Just days before the Honda-Nissan merger officially fell through, reports from China hinted at another merger between Chinese automotive giants Dongfeng and Changan. While these two brands are still developing in the Philippines, back in their home market, Dongfeng and Changan sell millions of vehicles every year.
A Dongfeng-Changan merger would create the largest automotive company in China—surpassing BYD, the current industry leader in the Chinese market. A report from CarNewsChina.com detailed how Dongfeng and Changan are exploring restructuring partnerships with state-owned enterprises (SOEs), which then prompted speculation that the two carmakers could be considering an alliance. It should be noted that Dongfeng and Changan are SOEs themselves, and a potential merger will not likely lead to privitization.
The same report explained that Dongfeng and Changan both failed to reach their sales targets in China last year, showing significant year-on-year decreases as well. Meanwhile, privately owned BYD has amassed a bigger share in the Chinese and global markets.
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Neither Dongfeng nor Changan have officially addressed the rumors and speculation, but another report from Reuters mentioned that Dongfeng is already planning to restructure with other SOEs—the specific enterprises, however, were unnamed.
From the looks of it, the Honda-Nissan merger fell apart due to the two entities not being able to compromise on a path forward. Honda may have demanded too much from Nissan, while Nissan may have not realized its lack of leverage in negotiations. However, Dongfeng and Changan may be able to find common ground faster and more efficiently given that they are both SOEs.
More details to come as the restructuring plans from Dongfeng, Changan, and other Chinese SOEs unfold.
