FAW to expand cooperation with GAC in China — TimesLIVE

Chinese state-owned automotive group FAW intends to expand cooperation with Guangzhou Automobile Industry Group, the controlling shareholder of GAC. The companies aim to improve quality and operational efficiency amid consolidation in the world’s largest automotive market, TimesLIVE reports.

Strategic agreement

FAW and Guangzhou Automobile Industry Group have signed a framework agreement on strategic cooperation. According to FAW, the parties will seek a new model of interaction between China’s central and local state-owned automakers.

The framework agreement was signed after GAC said that FAW was set to become its second-largest shareholder. This is to happen through GAC’s acquisition of a 50% stake in the FAW Toyota joint venture.

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Technology and supply chains

The China Association of Automobile Manufacturers called on FAW and Guangzhou Automobile Industry Group to jointly develop technologies and share resources. In the association’s view, this should strengthen the companies’ competitiveness and the resilience of supply chains.

At the same time, cross-regional integration of the automotive industry faces difficulties, including the transfer of production capacity quotas, the distribution of tax revenues, and lengthy approval procedures. The association called on the authorities to support industry consolidation.

China has also unveiled a roadmap through 2030 to strengthen its intelligent electric vehicle industry. It provides for limiting excessive investment, encouraging consolidation, and eliminating inefficient capacity.