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In 2007, a major wave of global asset restructuring began, and the Chinese auto industry was no exception. The sector witnessed a surge in mergers and acquisitions, with both domestic players and foreign investors eyeing opportunities to reshape the market. From small private auto parts companies to major groups like the Shanghai Automotive Industry Corporation (SAIC), the landscape was rapidly evolving.
This phase of restructuring was more diverse, extensive, and complex compared to previous years. One of the most notable developments was the rise of cross-regional reorganization models, often involving equity-based transactions rather than cash deals. A landmark case occurred on December 26, 2007, when SAIC Motor finalized its acquisition of Yuejin Automobile Group, including Nanjing Automotive Group and 75% of Donghua Company’s shares. In return, Yuejin received 320 million shares of SAIC Motor, marking a significant shift in how such deals were structured.
This merger had far-reaching implications for the capital market. It set a precedent for large-scale integration within China’s auto industry. Once completed, SAIC and Nanjing Auto would be fully merged, creating one of the largest auto groups in the country. This move also positioned SAIC as the top domestic automaker in terms of sales and revenue, surpassing FAW Group.
According to Sun Muzi, an analyst at Anxin Securities Research Institute, this deal highlighted a trend seen in mature markets—using stock instead of cash for acquisitions. “Equity-based payments are now common in developed countries during M&A processes,†he noted.
The momentum continued as other major players sought to expand. For instance, Dongfeng Motor was reportedly in talks to acquire Hafei and Changhe Automobile from AVIC, which planned to divest its automotive assets. If successful, this could lead to the formation of a new regional auto giant.
Meanwhile, the Japanese Institute of Modern Culture emphasized that China's government has long supported consolidation among major auto groups, a policy that remains relevant amid growing global competition. Such efforts are expected to enhance economies of scale and improve the industry’s competitiveness.
In addition, the auto parts sector saw its own share of major deals. Xinyi Glass Group made a significant move by acquiring Shenzhen CSG Automotive Glass Co., Ltd. for 232.64 million yuan in cash. This was not only Xinyi’s first major acquisition but also one of the largest in recent years. The deal helped Xinyi expand its production capacity while eliminating a key competitor, positioning it to challenge industry leader Fuyao Glass.
Outside players also entered the scene. Hunan Huatian Industrial Holding Group, originally focused on tourism and hospitality, expanded into the auto sector through strategic reorganizations. In 2007, it took over former Shandong Cylinder Liner Co. and Shandong Chiyu Engine Co., forming Shandong Yinhe Power Co., Ltd. Within 100 days, the company launched a production line for diesel engine cylinder liners, showcasing rapid execution and strong investment.
Industry experts and analysts generally agree that M&A activity will continue to grow in the coming years. A KPMG survey revealed that 81% of Asian respondents expect increased M&A activity in the auto sector. With globalization, technological advancements, and cost efficiencies driving the industry forward, the trend of consolidation is here to stay.