Disappointing sales dash revival hopes for Hongqi, auto brand with 'revolutionary history'

PUBLISHED : Monday, 20 January, 2014, 2:33pm
UPDATED : Monday, 20 January, 2014, 3:41pm

A leading Chinese automobile manufacturer’s ambitious bid to revive Hongqi, or "Red Flag", the country’s most famous home-grown luxury car brand, was dashed when its new flagship model was revealed to have only sold 3,000 units last year, reported Chinese Business News.

In comparison it took German luxury brands BMW and Audi, both direct competitors of Hongqi, just three days and two days respectively to sell the same number of cars in China.

The lacklustre sales performance means First Automobile Works (FAW), the manufacturer of Hongqi, only used about 10 per cent of its Hongqi production line capacity as the company once claimed it was able to churn out as many as 30,000 units per year.

This could be a major blow for state-owned, Jilin-based FAW Car Company, where the country’s first domestically produced passenger vehicle was built.

Last year the automaker announced the launch of H7, the newest car series with different models sold for between 300,000 and 480,000 yuan (HK$382,000 – HK$611,000). Advertising it as a wholly domestically produced luxury vehicle, the company tagged it “the official car for minister-level officials” and trumpeted it as a great revival of Hongqi.

Hongqi’s inadequate sales is related to its after-sales service and sale channels, which fall short against its competitors, said Chinese Business News, a leading business daily in China.

It explained that Hongqi stores do not offer car repairs services. “It is like having to take your Audi to a Volkswagen store, or Lexus to a Toyota store for repair,” car critic Zhang Zhiyong was quoted as saying. “This kind of after-sales service has driven away quite a few consumers.”

The establishment of Hongqi, or “red flag” in Chinese, which was originally designed as official carriers for Communist Party elites and foreign guests, came under the directive of late Chinese chairman Mao Zedong as a product to showcase the country’s newly boosted industry capability and promote the nation’s image.

But due to the country’s poor manufacturing capabilities, early generations of the brand were all modifications based on platforms of its famed foreign counterparts including the Chrysler, Audi, Lincoln, and Toyota models.

The cumbersome products have never proved to be popular among officials or among the public because of the known shortcomings of its past models including heavy weight, excessive fuel consumption, and poor reliability.

In 2012, FAW tried to bring Hongqi production back to life as the Chinese government was eager to establish its status as the standard official car for bureaucrats, who have generally preferred driving foreign-made car brands such as Audi.

Its flaws and unpopularity have led to production halts three times in the past, with the last time in 2010.

But despite the poor performance year for Hongqi, FAW has announced a research fund of 10.5 billion yuan between 2013 and 2015.

It will also unveil a high-end luxury model soon – the L9 model, which is expected to cost about four million yuan.