Dongfeng Motor shares surge amid restructuring and merger speculation
Autonews | The Chinese central government owns both Dongfeng Motor and Changan Auto while exercising majority control over shareholdings of their listed subsidiaries.
The Hong Kong trading day brought an 85.8% peak increase for Dongfeng Motor shares because its parent company Dongfeng Motor Corporation revealed its restructuring plans. The market started speculating about potential state-owned automotive merger deals aimed at improving industry performance in what appeared to be an escalating market competition.
The stock price jumped to HKD 6 which marked its highest point since July 2022 and eventually settled at a 20% profit increase. Dongfeng Motor issued a statement on Sunday which confirmed that changes resulting from restructuring will modify the controlling shareholder system without affecting the company's actual controllership. Shares for its Shanghai-listed subordinate company achieved a 10% daily trading limit.
Chinese social media networks further fueled rumors of a potential merger between automakers when Changan Auto shared information about its parent company initiating a restructuring plan. Stocks of Changan Auto showed a 4.8% increase on the Shenzhen market.
The Chinese central government owns both Dongfeng Motor and Changan Auto while exercising majority control over shareholdings of their listed subsidiaries. China supports its state-owned automakers to work away from foreign joint ventures while advancing independent innovations especially in electric vehicle (EV) manufacturing.
Foreign automobile manufacturers particularly in Japan find it difficult to maintain their market position against Chinese carmaker BYD which shows rising sales performance. In 2024 BYD secured the position of being the world's fifth largest automaker when it exceeded annual sales levels of General Motors, Honda and Ford.
The joint venture between Nissan and Honda through Dongfeng experienced a decrease in passenger vehicle sales to 1.54 million units which represented a 11.5% drop from the previous year. Both Changan Auto and Dongfeng use Huawei Technologies partnerships to drive their EV sales effectiveness. Changan's Avatr EV sales more than doubled in 2024, while Dongfeng-backed Seres tripled sales of its Aito-branded vehicles, equipped with Huawei’s advanced driver assistance systems.
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Dongfeng further strengthened its collaboration with Huawei in January, announcing plans to co-develop new EV models under its eπ brand, signaling continued investment in the evolving EV landscape.