Red Flag rises again, to take on Benz, Audi

08:44, August 27, 2010      

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By Sun Zhe

China's home-grown automobile brand Red Flag plans to boost its output and expand into the growing limousine market.

First Auto Works (FAW) is planning to revitalize the brand, a household name in China, by investing 1.79 billion yuan ($263.24 million) to update the Red Flag production line and raise the annual output by 2013 to 30,000 units. The Red Flag is to compete with Audi A6 and Benz E-class, according to an FAW statement released Thursday at the Shenzhen Stock Exchange.

Once the exclusive wheels for China's elite, when FAW started selling the luxury car on the open market, foreign brands practically pushed it out.

FAW is eyeing the rapidly growing luxury car market. In July, Audi sold more than 20,000 cars in China, and its sales in the first half of the year grew more than 60 percent from the same period last year. Both Benz and BMW also saw their sales double.

Red Flag cannot rival Audi or Benz, as the foreign brands have been making cars locally and pricing down, said Shangguan Zhoudong, a Beijing-based industry insider.

"Plus, Red Flag is based on foreign brands," said Shangguan.

The first Red Flag was produced in 1958, based on a 1955 Chrysler, and the sedans have since been allocated only to minister-level or above officials. At large national anniversary celebrations, the country's leaders review the military in the Tiananmen Square always on a Red Flag sedan.

A total of only 1,500 Red Flags were made before 1981 when the production stopped due to the car's poor energy efficiency and high production cost.

Though FAW resumed producing Red Flag based on the Audi 100 and 200 platforms, after the 1990s when an FAW-Volkswagen joint venture was launched, it never sold well and a Red Flag is hard to be found on the road nowadays.

Government procurement, which was the major sales channel for Red Flag, is now cornered by Audi and Benz, which makes it even harder for Red Flag, said Ye Dong, an auto sales manager in Beijing.

"The Chinese like to drive cars used by current government officials," said Ye, "A black Audi A6 can make them feel important."

Source: Global Times


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