With Competitors Out Of The Way, Chinese Communist Party Members Will Likely Pay More For The New Domestic Made Hongqi H7 Than For Comparable Foreign Luxury Cars

For years, one of the largest Chinese automakers, the state owned FAW Group, has worked to reintroduce the Hongqi -- or “Red Flag” -- as a stately vehicle. The brand had been so closely aligned with the ruling Communist Party that it has been nicknamed the “Mao Mobile.”

But that special status ended in 1981, when the last Hongqi made only for state officials rolled off the assembly line. More recent models fell in status, even appearing on city streets as taxis. Then in 2009, during the 60th anniversary celebrations of the People’s Republic, the Hongqi reappeared as some kind of patriotic symbol, at rallies carrying waving party dignitaries in parades. But by then, high-ranking party and military officials were starting to develop a sweet taste for the fruits of capitalist democracy -- especially in the form of the Audi German luxury automobile.

Enter the new leadership under Xi Jinping.

Earlier this year the central government, as part of its efforts to reel in what it considers an alarming rise of conspicuous consumption by the capitalism- and luxury-goods embracing new-money Chinese, issued a mandate preventing state officials from using foreign-branded vehicles. Perhaps not coincidentally, FAW announced in April that it would be offering a new Hongqi, the H7, in the retail market.

“The current environment among the leadership is stressing local brands, especially for vehicles. So it is an opportunity for the Hongqi brand,” Zhu Bing, a Shanghai-based senior analyst at consultancy LMC Automotive, told the China Economic Review in a report published Wednesday.

With the market in the government sector for Chinese-made cars cornered, it’s also an opportunity for the Hongqi to be priced higher than the same cars in its class. Most analysts expect the H7 to cost roughly the same as the Mercedes-Benz S Class and significantly higher than other foreign brands in this category, including that popular Audi.