GAC Group announced on the evening of September 14 that it plans to acquire, through the issuance of shares, part of the equity in a vehicle joint venture held by FAW Co., with the market speculating the target is FAW Toyota; after the transaction, FAW Co. may become GAC's second-largest shareholder. On September 15, GAC's H shares resumed trading and rose more than 12% in the call auction to HK$2.62, giving it a market value of HK$51.034 billion. Experts estimate that the consideration for roughly 25% of FAW Toyota's equity is about 20 billion yuan, requiring GAC to issue more than 4 billion shares. From January to August 2026, FAW Toyota's retail sales totaled 379,000 vehicles, down 26.4% year on year, while GAC Toyota sold 447,000 vehicles, down 10% year on year.
On the evening of September 14, after trading in both its A and H shares was suspended, GAC Group released a major asset restructuring announcement. At exactly 9:00 a.m. on September 15, its H shares resumed trading, rising more than 12% during the opening call auction to HK$2.62 per share, with a total market capitalization of HK$51.034 billion. The immediate reaction of the capital market points to a transaction that could rewrite Toyota's business structure in China.
Transaction structure: issuing shares to acquire equity; FAW to become second-largest shareholder
The announcement shows that GAC Group signed an "Intent Agreement" with China FAW Co., Ltd., planning to acquire part of the equity in a vehicle joint venture held by FAW by issuing shares, and to raise matching funds. According to preliminary estimates, after the transaction is completed, FAW will become the second-largest shareholder of GAC Group.
The announcement did not disclose the target's name, but the market almost unanimously points its speculation to FAW Toyota—the only foreign automaker that can appear on the shareholder lists of both FAW and GAC is Toyota.
Li Yanwei, an expert committee member of the China Automobile Dealers Association, estimates based on public information that GAC Group may acquire about 25% of FAW Toyota's equity for consideration of about RMB 20 billion; converted at GAC's current share price, it would need to issue more than 4 billion shares to FAW. After the transaction is completed, FAW's shareholding may approach 30%, while GAC Industry Group's stake would be diluted to 38.1%. Analysts at Gasgoo Research Institute judge that this is an equity investment rather than a merger: a central SOE cannot encroach on local state-owned capital rights; a more realistic path is for FAW to establish a strategic tie by holding a stake in GAC, following "business first, equity later; partial first, whole later."
North and South Toyota: from growth-stage division of labor to stock-stage internal friction
In 1998, Sichuan Toyota was established in Chengdu to produce Coaster minibuses; in 2000, Tianjin FAW Toyota was inaugurated; in 2004, GAC Toyota was established, with its first domestically produced vehicle being the Camry. FAW guarded the north, while GAC guarded the south. In 2006, Etsuo Hattori, then chief representative of Toyota China, said it was impossible for the two joint ventures to have no competition at all, "but competition is a good thing."
More than two decades later, under the twin-car strategy, the main products of North and South Toyota are basically sister cars on the same platform: Corolla and Levin, Avalon and Camry, RAV4 and Wildlander, Crown Kluger and Highlander, Granvia and Sienna. During the growth period, the two sides each fought for regions and staggered pricing; after shifting to stock competition, internal friction began to emerge. In the first half of 2026, Toyota's sales in China were 695,000 vehicles, down 17% year on year; North and South Toyota together accounted for the vast majority, yet they had about 1,400 dealers. Li He (pseudonym), a dealer head, told Gasgoo that for this volume, Toyota's nationwide dealer network is on the large side.
In 2025, Toyota China appointed its first Chinese general manager and transferred the general manager of GAC Toyota to FAW Toyota as its top executive; cross-joint-venture personnel transfers are relatively rare within the Toyota system. In response to questions about integrating the North and South networks, Toyota China said it was conducting a "one city, one store" pilot in lower-tier cities, which is "a very small-scale channel optimization."
The divergence of the two joint ventures
Data from the China Passenger Car Association (CPCA) shows that from January to August 2026, FAW Toyota's cumulative retail sales were 379,000 units, down 26.4% year-on-year, with a market share of 3.2%; GAC Toyota's retail sales in the same period were 447,000 units, down 10% year-on-year. FAW Toyota's core models are under pressure across the board: the Corolla sells only a few thousand units a month and has dropped off the list of China's best-selling sedans; Avalon sales are sluggish; RAV4 remains strong, but faces many competitors in its segment.
GAC Toyota's two foundational pillars are more stable: intelligent electric hybrid dual-engine models account for more than half of the brand's total sales, with the Camry, Wildlander and Sienna forming its core product line, while FAW Toyota's gasoline-electric hybrid models account for nearly 50%; on the new energy front, Gasgoo industry big data shows that the bZ series had cumulative sales of about 80,000 units from January to August, ranking first among joint-venture pure electric vehicles for several consecutive months, and the bZ3X's cumulative sales exceeded 100,000 units. The bZ series' product definition is led by GAC Toyota, implementing the RCE China chief engineer system; the bZ3X is based on a localized pure electric platform, while the bZ7 is equipped with Huawei HarmonyOS cockpit, Huawei DriveONE electric drive system, and features Momenta's intelligent driving solution and lidar.
FAW Toyota's bZ series also derives from Toyota's global model framework, but its product definition follows overseas standards more closely; its intelligent solutions and configuration calibration do not fully align with domestic user preferences, and it lacks a local electrification R&D base similar to GAC Aion.
Each of the Three Parties Gets What It Needs
It has been reported that Toyota, FAW and GAC will establish a new joint-venture sales company, with Toyota holding 50% and FAW and GAC each holding 25%. Toyota thus gains dominance on the sales side, while FAW and GAC shift from joint-venture partners “each managing its own patch” to strategic investors holding 25% each. Li He pointed out that if the north and south channels are truly connected, automakers will no longer need to push inventory to dealerships to meet their respective sales targets; inventory turnover will accelerate, and per-vehicle gross margin is expected to improve.
What GAC gains is FAW Toyota's northern channel network, allowing its channel footprint to extend from South China to Northeast and North China; new energy synergy is equally critical, as battery procurement and intelligent driving solution alignment could in theory create synergy with Aion and Trumpchi, and this highly profitable asset of FAW Toyota could also improve investment returns. However, the extent to which FAW will intervene in the business after becoming a major shareholder is unknown, and the decision-making chain could be lengthened.
FAW takes shares instead of cash, which is equivalent to shifting from directly holding joint-venture assets to “indirect holding + strategic investment”; profits from the joint-venture business remain within the system through the equity chain. Analysts at Gasgoo Research Institute believe that by holding a stake in GAC, FAW can use external pressure to drive internal organizational reform; at this stage, FAW's own new energy transformation has achieved limited results, and the market performance of its first model co-developed with Leapmotor, which is about to enter mass production, remains to be verified.
Benchmarks and Boundaries for Integration
This is not the first domino in joint-venture integration. In 2021, Mazda's two joint-venture automakers merged, with FAW Mazda becoming a wholly owned subsidiary of Changan Mazda, and “North and South Mazda” becoming history. Some analysts distinguish the two integrations: Mazda had no retreat, while Toyota is proactively seeking change.
Policy momentum is also increasing. On September 11, nine departments including the Ministry of Industry and Information Technology (MIIT) jointly issued the “15th Five-Year Plan for the Development of the Intelligent Connected New Energy Vehicle Industry,” explicitly proposing to increase mergers and acquisitions and cross-regional integration of automakers in accordance with law; three days later, GAC suspended trading.
Analysts at Gasgoo Research Institute noted that Stellantis's experience with unified platforms, joint procurement, and shared R&D can be referenced, but it must not remain at the equity level. It needs to go deep into underlying capabilities such as platforms, procurement, R&D, and supply chains, while preserving brand and market differentiation. Among joint-venture automakers, Honda's situation is relatively close to Toyota's, with a high degree of overlap in product lines between GAC Honda and Dongfeng Honda; Ford continues to advance channel and component collaboration between Changan Ford and Jiangling Ford, and Volkswagen's three major joint-venture automakers are also gradually banding together.
On September 15, Zhang Yongwei, chairman of the China EV100 Research Institute, said that during the 15th Five-Year Plan period, the auto market needs to maintain an overall annual sales scale of 35 million to 40 million vehicles, with exports plus overseas production shifting from speed to quality, and a reasonable target of 10 million to 15 million vehicles per year. China EV100 predicts that overall auto sales will decline slightly by 3% to about 33.4 million vehicles in 2026, with NEVs expected at 18.4 million, up 12% year-on-year, and an overall penetration rate of about 55%; the market will enter a recovery period in 2027.
Whether this deal, still at the intent stage, can materialize depends on the progress of subsequent due diligence, pricing, and regulatory steps; but it has already put a core proposition of the joint-venture era on the table: when incremental growth is gone, how much longer can the fragmented joint-venture structure hold up.
