Guangzhou Automobile Group may merge its GAC Changfeng Motors unit with Japan Mitsubishi Motors in a 50-50 joint venture.
Shares in Changfeng Motors have been suspended from trading since October 28.
In May 2009, Guangzhou Automobile Group bought a 29 percent stake in GAC Changfeng Motors from Changfeng Group and agreed a joint investment program of 10 billion yuan (US$1.5 billion) over five years to boost annual output to half a million units.
Guangzhou Automobile Group, Changfeng Group and Mitsubishi Motors currently hold 29 percent, 21.98 percent and 14.59 percent stakes in GAC Changfeng Motors respectively.
China's business press carried the story above on Thursday. China.org.cn has not checked the stories and does not vouch for their accuracy.