinese market;
In January 2024, GAC Hino completed equity adjustment. In the following year, the company name was officially changed from "GAC Hino Motors Co., Ltd." to "GAC Lingcheng New Energy Commercial Vehicle Co., Ltd.";
Over the years, affected by market changes, many of its joint ventures have gone through their whole life in a hurry. Does this mean that GAC encountered a bottleneck in its operation very early?
Around 2020, GAC Aion emerged, operating in both B-end and C-end markets, which once made people think that "GAC is the most decent state-owned enterprise in transformation". This also makes everyone think from an emotional level that no matter how the joint venture business shrinks, GAC always has a backup plan.
Facing a strange new energy market, GAC Aion's total sales volume in 2021 was 120,000 units, reached 270,000 units in 2022, and the figure reached 480,000 units in 2023, leaving all large enterprises with "state-owned" background far behind.
The more far-reaching impact is that GAC Aion began to consider listing, seeking favor from external capital, and GAC Group took this opportunity to show the whole industry how thorough its understanding of new energy development is, and how this thoroughness fills the development gap left by the stalled subsidiaries.
Many times, GAC has been looking forward to that starting from Aion, this old southern Chinese automaker can outperform the process of market changes. However, when GAC moves forward closely following the pace of industrial transformation, it never expected that the needs and cognition of the new generation of Chinese consumers are so "untraditional". At the same time, the capital market's attitude towards new energy vehicle companies has changed so unexpectedly.
When Aion no longer seeks to go public and the joint venture business is no longer a profit cow, in November 2024, the newly appointed chairman Feng Xingya led the senior management of the group to decide to move the group's headquarters from Zhujiang New Town to Panyu, launching the "Panyu Operation".
This is not just moving the office, but transforming the group headquarters from an authority that "manages investment, cadres and budgets" into a combat command that "manages users, products and development rhythm".
GAC is determined to start all over again.
Then the group introduced IPD and DSTE systems, shortening the new car development cycle from 26 months to 18-21 months; in December 2025, Hyper and Aion were merged into the "Hyper Aion BU"; in January 2026, the Trumpchi BU became independent; Qijing, built in cooperation with Huawei Qiankun, immediately launched new models to fill the gap of GAC's self-owned business in the high-end intelligent vehicle market;
In terms of technology, all-solid-state batteries, magazine batteries, Xingyuan range extenders, L3 test licenses, Ruqi Robotaxi, GOVY flying cars, and Huilun robots — GAC has laid out all "future" related technologies.
Therefore, GAC's revenue in 2025 was 96.5 billion yuan with a loss of 8.7 billion yuan; in the first half of 2026, its revenue was 46.5 billion yuan with a loss of 4.4 billion yuan, but the sales volume of its self-owned brands increased by 35.69% year-on-year. This shows GAC's real status: the transformation intensity and organizational structure adjustment are unprecedented, but the profit pressure it bears is also unprecedented.
At this time, FAW came. The signing of the "Letter of Intent" and the intention to release the equity of the joint venture to GAC are self-explanatory.
Of course, although located in different regions, with different cultures and different industrial structures, in this era, FAW also has its own troubles.
In addition to Jiefang, compared with SAIC Volkswagen, FAW-Volkswagen is under significant pressure; FAW Toyota has to compete for the market with GAC Toyota using the same product lineup; the new energy sector has not yet cultivated a national pure electric asset at the level of Aion; it is difficult to balance the resources between Hongqi and Bestune properly;
As a result, in the eyes of the outside world, this integration is more about mutual benefit of resources and taking what each needs, rather than a story of one party saving the other.
The northern and southern Toyota kick off the integration
According to previous ideas, if the integration can really be implemented, a very interesting dual-core structure will inevitably emerge within GAC: no matter how the sub-sectors are merged, normally, the Panyu headquarters will be in charge of products, users, intelligence and overseas business; the Changchun/group level will be in charge of strategic resources, central enterprise collaboration, commercial vehicles and high-end brand matrix.
However, according to the information currently provided by GAC Group, the scope defined by the joint venture agreement is not that huge.
When FAW enters the market and becomes a major shareholder of GAC, GAC will change from a "local leading enterprise" to a "southern base of the national team".
When GAC issues additional A-shares to acquire part of the equity of that complete vehicle joint venture held by FAW, it is very likely that this joint venture is FAW Toyota as guessed at the beginning of the article. The final pattern will be that the northern and southern Toyota are integrated into one, officially operating in a full state to compete with Chinese enterprises in this period when joint ventures are under great pressure.
The sensational impact brought by this resource integration will definitely be unprecedented. Whether Chinese automakers will kick off the integration wave from this point, we may get some clues from it. As for the integrated operation of the northern and southern Toyota, its attack power is even more obvious.
Currently, the most valuable asset of GAC may still be GAC Toyota.
In 2025, GAC Toyota's cumulative sales volume reached 756,000 units, and it managed to maintain its position against the general decline of Japanese brands. Now, if the northern and southern Toyota further cooperate in China, complement each other in R&D and procurement, and merge twin models, Toyota will no longer have the concerns about which party to assign China-exclusive vehicles, intelligent cockpits, and plug-in/extended range platforms to. Even if the joint venture is no longer the lifeblood of GAC, with the help of Toyota, the northern and southern Toyota will definitely become the cash guarantee of the group.
There are rumors that the general manager and deputy general manager of GAC Toyota will be re-selected or appointed.
No matter whether the news is true or not, Toyota's development trend in China is the top priority under this agreement.
Frankly speaking, since joint ventures were hit one by one by the changes in the Chinese auto market 3 to 5 years ago, the cooperation between the northern and southern Toyota has been estranged.
Acting on their own, they have to fight against each other in the same market segment. In the eyes of the outside world, GAC Toyota always thinks that FAW Toyota's market judgment is not sufficient. Under the premise of similar product strength, they even fight a price war with each other instead of forming a united front to deal with external competition.
In this context, it is no wonder that GAC is willing to take the cost of letting FAW become its shareholder in exchange for FAW Toyota's equity. When the interests are bound, FAW will not encourage the northern and southern Toyota to be hostile to each other. After GAC gets the equity of FAW Toyota, the increase of its right to speak means that Toyota's future development in China will not deviate due to external forces.
It is not surprising that as Chinese automakers are increasingly aggressively recapturing the Chinese auto market, Volkswagen and Toyota will become the only foreign automakers with real strength. Now Volkswagen has three joint ventures in China, and its resource allocation has been unbalanced. From Toyota's perspective, it does not want to distract its energy due to such problems.
"The northern and southern Toyota should have been merged long ago!"
This is the view that the outside world has been putting forward. Today, as long as the agreement is finally realized, this matter will be settled. If under the lead of the new sales company, the sister models under both parties only retain global models, and the dealer channels are fully opened to sell and maintain all Toyota models at the same time.
At that time, for GAC, FAW's entry and becoming the second largest shareholder of the group is not to plunder resources, nor is it an outsider coming to give unprofessional guidance. Instead, it is a historic reinforcement based on the "Panyu Operation".
The best result of the organic combination of the two is to integrate "the north's understanding of brands, its strength in the commercial vehicle market, the south's forward-looking layout of the industry, its achievements in new energy development, the endorsement of central enterprises, and the flexibility of local state-owned enterprises" together.
This mutual benefit and cooperation will certainly not be easy. Especially under the background of this era, too many people are watching, and too many people do not want joint ventures to develop well.
However, no matter it is GAC or FAW, their close cooperation is like a depth bomb thrown into the market. Even if the room for improvement is limited, the northern and southern Toyota still need more time to sort out their ideas after the merger, it can more or less change the current cruel industrial structure.
This article is from WeChat Official Account "Auto Community" (ID: iAUTO2010), author: Cao Jiadong, published with authorization from 36Kr.