Chang’an Dongfeng Group: A Super Bowl Sunday super blockbuster merger?
Updated 2/12/25: added Liu Weidong investigation
Updated on 2/13/25: added Nissan Honda decision to terminate integration
The blockbuster matchup between the Eagles and Chiefs on Super Bowl Sunday here in the U.S. turned into a laugher as the Eagles manhandled the Chiefs, avenging a loss two years ago in the same game and preventing the two-time defending champions from a rare three-peat.
Over in China, Sunday also turned out to be a super blockbuster day for the country’s auto industry with the news that a potential merger could be forthcoming involving two of the top 10 Chinese automakers and two of China’s three centrally administered state-owned automakers.
As I was having breakfast and getting ready for the last day of my daughter’s volleyball tournament yesterday morning in snowy Boston, the news that Chang’an Automobile Co., Ltd. and Dongfeng Motor Corp. could be merging hit my WeChat moments and several group chats.
It’s the first blockbuster news event for the industry in the Year of the Snake.
Late in the afternoon on Sunday Beijing time, Chang’an and several other public-listed subsidiaries of parent company China South Industries Group Corp. (CSGC) issued notices concerning that CSGC was planning to restructure with another centrally administered state-owned company, while Dongfeng Automobile Co., Ltd. (DFAC) and Dongfeng Electronic Technology Co., Ltd. (DETC), public listed subsidiaries of parent company Dongfeng Motor Corp., issued notices concerning a similar plan by Dongfeng.
All signs are pointing to a merger between Chang’an and Dongfeng, China’s No. 5 and 7 automakers respectively according to sales volumes in 2024. Along with FAW Group, they represent the only three centrally administered state-owned automakers in China.
The news of the potential merger was abrupt and somewhat surprising, and the merger itself, were it to go ahead, would be significant as it is complicated.
Most of the senior executives from the two companies probably got to know of the announcements only hours before they were official, and for these announcements to be made on a Sunday, a non-working day in China while many parts of the country was still technically on Chinese New Year holiday break (many don’t return to work until the Lantern Festival, the 15th of the first month of the Lunar New Year, which falls on February 12 this year), was quite uncommon.
Staying in the sports world for an analogy, it almost feels like the Luka Doncic and Anthony Davis trade between the Lakers and Mavericks in the NBA last week: nobody knew about it until it happened.
A jaw-dropping moment.
Because the significance of the merger is profound in many ways.
Chang’an and Dongfeng combined would be the №1 automaker in China in terms of sales: last year, their sales totaled nearly 5.2 million vehicles (including joint ventures), which would put the combined entity ahead of BYD, which sold 4.27 million vehicles globally in 2024.
The merger would be the biggest globally since Groupe PSA and FCA agreed to merge in October 2019 into what later became Stellantis Group, the world’s №5 automaker in terms of sales volume in 2024. It would be the biggest in China since SAIC Motor’s acquisition of Nanjing Automobile Group Corp. in 2007 and FAW Group’s integration of Tianjin Auto Industry Group Corp. in 2002.
Both Chang’an and Dongfeng operate multiple Sino-foreign vehicle joint ventures: Chang’an with Ford and Mazda, and Dongfeng with Nissan, Honda, Stellantis and Renault Group. Interestingly enough, Dongfeng’s partners Nissan and Honda themselves officially announced a decision on February 13, a day before Valentine’s Day, to NOT go ahead with their proposed integration citing differences in the integration structure. The two Japanese automakers signed an MOU in late 2024 intending to merge, one of the last blockbuster news event of the global auto industry last year.
Both Chang’an and Dongfeng are structurally complex companies. Aside from the joint ventures, Chang’an and Dongfeng are both parent companies of a host of subsidiaries and at the same time are themselves subsidiaries of larger parent companies. Chang’an for example is under China Chang’an Automobile Group (CCAG), which is a subsidiary of CSGC, but Chang’an itself is a subsidiary of CSGC. Dongfeng, on the other hand, has a Hong Kong-listed subsidiary called Dongfeng Motor Group Co., Ltd. (DFG), which has a joint venture with Nissan called Dongfeng Motor Co., Ltd. (DFL) and a domestic-listed company called Dongfeng Automobile Co., Ltd. (DFAC) that primarily makes light trucks and pickups.
Confused yet? It goes even deeper than that.
But essentially, being centrally administered state-owned automakers, Chang’an and Dongfeng are both effectively owned by the State-Owned Assets Supervision & Administration Commission of the State Council (SASAC).
Both Chang’an and Dongfeng have launched multiple brands dedicated to smart EVs in addition to their legacy independent brands, such as Chang’an’s AVATR, Deepal and Qiyuan, and Dongfeng’s Aeolus, VOYAH, eπ, NAMMI and M-Hero. Both Chang’an and Dongfeng have deep strategic collaboration agreements with Huawei on smartification. On the Chinese brand front, Chang’an has done relatively better than Dongfeng (and FAW Group) in recent years, selling about 2.23 million vehicles, compared to about 1.37 million vehicles at Dongfeng, representing about 83% and 55% of total group sales of the two companies, respectively.
Though the news of the potential Chang’ang-Dongfeng merger may seem abrupt and surprising, it’s not the first time that they and FAW Group have been involved in merger rumors in the past. In fact, preparations for such a merger may have been in the works for years.
For starters, many of the current and former senior executives at these three companies have held different roles at one time or another at two if not all three companies. For example, Xu Xianping, current Chairman of CSGC, is a former president of FAW Group; Liu Weidong, current vice president of CSGC, is a former vice president of Dongfeng; and Wang Jun, current vice president of CSGC, is a former president of Chang’an. Zhou Zhiping, current president of Dongfeng, is a former president of CCAG and vice president of FAW Group.
The list can go on and on: these senior executive appointments are often made at the central government level than at the corporate level.
Interestingly enough, Liu Weidong, a vice president of CSGC and former vice president of Dongfeng and president of DPCA, is being investigated by China’s central disciplinary and inspection commission, according to a notice published on the commission website on February 12, adding a new twist to the potential merger.
Dongfeng, Chang’an and FAW Group already operate a jointly invested ride-hailing mobility service company called T3 that was established in 2017. Two years later, Dongfeng, FAW Group, CSGC and Chang’an jointly established China Automotive Innovation Corp. (CAIC) engaged in the development of intelligent connected vehicle technologies.
The most recent sign pointing to potential moves came at a State-Council Information Office news conference on high-quality development of China’s centrally administered state-owned enterprises held on January 17, when Lin Qingmiao, director of the Bureau of Enterprise Reform of SASAC said that China would continue to strengthen the strategic restructuring of existing companies and formation of new companies centered on consolidation of centrally administered state-owned enterprises, and improve their competitive positions in key industries.
Other unconfirmed reports have indicated that a special “high-level meeting” was held in Beijing on February 7 that basically approved a major restructuring of FAW Group, Dongfeng and Chang’an.
One possible outcome from the potential merger that has been reported is the formation of a new automotive group, let’s call it for the time being Chang’an Dongfeng Group, or CDG, that will house all of the automotive-related subsidiaries of CSGC including Chang’an as well as those of Dongfeng. The current Chang’an and Dongfeng, as we know them, could be history. Yang Qing, current chairman of Dongfeng, is expected to become the chairman of CDG, while Zhou Zhiping is expected to become president and Wang Jun is expected to become executive vice president, according to media reports.
Rather than an acquisition, which was the case involving SAIC Motor and Nanjing Auto and FAW Group and Tianjin Auto, the Chang’an Dongfeng integration is expected to be an equal merger. Although Dongfeng seems to be taking the lead despite Chang’an doing better on the Chinese brand front. That’s partially because Dongfeng is a directly controlled entity of SASAC, while Chang’an has an additional layer of control in CSGC.
Regardless, the first thing might be to figure out which of the dozens of subsidiaries from both CSGC and Dongeng will be retained under the new entity, CDG. There will likely be consolidation and integration of brands, akin to what Geely Holding Group has done with ZEEKR and LYNK & CO since its Taizhou Declaration announced last Fall. Joint ventures such as Dongfeng Honda, Dongfeng Nissan, Dongfeng Peugeot Citroën (DPCA), eGT New Energy Automotive, Chang’an Ford and Chang’an Mazda will likely remain as long as they are able to commercially survive.
More decisions and announcements are expected to materialize in the coming days and weeks. The potential Chang’an Dongfeng merger, if it comes to fruition, might be a precursor to an even bigger mega merger involving FAW Group.
A huge reshuffle of China’s auto industry landscape unlike any that we have seen before is playing out in the Year of the Snake.
Buckle up, folks!
