KATHMANDU: China’s state-owned automaker First Automotive Works (FAW) Group is reportedly planning to acquire a stake in Guangzhou Automobile Group (GAC).
GAC suspended trading of its shares in Hong Kong and Shanghai on Monday. The company said the suspension was related to the disclosure of “inside information.”
The move came after Chinese financial news outlet Caixin reported that FAW plans to take a stake in GAC and form a joint venture.
If completed, the deal could be an important step in the consolidation of China’s highly competitive car industry.
China’s traditional state-owned automakers are facing growing pressure as the market shifts quickly towards electric vehicles. Many of these companies once relied on joint ventures with global carmakers for a large part of their business.
They are now struggling to keep up with newer Chinese EV companies, which are launching new models and technologies much faster.
GAC reported a net loss of $670 million in the first half of 2026. The loss was 76% higher than a year earlier.
FAW and GAC are both partners of Toyota in China. However, sales at their Toyota joint ventures have also declined. GAC-Toyota sales fell 6.3% in the first half of the year, while FAW-Toyota sales dropped 27.4%.
China’s car industry is also dealing with excess production capacity and a long-running price war. This has increased expectations that weaker automakers could merge or work more closely with stronger companies.
The Chinese government has also shown support for consolidation among major automakers. Officials say mergers could help reduce excess capacity and avoid unnecessary competition between similar products.
However, such deals are not always easy to complete. A proposed merger between Dongfeng Motor and Changan Automobile fell apart last year amid concerns over its impact on local jobs.
GAC shares in Hong Kong had risen 8.6% on Monday before trading was suspended, according to media reports.
FAW Group’s Hongqi brand has entered the Nepali market through Advance Automobiles, while GAC’s Aion brand has established a presence in Nepal through CG Motors.
