Summary
- Dongfeng JVs with foreign brands lose market share to domestic rivals such as BYD
- China urges SOE automakers to improve EV competitiveness
- Dongfeng, Changan leverage Huawei brand, tech to boost EV sales
HONG KONG, (Reuters) – Shares of Dongfeng Motor soared as much as 85.8% in Hong Kong on Monday after the Chinese automaker said its parent was planning a restructuring, stoking speculation that some of the state-owned players could be merged as competition grows.
The stock jumped to HK$6, its highest since July 2022, shortly after the open, before paring gains later to be up by about 20%.
Dongfeng Motor said on Sunday that the restructuring by its parent, Dongfeng Motor Corporation, may lead to a change in the controlling shareholder structure but would “not result in a change to the actual controller”. Shares in its Shanghai-listed sister unit jumped by their 10% maximum daily limit.
Changan Auto which like Dongfeng is controlled by the central government, published a similarly worded statement about a restructuring plan by its parent on Sunday, stirring speculation on Chinese social media that the two companies may be merged.
Shares in Changan Auto climbed 4.8% in Shenzhen.
The central government fully owns the parent companies of both Dongfeng Motor and Changan Auto, and keeps majority ownership of the listed units.
China has been urging its state-owned automakers, which have been reliant on foreign joint venture partners to contribute sales and profits, to improve independent technology, innovation and competitiveness, especially in new energy vehicles.
Foreign brands, especially Japanese ones, have lost market share to Chinese automakers such as BYD in the past three years as they have failed to roll out competitive electric cars in the world’s largest auto market.
BYD, whose biggest shareholder is its founder Chinese entrepreneur Wang Chuanfu, rose to be the fifth largest automaker globally in 2024 with its annual sales volume surpassing General Motors, Honda and Ford.
Dongfeng, the Chinese joint venture partner of Nissan and Honda sold 1.54 million passenger vehicles in 2024, down 11.5% from 2023.
Besides Dongfeng and Changan, the Chinese central government owns FAW, which is not listed.
Changan and Dongfeng are among the state-owned Chinese automakers that have been counting on partnerships with Huawei Technologies, the Chinese tech giant that has been rapidly emerging as a key supplier of smart EV technologies, to boost EV sales.
Changan set up a joint venture with Huawei and battery maker CATL in 2022 to make Avatr EVs, sales of which more than doubled in 2024 from 2023.
Dongfeng-backed Seres more than tripled its annual sales of Aito-branded cars in 2024. The best-selling models are equipped with Huawei’s advanced driver assistance systems and sold in Huawei’s showrooms nationwide.
Dongfeng in January extended its partnership with Huawei to co-develop new EV models under its eπ brand.
Reporting by Hong Kong and Shanghai newsroom; Editing by Kim Coghill, Muralikumar Anantharaman and Jamie Freed
