FAW Announces Plan to Revive Hongqi Limousines

FAW Car Co.(000800.SZ), a passenger car division of First Auto Works (FAW), announced today that it will spend 3.11 billion Yuan in the coming 3-4 years on upgrading and expanding sedan and engine production. Most of the investment is aimed directly at reviving "Hongqi" (Red Flag), the luxury cars that have been a symbol of red China and are half-dead recently.

The first Hongqi (ca72) was developed in 1958-9 for official use at the celebration of the 10th anniversary of the People’s Republic on Tiananmen Square. It was hand-made based on a 1955 model Chrysler. Evolving into several models (ca770, ca771, ca772, ca773, etc) before 1981 when its production was halted, Hongqi had been manufactured in very limited numbers and provided almost exclusively to high officials, usually members of the politburo.

FAW re-launched Hongqi in the 1990s, and has modeled it on several foreign cars including Audi 100, Audi 200, the Lincoln Town Car, and Toyota Crown. The current version, Shengshi (HQ3), was based primarily on the last and first released in 2006. The new Hongqi has been targeting executives and China’s new rich; however, even they find it untasteful, seeing it as an imitator. Last year, only about 800 of Shengshi were sold.


(Hongqi Shengshi/HQ3)

According to the revival plan, 1.76 billion Yuan will be spent on building a production line for C131–the current label for the next generation Hongqi–with a projected annual capacity of 30,000 units in 2013; 690 million Yuan on the plant producing 4GC engines to power Hongqi and other FAW cars; 650 million Yuan on expanding the stamping workshop.

Four new models of Hongqi are believed to come in 2012; engine options will include a 2.0T, 2.5L, and 3.0L.