GAC to acquire 50% of FAW Toyota, consolidating Toyota's two China JVs

• The deal would give GAC stakes in Toyota's northern and southern China joint ventures, paving the way for closer cooperation.
• FAW is expected to become GAC's second-largest shareholder, while GAC's ultimate controller would remain unchanged.

GAC Group (SSE: 601238) plans to issue shares to acquire China FAW's 50% stake in toyota" class="tag-link text-primary font-medium">FAW Toyota, with trading in its A-shares set to resume at the market open on Tuesday, September 29.

GAC disclosed the arrangement in a preliminary restructuring plan on Monday, identifying the previously unnamed acquisition target and advancing its equity partnership with FAW.

The company's board approved the preliminary plan. GAC's A-shares have been suspended since September 14, when it disclosed plans to acquire a stake in an unspecified vehicle joint venture held by FAW.

Under the plan, shares issued to fund the acquisition would be priced at 5.75 yuan ($0.85) each. The transaction price and the number of shares to be issued have yet to be determined, as audit and valuation work remains incomplete.

Upon completion, FAW is expected to become GAC's second-largest shareholder, and toyota" class="tag-link text-primary font-medium">FAW Toyota would become a joint venture of GAC. GAC's ultimate controller would remain the Guangzhou State-owned Assets Supervision and Administration Commission.

The deal would give GAC stakes in Toyota's northern and southern China joint ventures, paving the way for coordination in research and development, production, supply chains and sales.

GAC said it plans to coordinate localized R&D, supply chains, production sites and market expansion resources across toyota" class="tag-link text-primary font-medium">FAW Toyota and GAC Toyota to reduce duplicate investment and share the costs of technological innovation.

toyota" class="tag-link text-primary font-medium">FAW Toyota operates vehicle production bases and supporting engine plants in Tianjin, Changchun and Chengdu. Its lineup spans gasoline, hybrid and battery electric vehicles.

Combined sales at toyota" class="tag-link text-primary font-medium">FAW Toyota and GAC Toyota accounted for 17.03% of China's joint-venture passenger vehicle sales in 2025, according to China Association of Automobile Manufacturers (CAAM) data cited in the plan.

The acquisition also aims to improve GAC's earnings. The company said in the plan that it posted a net loss attributable to shareholders in 2025, weighed down by industry price competition, declining earnings from joint ventures and spending on its transformation.

toyota" class="tag-link text-primary font-medium">FAW Toyota's own profits, however, are also under pressure. Unaudited figures show that its revenue rose to 108.62 billion yuan in 2025 from 106.57 billion yuan in 2024, while net profit fell to 4.23 billion yuan from 4.72 billion yuan.

In the first half of 2026, toyota" class="tag-link text-primary font-medium">FAW Toyota reported revenue of 40.73 billion yuan and net profit of 1.01 billion yuan. GAC warned that continued price competition and investment in electrification and smart vehicle technologies could further weigh on its profitability.

GAC expects the acquisition to contribute positively to investment income and net profit, but said it cannot yet accurately quantify the financial impact while audit and valuation work remains incomplete.

The company also plans to issue shares to no more than 35 qualified investors to raise supporting funds for toyota" class="tag-link text-primary font-medium">FAW Toyota's projects, working capital, debt repayment and transaction expenses.

The fundraising would be capped at 100% of the acquisition price, with the amount yet to be determined. Completion of the acquisition is not contingent on the success of the fundraising.

The deal comes as China pushes for consolidation in its auto industry. The 15th five-year plan for the intelligent connected new energy vehicle (NEV) industry, released earlier this month, called for greater efforts to promote mergers, acquisitions and cross-regional consolidation among automakers.

The transaction still requires completion of audit and valuation work, another review by GAC's board, shareholder approval, a review by the Shanghai Stock Exchange and registration with the China Securities Regulatory Commission, among other procedures. GAC said completion remains uncertain.