Dongfeng Motor Corp plans to take its Hong Kong-listed unit, Dongfeng Motor Group, private in a deal valued at HK$55.1 billion (US$7.1 billion).

The company also plans to spin off its EV arm, Voyah, for a separate Hong Kong listing.

Dongfeng will pay HK$6.68 (US$0.85) per share, an 11.9% premium to Dongfeng Motor Group’s August 8 closing price before a trading halt.

The parent company currently owns 13.16% of Dongfeng Motor Group and has applied for the stock’s resumption on the Hong Kong exchange.

The move comes as Chinese automakers face ongoing price wars that have increased costs and reduced profit margins, prompting greater regulatory scrutiny.

Dongfeng owns nearly 80% of Voyah.

Earlier in August, Dongfeng announced plans to sell its 50% stake in Dongfeng Honda Engine Co. Shares of Dongfeng Motor rose over 80% in February after initial restructuring news.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Financial pressures from price wars are driving major restructuring moves

Dongfeng’s $7.06 billion privatization comes as China’s automotive industry faces significant financial strain from aggressive pricing competition.

The industry recorded cumulative retail losses of 177.6 billion yuan ($24.7 billion) in the first 11 months of 2024 alone, with profits falling 5.1% despite revenue increases 1.

Chinese automakers have slashed prices by up to 34% to clear excess inventory, with BYD cutting prices across 22 models 2.

This financial pressure explains why Dongfeng is consolidating its operations. Privatization reduces the costs and reporting requirements of a public listing while the company navigates this challenging period.

The move reflects broader industry restructuring, with companies like Geely halting capacity expansion and focusing on repurposing existing facilities rather than building new ones 1.

2️⃣ State-owned enterprises are splitting operations to compete in the EV transition