China’s State-Owned Changan Auto & Dongfeng Motor In Merger Talks

China’s state-owned automobile manufacturers, Changan Auto and Dongfeng Motor Group, are in the final stage of discussion of a merger, the New York Times reported on Tuesday, highlighting people with knowledge in this matter.

Both state-owned automobile companies conducted detailed discussions on merging their operations and informed their international partners about recent merger talks.

According to LSEG, Dongfeng Motor has a market capitalization of $4.89 billion, while Changan Auto is valued at $15.65 billion.

Changan and Dongfeng both disclosed in February this year that their parent companies were in discussion of potential reconstruction plans with other state-owned enterprises. Dongfeng announced that it holds the controlling shares and was in discussion on possible reconstruction with other SOEs.

This merger could change the indirect controlling shareholder, but the controller will remain the same. The automaker stated that it didn’t expect any major impact on its business operations. The central government in China has complete ownership of these brand’s parent companies and also holds majority stakes in Dongfeng Motor and Changan Auto,

China has urged its state-owned automobile manufacturers to become more independent regarding technology, innovation, and competitiveness, especially in electric vehicles. These brands rely on foreign joint venture partners to generate sales and profits.

Changan Auto owns several Chinese automobile brands like Chang-An, Deepal, Avatr, and Joint Ventures ChangAn Ford, ChangAn Mazda, and JMC. The automaker recently organized a European launch event the previous week and announced plans to expand in at least 10 regional markets of Europe by the end of this year.