INDUSTRY BRIEF: Changan-Dongfeng merger crashes

A long-rumored merger between Changan Automobile and Dongfeng Motor has officially collapsed after nearly four months of speculation.

Changan Automobile Co. Ltd. (000625.SZ) announced on Thursday that its parent, China South Industries Group Corp. (CSGC), will spin off its automotive business into a standalone central state-owned enterprise, with the State-owned Assets Supervision and Administration Commission (SASAC) as its controlling shareholder. On the same day, Dongfeng Motor Group Co. Ltd. (0489.HK) stated that it would not participate in any asset or business restructuring, signaling a major scale-back in SASAC’s plans to consolidate China’s state-owned automakers.

According to Caixin, the government was originally trying to engineer a merger between Changan and Dongfeng’s to form a new state-owned car giant tentatively named China Southern Auto Group, with headquarters at Changan’s base in the city of Chongqing. However, significant differences over leadership structure, decision-making authority, and headquarters location — compounded by intervention from local governments — led to the plan’s collapse.

Sources quoted by Caixin said the restructuring was to be led by Changan, with hopes of revitalizing Dongfeng’s operations. But internal resistance and political bargaining ultimately led to the merger’s collapse. Analysts noted that mergers alone are unlikely to strengthen state-owned automakers, and SASAC’s retreat from pushing the merger suggests that future consolidation in China’s auto industry will rely more heavily on market forces.

Following the announcement, Changan shares rose 3.34% to 12.98 yuan, while Dongfeng Motor fell 14.45% to HK$3.61 on Thursday.

By Lee Shih Ta

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