The planned restructuring of Wuhan, Hubei province-headquartered Dongfeng Motor Corp and Chongqing-based Changan Automobile is expected to create a more integrated and competitive automaker capable of competing with global giants like Toyota, Volkswagen and Tesla in the coming years, said analysts on Monday.

A number of listed subsidiaries of State-owned Dongfeng Motor and CSGC, the parent company of Changan Automobile, including Dongfeng Automobile Co and Harbin Dongan Auto Engine Co, announced possible changes to their controlling shareholders on Sunday.

The listed companies under CSGC announced that they had received a notice from their parent company regarding ongoing restructuring plans with other State-owned enterprises.

They said that while the restructuring could result in changes to their controlling shareholders, it would not affect the ultimate controlling entity. They also emphasized that the plan remains subject to approval from the relevant authorities.

Even though Dongfeng Motor and CSGC have not explicitly named each other as restructuring partners, market watchers said that there is a high possibility of integration among China's State-owned automakers' passenger vehicle businesses.

Currently, Changan Automobile, in partnership with Chinese technology company Huawei Technologies Co, maintains a leading position in the transition to new energy vehicles and intelligent mobility development, said Zhang Xiang, an auto industry researcher at the Beijing-based North China University of Technology.

"Therefore, it is expected that Changan Automobile will play a leading role in the future integration of the passenger vehicle businesses owned by centrally administered SOEs," Zhang said.

Dongfeng Motor reported vehicle sales of 2.48 million units in 2024, reflecting a 2.5 percent year-on-year increase, according to information released by the State-owned Assets Supervision and Administration Commission of the State Council, the country's Cabinet.

Meanwhile, Changan Automobile achieved total sales of 2.68 million vehicles last year, marking a 5.1 percent growth compared to the previous year. Notably, the company's NEV sales surpassed 734,000 units, representing a 52.8 percent year-on-year surge.

Based on their production capacity, the restructuring will effectively enhance the competitiveness of Chinese vehicle brands on the global stage, Zhang added.

In terms of component integration, the restructuring of these two SOEs will significantly expand the procurement scale, enhancing their bargaining power with component suppliers. This is expected to cut procurement costs and improve the overall efficiency of the supply chain, said Ding Rijia, a professor specializing in industrial economy at the China University of Mining and Technology in Beijing.

Further, if both companies integrate their component technologies, it will enhance the technical sophistication and performance of vehicle components, Ding said.

Speaking at a news conference in Beijing last month, Lin Qingmiao, head of the SASAC's bureau of enterprise reform, said the government's key focus will be on the restructuring and integration of central SOEs this year, in order to further promote the optimization of the State-owned economy's structural adjustment going forward.

Lin said that China will speed up the allocation of State capital to critical industries related to national security and the lifeline of national economy, public services, emergency response capabilities, public welfare and strategic emerging industries.

Eager to enrich user experience, Dongfeng Motor announced last week the successful integration of the full range of DeepSeek's open-source large language model. Its brands, such as M-Hero and Nano Box, are set to incorporate and deploy this technology in their vehicles soon.

Among these, the intelligent cockpit of the M-Hero 917, one of Dongfeng Motor's luxury models, has already integrated the DeepSeek-R1 model, with an over-the-air update scheduled for April 2025.

Through continuous customized model distillation and AI training, M-Hero owners will enjoy a significantly enhanced smart cockpit, featuring faster voice recognition, improved semantic understanding and humanlike responses, as well as expanded functionality for offroad driving scenarios, said Dongfeng Motor.