Hongqi looks to turn around sales slump

A manager at the Hongqi sales unit of State-owned automaker FAW Group confirmed Thursday that sales of Hongqi brand cars have been slack over the last two years and the company is now aiming to boost sales of its new model to revive the iconic Hongqi brand.

The manager was responding to a report by The Wall Street Journal last week which said FAW sold only two Hongqi cars in 2011 - a sharp decline from 6,085 units in 2006 - and 127 Hongqi cars in 2012, citing estimates from Guosen Securities, a Shenzhen-based financial service firm.

"The figures were correct. We did sell two Hongqi brand cars in 2011, but they were old-model inventory," a manager at FAW Hongqi Car Sales Co who declined to be named told the Global Times Thursday.

"In 2011, we didn't unveil any new models, so what we sold in 2011 were the remaining old models produced in 2009 and 2010," the manager said.

The manager said the company sold more than 100 of its newly developed H7 sedans in 2012 in advance of the model's official launch at the end of May this year.

So far this year, the company has sold 1,000 H7 cars, the manager said, without revealing information about the buyers.

Zhang Xiaojun, general manager of FAW Car Sales Company, said at the end of May that all 1,000 Hongqi cars were sold to government agencies.

FAW introduced five H7 models on May 30, priced between 299,800 yuan ($48,511) and 479,800 yuan.

The homegrown H7 models are positioned as high-end business cars, and will initially target officials before gradually entering the personal car market to compete with foreign brands such as Audi and Mercedes-Benz.

Hongqi cars have been an icon ever since the first 20 were unveiled in 1959 to mark the 10th anniversary of the People's Republic of China. As a prime ceremonial car, Hongqi had been used by State leaders at important occasions and for carrying important foreign guests.

The government ordered production of the cars to cease in 1981 due to high fuel consumption, high cost and low production numbers. Manufacturing resumed in 1992 but sales were low. In 2008, FAW introduced a plan to revive the Hongqi brand.

"Chinese people have a special attachment to the Hongqi brand because it carried China's automotive dreams in the early years of New China. The brand has lost its market once already and can't afford to lose it again," Zhong Shi, an independent auto industry analyst in Beijing, told the Global Times.

"Homegrown cars in China emerge almost every day. If Hongqi can successfully market its new H7 model as it has said, targeting officials above ministerial level and high-end users, it may see a turnaround," Zhong.

In December, Chinese president Xi Jinping called on officials to use domestically-produced cars.