China has long called for consolidation to rein in production overcapacity in the world's biggest auto market, only for those efforts to fizzle. But a deal involving two state-owned companies is a sign that it may finally have found a way of tackling the problem of making too many cars.
Guangzhou Automobile Group announced plans to buy a stake from FAW Group in an unspecified car-manufacturing venture by issuing GAC shares to FAW in return. Since both companies make Toyota models in China, analysts said the move likely indicates the two government-owned firms are planning to combine those operations.
