Investing.com-- Shares of Dongfeng Motor (HK: 0489 ) rose on Wednesday after a New York Times (NYSE: NYT ) report stated that the Chinese state-owned automaker is in advanced talks to merge with Changan Automobile (SZ: 000625 ).

Both state-owned automakers Dongfeng Motor and Changan Automobile are in advanced talks to merge, aiming to consolidate the country’s auto industry and shift focus toward electric vehicles, The New York Times reported on Tuesday citing sources familiar with the matter.

The potential deal aligns with Beijing’s push for consolidation in the auto industry, as policymakers seek to curb overcapacity and accelerate the transition to electric vehicles (EVs).

Dongfeng and Changan, which together produce about five million vehicles annually, have reportedly informed their foreign partners, including Ford, Nissan (OTC: NSANY ), and Honda (NYSE: HMC ), of their merger discussions, the NYT report stated.

Dongfeng has yet to issue an official statement, but investor optimism over the potential consolidation sent its shares higher in Hong Kong trading.

Hong Kong-listed Dongfeng shares rose as much as 2.8% to HK$4.74. They were trading 0.8% higher at HK$4.65 as of 03:59 GMT.

Shenzhen-listed Changan Automobile stock was 0.7% lower.

Other carmaker stocks were higher in line with the broader uptick.

Geely Automobile (HK: 0175 ) shares rose 3.5%, while NIO Inc (HK: 9866 ) stock gained 0.8%.

Xpeng (NYSE: XPEV ) Inc (HK: 9868 ) shares were trading 0.7% higher.