Guangzhou Automobile Group Company (GAC) has announced that it has signed a letter of intent with FAW Group to acquire part of its stake in an as-yet unnamed joint venture with a foreign automaker, believed to be Japan’s Toyota Motor Corporation. If completed, the move would represent a significant restructuring within China’s state-owned automotive industry.
GAC established its joint venture with Toyota, called GAC Toyota Motor Company, in Guangzhou in 2004, with each partner owning 50% of the equity. The joint venture reported a 24% plunge in sales in to 375,000 units in the first eight months of 2026, according to industry data.
FAW Group’s joint venture with Toyota, Tianjin-headquartered FAW Toyota Motor Company, was established in 2000 with each partner also owning 50% of the equity. FAW Toyota saw its sales fall by 13% to 379,000 vehicles year-to-date, according to industry data. Both joint ventures rely mainly on the domestic Chinese market.
GAC Group said it would issue new A shares in to fund the acquisition of FAW Group’s stake (in FAW Toyota), which FAW Group would acquire to become GAC Group’s second-largest shareholder.
The move is understood to be part of Toyota’s efforts to consolidate and streamline its struggling Chinese operations and to help improve efficiency, as competition from domestic automakers continues to surge. Toyota would continue to hold 50% of its operations in China, following the merger of the two joint ventures.
The Chinese government is also pushing large state-owned auto groups to integrate their resources and eliminate duplication, as they also face intensifying competition from fast-expanding domestic new energy vehicle (NEV) manufacturers.
