Toyota’s operations in China are about to experience a major shakeup. That’s because GAC recently announced it plans to acquire a 50% equity stake in the FAW-Toyota joint venture, which will effectively replace FAW in the partnership.

The planned acquisition by GAC is to streamline operations, as Toyota currently operates in China under two separate joint ventures: GAC-Toyota and FAW-Toyota. The former produces Toyota vehicles in Guangzhou & Guangdong provinces, while the latter makes Toyota cars in Northern China, specifically in Tianjin, Changchun, and Chengdu.

Toyota Wildlander built by GAC-Toyota

While the two Toyota joint ventures have been operating for quite a while, their model lineup has been overlapping for several years. For instance, GAC-Toyota used to manufacture and sell the Yaris L sedan (not to be confused with the Vios sedan), while FAW-Toyota assembles and sells the Vios L Hatchback. 

Today, GAC-Toyota makes the Wildlander, while FAW-Toyota builds the RAV4. Both vehicles are essentially the same, but built by a different joint venture.

Under the new deal, Toyota will retain its 50% stake in FAW-Toyota. However, GAC will replace FAW as the brand’s partner after it secures the 50% equity stake. Once finalized, this will bring Toyota’s Chinese operations under a single local umbrella through GAC.

Toyota RAV4 manufactured by FAW-Toyota

But what does this mean for FAW? Despite GAC taking over the joint venture, FAW will reportedly become GAC’s second-largest shareholder under the new deal. In addition, sales of internal combustion engine (ICE) cars in China continue to shrink, as the market shifts towards electrified vehicles. Combined with the fact that Toyota is set to join the extended range EV (EREV) segment in China, it stands to reason that Toyota decided to consolidate its operations in China amid intensifying competition.

Once the deal between Toyota, GAC, and FAW is finalized, we can expect more electrified vehicles to be built by GAC-Toyota. The question now is whether this could lead Toyota Motor Philippines to leverage the GAC-Toyota joint venture to bring more electrified models to the country.