Car firm flies Red Flag against Audi and BMW

Former favourite of Communist Party elite is revived to do battle with top foreign car brands

PUBLISHED : Thursday, 30 May, 2013, 12:00am
UPDATED : Thursday, 30 May, 2013, 4:33am

Chairman Mao Zedong's Red Flag cars go on sale to the public today after a US$300 million overhaul, pitting the symbol of Communist privilege against Audi and BMW for the mainland's elite.

China FAW Group, which built the first Hongqi, as the brand is known in Chinese, for Mao in 1958, will hold an event this evening to mark the start of retail sales, according to Fan Xiaojing, a marketing executive with the state-owned carmaker.

FAW Group, formerly called First Automotive Works, and started by the Communist Party of China as a linchpin of industrial policy, has delivered more than 500 Red Flags to government agencies and has been included by the Ministry of Commerce as an item for foreign aid.

To win private sales, FAW will have to compete against foreign luxury car brands from Audi to BMW and Mercedes-Benz.

Cao He, an analyst with China Minzu Securities in Beijing, said: "China's car market is like a jungle full of ferocious beasts. The Red Flag is like a panda that grew up in a man-made environment. It won't survive unless it has the toughest type of DNA." "

FAW made about 1,500 Red Flag cars, reserved for high-ranking government and party officials, in the 24 years before the brand was discontinued in 1982 for having excessive fuel consumption.

The revived brand is receiving a similar boost from the current Communist Party leadership.

According to the 21st Century Business Herald in March, President Xi Jinping said in a closed-door meeting in December that "it doesn't look good" for government officials to ride in foreign-brand cars all the time.

Last month, FAW delivered 12 Red Flags to the Zhejiang provincial government, which bought the cars to support the party's government-car reforms, the company said.

In April, French president Francois Hollande was ferried in a Red Flag L5 limousine during his state visit to China.

The carmaker sent 20 Red Flags to Fiji for use at the Group of 77 summit.

The car was included by the commerce ministry among items the government may donate to foreign countries and the carmaker said it was actively liaising with Chinese embassies and overseas governments to "fly the Red Flag in all corners of the world".