Classic Carmaker Looks for Jump-Start With Electric Plan

The fabled but struggling carmaker that made history by chauffeuring US President Richard Nixon on his landmark trip to China is hoping a dose of shock therapy will give it a new lease on life.

The Hongqi brand, whose name means “Red Flag,” is one of the best-known car names among China’s older generation. But it suffers from an identity crisis among younger people who have grown up with far more choice. In a bid to reinvent itself, the company is aiming to become one of China’s first traditional car makers to go completely green by switching to a lineup of only-electric vehicles.

“That’s the hope of our chairman,” a company insider at FAW Group Corp., Hongqi’s parent, told Caixin, without giving any timeframe.

Such a move would come as China aggressively promotes the development of new energy cars including both pure electric and hybrid, in a bid to clean up the nation’s polluted air and create technologies that can be exported. But the road to those goals has been riddled with potholes, since many of China’s own car companies lack the expertise and technology to create cutting-edge vehicles.

Hongqi’s case is also complicated by difficult times for its parent, China’s oldest automaker FAW, which is undergoing its own overhaul in the crowded domestic car industry.

Hongqi was one of China’s first homegrown car brands in the post-1949 era, founded in 1958. It quickly became known as a maker of limousines that ferried around Chinese and foreign dignitaries, and leapt into global headlines when its cars were used to chauffer Nixon during his ground-breaking 1972 trip that eventually led to China’s normalization of ties with the West.

But the brand has fallen onto hard times since then with the influx of foreign competition and rise of other domestic brands. In a bid to reclaim some relevance, the company announced plans earlier this year to build up a national sales and service network and extend its limited appeal to the broader masses. That revamped product lineup will also include a small electric-powered SUV model next year, the FAW source said.

“Besides this electric SUV, we don’t have any other products that will start to be electric powered,” he said.

Hongqi’s identity crisis mirrors another one at its much larger parent, FAW, which is one of many big state-run firms trying to reinvent itself as a more commercial, market-oriented company. FAW announced at a management meeting earlier this month that all its employees had to quit their positions and reapply for their jobs. Later on the day of the announcement, it began to fill the vacated positions, with employees being allowed to apply for roles in other departments if they stayed within their former pay grades.

Contact reporter Yang Ge (geyang@caixin.com)