Resistance to Chinese automakers in the U.S. hasn’t deterred the deepening of alliances with the companies abroad, as more automakers turn to partnerships and restructure existing relationships to improve efficiency.
Digging in: Guangzhou Automobile Group (GAC) has signed a letter of intent to acquire part of FAW Group’s stake in an unnamed auto joint venture with an overseas-listed company, with Chinese state media reporting that the JV is FAW Toyota, according to Reuters. The transaction has not been finalized and remains subject to approvals.
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Under the deal, reportedly being strongly pushed by Toyota’s Japanese side, Toyota would hold 50% of a merged Toyota sales company in China, with FAW and GAC holding 25% stakes each.
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Dealer networks would be fully integrated under the new company, allowing it to sell and service all Toyota models in China.
For decades, Toyota expanded in China through separate partnerships with FAW in the north and GAC in the south, a strategy that helped it build scale in a fast-growing market but has become less viable as growth slows and competition intensifies, per Reuters.
Why it matters: Integrating Toyota’s Chinese dealer networks could help eliminate overlapping operations and make sales and service more efficient, illustrating how automakers are rethinking how they leverage partnerships with Chinese automakers as they look to cut costs and remain competitive in an increasingly challenging market.
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Between the lines: The potential Toyota restructuring also reflects a broader trend as automakers look for ways to address overcapacity and other industry challenges. This comes amid intensifying competition, as partnerships with Chinese automakers expand around manufacturing efficiency, R&D capabilities, and technology.
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SAIC Motor and General Motors (GM) signed an agreement in early August to extend their joint venture partnership by 20 years to 2047, per a Global Times report.
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A month earlier, Honda Motor and GAC Group signed a strategic agreement to renew their joint venture partnership with GAC Honda.
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Ford has been working to expand its partnerships with Chinese manufacturers abroad, including a new joint venture with Chinese automaker Geely in Spain, amid criticism from some U.S. officials and lawmakers.
What they’re saying: “These examples reflect a broader shift in China’s auto industry, where strengths in advanced manufacturing, supply chains, software, AI, and rapid technology commercialization are increasingly translating into a competitive edge,” said Sun Xiaohong, former secretary-general of the automotive branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, per Global Times.
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