Chongqing - After nearly four months, the restructuring plan between Dongfeng Motor Corporation (Dongfeng) and Changan Automobile (Changan) took a major turn. This may put an end to the potential birth of a new Chinese central state-owned auto group with annual sales of over five million units, which would have ranked fifth among global carmakers.

In the welding workshop of Changan Automobile's Second Plant in Liangjiang New Area, intelligent robotic arms carry out welding operations. (Photo/Wang Jiaxi)

Changan, headquartered in Chongqing, announced today that it received a notice from its parent company, China South Industries Group Corporation (CSGC), that the State-owned Assets Supervision and Administration Commission (SASAC) has approved the split of CSGC. The CSGC's auto business will now become an independent central state-owned enterprise (SOE).

Following the split, Changan’s indirect controlling shareholder will be the newly established auto-focused central state-owned enterprise. Its status as a second-tier subsidiary enterprise remains unchanged, and the company emphasized that the change will not impact its normal operations.

On the same day, Dongfeng, the other key party in the proposed merger, stated that its subsidiary, Dongfeng Automobile Co., Ltd. (DFAC), confirmed it is currently not involved in any asset or business restructuring. The company added that its production and operations remain unaffected.

Back in February, both CSGC and Dongfeng had disclosed that their respective parent companies were in talks with other central state-owned enterprise (SOE) groups, sparking widespread speculation about an imminent reshuffling of China’s state-owned auto sector.

The initial plan involved spinning off CSGC’s military assets and merging its automotive division with Dongfeng to form a new central state-owned enterprise (SOE) in the automotive sector. However, the latest developments indicate a different direction: CSGC’s auto business will become a standalone state-owned enterprise (SOE), and the merger with Dongfeng will not proceed.

The automotive business of CSGC primarily includes Changan, China Changan Automobile Group, and Harbin Dongan Auto Engine Co., Ltd. Although Changan retains a subsidiary status, its scale, market influence, and technological strength make it the clear core of the newly established car central state-owned enterprise (SOE).

According to Chongqing Daily, industry insiders believe Changan's upgrade to the core entity marks a historic opportunity for both the company and Chongqing’s auto industry.

As the main body, Changan will gain more direct access to national-level special funds and be able to efficiently integrate key CSGC resources, such as engines and turbochargers, to build a closed-loop supply chain.

Changan will also gain greater strategic autonomy, enabling faster R&D on core technologies such as smart electric platforms and advanced electric drive systems. The company will independently advance the expansion of its NEV brands, Deepal and Avatr, and deepen partnerships with leading technology firms, such as Huawei and CATL.

The new status is also expected to boost Changan’s global reach, enabling it to align more closely with national initiatives such as the Belt and Road Initiative (BRI) and reduce logistics costs through channels like the China-Laos Railway.

Deepal is the new energy vehicle brand under Changan Automobile. (Photo/Deepal)

At the China EV100 Forum held on March 29, SASAC Deputy Director Gou Ping noted that the strategic restructuring of central state-owned enterprises (SOEs) in the automotive sector aims to build a globally competitive automotive group with core technologies and leadership in intelligent connected vehicles.

Though the latest outcome diverges from that strategy, it aligns with SASAC’s emphasis on central SOEs focusing on core businesses. SASAC Director Zhang Yuzhuo has been intensively visiting state enterprises recently, with “focusing on core business” emerging as a central theme of the inspections.

On June 5, Changan Automobile closed at 12.98 yuan (1.81 USD) per share, up 3.34%. In contrast, Dongfeng’s Hong Kong-listed stock dropped 14.45%, closing at 3.61 HKD.