On September 30, GAC Group released a significant announcement, reviewing and approving the proposal on “GAC Honda Equity Investment Matters.” GAC Honda Automobile Co., Ltd. (referred to as “GAC Honda”) will acquire 50% of the shares in Dongfeng Honda Engine Co., Ltd. (referred to as “Dongben Engine”) held by Dongfeng Motor Group Co., Ltd. through a public transfer at the Guangdong United Property Rights Exchange Center. The listing price is 1.172 billion yuan, and the funding source will be a cash capital increase.
First, let’s take a look at the history of Dongben Engine. Established on July 1, 1998, Dongfeng Motor Group Co., Ltd. holds a 50% stake in Dongben Engine, while Honda Motor Co., Ltd. and Honda Motor (China) Investment Co., Ltd. hold 40% and 10%, respectively. The company is located in the Huangpu District of Guangzhou. Both the registered and paid-in capital are 12.158 million USD. In terms of finances, Dongben Engine achieved a revenue of 9.566 billion yuan in 2024, with a net loss of 228 million yuan. In the first half of this year, it had a revenue of 3.807 billion yuan and a net profit of 371 million yuan.
Although the name of Dongben Engine includes “Dongfeng Honda,” it has little to no direct relationship with Dongfeng Honda Automobile Co., Ltd. It is located in Guangzhou, and the engines, transmissions, and other core components it manufactures are primarily supplied to GAC Honda.
In 1998, Dongben Engine and GAC Honda began collaborating on the “Guangzhou Sedan Project,” using a “one project, two companies” model: GAC Honda was responsible for vehicle production, while Dongben Engine, as a supporting enterprise, handled powertrain supply, including the development and production of engines, transmissions, and related parts. These products were mainly used in the series of passenger vehicles produced by GAC Honda (such as the Accord and Odyssey models), with only a small amount of basic parts, such as cylinder blocks and cylinder heads, supplied to Dongfeng Honda. The company did not engage in vehicle production.
In August this year, according to the official website of Guangdong United Property Rights Exchange, Dongfeng Motor Group Co., Ltd. announced plans to sell 50% of its shares in Dongben Engine. This means that if the share acquisition is completed, Dongfeng Group will completely exit Dongben Engine, and after GAC Group increases its investment in GAC Honda, Dongben Engine will become a wholly-owned subsidiary of GAC Honda.
GAC Honda stated that through the acquisition of Dongben Engine’s shares, it will further enrich its engine product matrix. Engines are crucial components for hybrid and plug-in hybrid models, and this move will strengthen the foundation of the hybrid and gasoline vehicle sectors, enhancing the company’s competitiveness and laying a more solid foundation for its transformation and upgrading.
GAC Group stated that Dongben Engine mainly supplies engines and parts to GAC Honda. If this equity acquisition and capital increase are completed, it will facilitate the integration of GAC Honda’s engine operations, improving the stability and autonomy of the supply chain. This will also help improve management efficiency, reduce costs, and enhance operational benefits, laying a solid foundation for accelerating the transition to smart and electric vehicles.
According to the announcement, the listing price for the 50% stake in Dongben Honda Engine Co., Ltd. is 1.172 billion yuan. After GAC Honda successfully acquires the shares, GAC Group will inject capital into GAC Honda and will encourage Honda to use its 50% stake in Dongben Engine to further increase its investment in GAC Honda. This series of capital investments and equity operations demonstrates GAC Group’s optimism about GAC Honda’s future development and its strong support during a critical period. It will help GAC Honda make breakthroughs in a competitive market and enter a new phase of growth.
“Automotive Industry Focus” believes that once GAC Honda completes the acquisition of Dongfeng Honda Engine, it will achieve fully independent engine supply, reducing communication costs with external suppliers, transportation costs, and profit loss from intermediary links. By integrating resources and adopting unified management, the production process can be optimized, production costs lowered, and production efficiency improved. This will make vehicle prices more competitive, improving overall operational efficiency. Ultimately, these optimizations will translate into enhanced market competitiveness, helping GAC Honda stand out in the intense market competition, expand its market share, and achieve sustainable development.
