A revolutionary limo

Sales plan: a bit of a stretch?

For guests at the Red Capital Club, one of the quirkier excursions on offer is a tour of Beijing in Madame Mao’s car. Mao’s third wife (Jiang Qing) doesn’t have much of a reputation – she’s regarded by many Chinese as just about the most evil woman of the twentieth century, for her part in fomenting the Cultural Revolution. But a few customers still can’t resist a spin round the block in her old limo.

The car itself – purchased by the Club’s owner, New York-born Lawrence Brahm – is a Red Flag limousine. These were the vehicles made for the Party elite. The Hongqi (to use its local name) was first produced in 1958, partly with Soviet expertise, but billed as China’s first homegrown luxury car.

With bodywork not too dissimilar to an early Batmobile, only 1,500 Red Flags had been made by 1981. They didn’t look like vehicles that had much of a future. But FAW (First Auto Works) kept the marque going and this week has announced plans for a fully-fledged revival of the limo’s fortunes, reports the South China Morning Post. The state-owned carmaker says it will spend Rmb1.79 billion on a new factory to produce 30,000 of the high-end cars per year. The new vehicle, identified for now as the C131, will be on sale by 2012, targeted at government officials and the new rich.

It’s an ambitious plan. China’s billionaires now tend to prefer Bentleys. Bureaucrats love Audis: the German firm sold 20,000 of its cars in China in July. Compare that with Red Flag’s current offering, the HQ3 (priced at Rmb349,800 or $51,400 for a basic model) which sold only 31 units in the same month.

Of course, that could all change if the government tells its officials they must procure the local limo. That would be an uncomfortable directive for Audi, BMW and Mercedes. According to the Economic Observer, Chinese government bodies spent a collective Rmb80 billion on cars in 2008.

But perhaps the bigger question is whether wealthy businesspeople will choose to buy Red Flags too. Traditionally the Chinese have liked to drive cars that they see being used by government officials, for the implication of power and status. So, if more bureaucrats are seen climbing into the back seat of a C131 rather than an Audi A6, perhaps sales might pick up for the homegrown challenger.

That would still be quite a step-change. It’s a struggle to think of many Chinese firms that have positioned themselves successfully in the luxury category. And in the car industry executives seem to doubt it’s possible (one reason why Geely bought Volvo: to gain an entrée into the top end of the market).

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