Dongfeng Motor Group, Dongfeng Honda, and Changan Motors, along with other companies under Dongfeng Motor Corporation and China South Industries Group (CSGC), announced that they are discussing restructuring plans with other state-owned enterprises (SOEs). Despite these discussions, the companies clarified that corporate ownership would remain unchanged, with China’s State-owned Assets Supervision and Administration Commission (SASAC) maintaining ultimate control.
The simultaneous announcements from two of China’s largest SOEs have fueled speculation about a possible merger between Dongfeng and Changan. According to 36kr, if combined, the two companies could achieve annual sales exceeding 4.5 million vehicles, surpassing BYD, the current leader in China’s automotive market. This move aligns with SASAC’s ongoing strategy to optimize SOEs by reducing internal competition and encouraging specialization in specific market segments.
However, a full merger would be complex due to the different ownership structures of the two companies. Dongfeng operates as an independent SOE, while Changan falls under CSGC, which also manages businesses in the munitions, electronics, and automotive sectors. According to Yiche, merging these entities would require significant restructuring of both corporate governance and investment portfolios.
Another major concern is brand overlap. Both Dongfeng and Changan cater to similar price segments, leading to potential brand cannibalization and internal competition. Merging their management teams and product lines could further complicate the process. Because of these factors, 36kr suggests that the companies may opt for an “alliance model” rather than a full merger. This approach would allow them to collaborate in research and development, supply chain management, and international expansion while maintaining independent brand identities. A similar strategy has been seen with the Renault-Nissan-Mitsubishi Alliance.
Neither Dongfeng nor Changan met their 2024 sales targets. According to Yiche, Changan Auto had aimed to sell 2.8 million vehicles but reached 2.68 million, marking a 14.79% year-over-year increase. Looking ahead to 2025, Changan aims to sell 3 million vehicles, focusing on new energy vehicles (NEVs) and exports, each targeted at 1 million units.
Meanwhile, Dongfeng Motor Group had set an ambitious 2024 sales target of 3.2 million vehicles but only achieved 1.89 million units, a 9.2% decline from the previous year. Despite this shortfall, Dongfeng has set an aggressive 2025 goal of 3 million sales, with a stretch target of 3.2 million, including over 1 million NEVs and 500,000 exports.
While Dongfeng’s joint ventures, such as Dongfeng Nissan and Dongfeng Honda, reported declines of 12.7% and 29.2%, respectively, its self-owned brands have shown resilience. Most of Dongfeng’s growth in 2024 came from its own NEV segment, reflecting a broader shift in China’s automotive industry.
Although this restructuring won’t immediately impact production or operations, it represents a broader push for efficiency in China’s state-owned enterprises. As the Chinese auto industry transitions toward electric vehicles (EVs) and intelligent mobility, SOEs face growing pressure to compete with private companies like BYD and Huawei’s Harmony Intelligent Mobility Alliance (HIMA), both of which are aggressively expanding their domestic and international presence.