On February 9th, Dongfeng Motor Corporation (including Dongfeng Motor Group and Dongfeng Honda) and China South Industries Group (CSGC, parent of Changan Motors) jointly announced ongoing discussions with other state-owned enterprises (SOEs) regarding restructuring.
These announcements clarified that corporate ownership would remain unchanged, with the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) continuing as the ultimate controlling shareholder. However, some controlling shareholders may change.
Industry speculation has surged due to the timing of these announcements, hinting at a possible merger. A combined Dongfeng-Changan could achieve annual sales exceeding 4.5 million vehicles, surpassing BYD.
SASAC’s recent drive to optimize SOEs aligns with this restructuring, aiming to reduce internal competition and promote specialization. However, a full merger faces challenges due to differing ownership structures and potential brand cannibalization. Integration of management structures and complex capital restructuring would also be required.
A “alliance model” has been speculated as an alternative, allowing strategic cooperation in R&D, supply chains, and international expansion while preserving brand independence. The Renault-Nissan-Mitsubishi Alliance serves as a relevant example.
