Dongfeng Motor shares soared up to 85.8% after the announcement that the controlling shareholders structure of the company could change.
Just after market opening, the stock jumped up to HK$6.
The shares of this automaker remain under pressure.
Dongfeng’s stock had been down 13% from the beginning of the year. Comparatively, the Hang Seng Index has increased by around 9% year to date.
The stock is currently trading around 21% higher, at HK$3.95.
Automaker Dongfeng Motor Corporation announced on Sunday it is planning to restructure with another centrally-owned state enterprise.
Dongfeng stressed that this restructuring would not “change the actual control.”
Speculation of Dongfeng-Changan merger grows
Changan Auto also released a press release on Sunday about a restructuring program involving the parent company. This fueled speculation in Chinese social media regarding a possible merger between Changan Auto and Dongfeng.
The Chinese government owns both companies.
After this announcement, shares of Changan Auto rose 5.6% in Shenzhen.
A merger, if true, could make a strong entity on China’s competitive auto market.
China’s state-owned automobile manufacturers have been encouraged to focus more on innovation and less on joint ventures with foreign companies, especially in the segment of new energy vehicles (NEVs).
China’s traditional automakers face increasing competition as the nation’s electric vehicles and hybrid vehicle manufacturers grow rapidly.
The automotive landscape in China is being reshaped by these emerging players, who are using innovative technologies and competitive pricing. They also place a high priority on sustainability.
Due to the lack of electric vehicles that are competitive, foreign automakers have lost market share, particularly Japanese brands.
BYD is a privately owned Chinese carmaker that has become a global leader on the automotive market. BYD will surpass General Motors and Ford as the world’s fifth largest automaker in 2024.
Dongfeng’s Position in the EV Race
Dongfeng in China is a partner of Nissan and Honda. In 2024 they sold 1,54 million vehicles, a decline of 11.5% compared with 2023.
The company has increased its focus on the NEV sector despite the economic downturn.
Dongfeng Motor Corporation and Huawei signed a collaboration last month to create mid-range smart electric cars.
Huawei and Dongfeng will jointly develop advanced EVs, including Voyah models that integrate Huawei’s leading-edge driving technologies.
Both companies are working to improve the Yipai travel brand.
The post China’s Dongfeng Motor’s shares rocketed 85% today: Here’s Why may be updated as new information becomes available
