Although FAW Group is expected to complete the A-share listing, the overall integration may face challenges due to coordination issues among stakeholders. The two major centers in Changchun and Tianjin, representing central interests, are more likely to remain separate. This internal division could complicate the process of a unified listing.
FAW Group, one of China’s top three automotive manufacturers, is moving closer to an overall listing, either as a full-scale consolidation or with accelerated timelines. According to internal sources, the group has reached the final stages of planning for the A-share listing, which is expected to be announced by August. Both SAIC and Dongfeng have already completed their overall listings, setting a precedent for FAW.
It is confirmed that FAW will successfully complete its A-share listing. While overseas listings can boost brand visibility, they often suffer from lower valuations. In contrast, the current A-share market is experiencing a surge in valuations, making it highly favorable for FAW’s overall listing.
An integrated listing is considered to be in the best interest of the company. Since the start of this year, FAW Cars (000800), holding 52.96% shares, FAW Xiali (000927) with 47.73%, and FAW Fourth Ring (600742) with 20.14% have seen gains of 133%, 31%, and 131% respectively. FAW Cars produces models like Pentium and Hongqi, while FAW Xiali specializes in economical cars. FAW Sihuan focuses on parts and components. The unlisted assets include key joint ventures such as FAW-Volkswagen, FAW-Toyota, and FAW-Liberation.
Due to the long-term underperformance of FAW Liberation, profits from FAW-Volkswagen and FAW-Toyota account for nearly half of FAW Group's total earnings. Therefore, the real significance of the overall listing will depend on whether FAW can integrate these joint ventures effectively.
The market is closely watching the integration of passenger vehicle resources within FAW, especially the equity structure of the joint ventures. Whether the shareholder status can be smoothly converted so that the rights of the joint ventures are included in the listed assets remains a point of contention.
Previously, both Dongfeng Motor and SAIC achieved full listings by consolidating all operations into one company. In March, JAC Chairman Zuo Yanan mentioned that JAC Group is essentially a holding company, with its main businesses already covered by its listed subsidiaries, making a full listing unnecessary.
Within FAW, the debate continues between "total listing" and "split listing." Some prefer to consolidate core businesses into a single listed entity, similar to Dongfeng and SAIC, while others advocate for splitting them among multiple listed companies, as seen with JAC.
Behind these differences lies a power struggle between the "central" and "local" factions. Changchun-based FAW Car, with strong product development capabilities and profitability, believes that FAW Group should use Changchun as the base to inject FAW-Volkswagen and FAW-Toyota assets.
If this approach is followed, Changchun-based FAW Car would become the sole listed platform, gradually integrating passenger car assets, commercial vehicles, and parts into the company. The placement of FAW-Volkswagen equity could begin soon.
"A red flag car produced by FAW Car represents the group’s own brand," noted an analyst. Choosing FAW Car as the sole platform aligns with the company’s strategy of developing independent brands, beyond just historical performance.
However, another faction, including FAW Xiali and FAW Toyota, representing central interests, supports a dual-center model—Changchun and Tianjin. They propose that FAW Xiali acquire 20% of FAW Toyota’s shares through private placement, placing the joint venture equities in FAW Cars and FAW Xiali separately, while parts assets may go to FAW Fourth Ring.
It is understood that more developed plans favor splitting core businesses into different subsidiaries. For FAW, integrating all core assets into one listed company is challenging, especially when coordinating relationships between parties. As one expert put it, "For state-owned assets, the priority is asset securitization, not just overall listing."
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