Chinese Automakers FAW and GAC Plan State-Backed Merger Amid Declining Sales
Chinese automakers FAW and GAC are pursuing state-backed consolidation amid falling sales and profits, a move that could reshape automotive markets, including Israel.
Intense competition among Chinese automakers and declining profitability are prompting the Chinese government to orchestrate mergers and acquisitions within the state-backed automotive sector. According to reports in China, FAW—whose Hongqi vehicles are marketed in Israel—is set to become the second-largest shareholder in GAC, whose AION cars are also sold on the Israeli market.
While the exact impact on the Israeli automotive market remains unclear due to the time required to complete the consolidation, GAC recently announced a trading suspension followed by a joint venture with FAW, reportedly involving a factory that manufactures Toyota vehicles for the domestic Chinese market. In 2025, GAC sold 1.72 million vehicles, marking a 14.6% decline compared to 2024, with revenues dropping 10.4% to 95.7 billion yuan (approximately $1.4 billion). Meanwhile, FAW produced 3.31 million vehicles in 2025, down from 3.73 million in 2024.
This strategic restructuring comes as no surprise. In March 2025, China's State-owned Assets Supervision and Administration Commission (SASAC) mandated that state-affiliated automakers undergo reorganization and mergers to boost overall operational efficiency.
