GAC Group to Acquire FAW Stake in Auto JV, Potentially Restructuring Toyota's China Operations

Guangzhou Automobile Group (GAC) plans to acquire part of FAW Group's stake in a vehicle-manufacturing joint venture through a share issuance and capital raise, according to a company filing. The deal, if completed, would make state-owned automaker FAW the second-largest shareholder in GAC with strategic influence.

Details of the Proposed Deal

In a filing with the Shanghai Stock Exchange on Monday, GAC announced it had signed a letter of intent with FAW. The company stated that its Shanghai-listed A-shares have been suspended from trading since September 14 for a period not expected to exceed 10 trading days pending the transaction.

The name of the target joint venture was temporarily withheld, as the deal involves an overseas-listed company. GAC cautioned that no definitive agreement has been signed and the transaction remains subject to internal and regulatory approvals.

Consolidation of Toyota's China JVs

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While GAC did not name the joint venture, China's state-owned Economic Daily reported that the target is FAW Toyota, citing unnamed sources. Both GAC and FAW are major partners for Japan's Toyota Motor Corp. in China, operating GAC Toyota and FAW Toyota, respectively.

The report suggested this transaction marks a significant step toward consolidating Toyota's two Chinese JVs. According to the outlet's sources, the proposed structure for a merged sales company would be:

• 50% owned by Toyota
• 25% owned by FAW
• 25% owned by GAC

This new entity would reportedly integrate the dealer networks, allowing it to sell and service all Toyota models across China. Toyota did not immediately respond to a request for comment on the matter.