Shares of Dongfeng Motor soared by as much as 85.8% on Monday following the announcement of a potential change in the company’s controlling shareholder structure.
The stock jumped to HK$6 shortly after the market opened.
Shares of the automaker have remained under pressure over the past few months.
Before the surge today, the Dongfeng stock was down around 13% since the start of the year. In comparison, the Hang Seng index has climbed up around 9% on a year-to-date basis.
At the time of writing, the stock has shed most of its initial gain to trade around 21% higher at HK$3.95.
The automaker disclosed on Sunday that its parent company, Dongfeng Motor Corporation, is planning a restructuring with another central state-owned enterprise.
While this restructuring could alter the controlling shareholder structure, Dongfeng emphasized that it would “not result in a change to the actual controller.”
Speculation of Dongfeng-Changan merger grows
Similarly, Changan Auto released a statement on Sunday regarding a restructuring plan involving its parent company, fueling speculation on Chinese social media about a potential merger between Changan and Dongfeng.
Both companies are owned by the Chinese government.
Shares of Changan Auto climbed 5.6% in Shenzhen on the back of this announcement.
If the speculation holds true, a merger could create a stronger entity in China’s increasingly competitive automotive market.
China has been urging its state-owned automakers to reduce reliance on foreign joint ventures and focus on independent innovation, particularly in the new energy vehicle (NEV) segment.
China’s legacy automakers are facing increasing pressure as they contend with fierce competition from the country’s rapidly growing electric vehicle and hybrid manufacturers.
These emerging players are gaining traction with innovative technologies, competitive pricing, and a strong focus on sustainable mobility, reshaping the landscape of the automotive industry in China.
Foreign automakers, especially Japanese brands, have also been losing market share in China over the past three years due to a lack of competitive electric vehicle offerings.
BYD, a private Chinese automaker, has emerged as a leader in the global automotive market. In 2024, BYD became the fifth-largest automaker globally, surpassing General Motors, Honda, and Ford in annual sales volumes.
Dongfeng’s position in the EV Race
Dongfeng, which partners with Nissan and Honda in China, sold 1.54 million passenger vehicles in 2024, marking an 11.5% decline compared to 2023.
Despite the downturn, the company is ramping up its efforts in the NEV market.
Last month, Dongfeng Motor Corporation signed a partnership with Huawei to develop mid-range and high-end smart electric vehicles.
The collaboration includes joint development of advanced EVs under Dongfeng’s Voyah brand, which integrates Huawei’s cutting-edge driving solutions.
The two companies aim to enhance the Yipai brand and redefine the smart travel experience.
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