FAW strives to develop its own line of vehicles

By Chen Qingqing in Changchun Source:Global Times Published: 2015-6-23 19:13:01

In recent years, China FAW Group Corp has strived to develop its own brands to gain a competitive edge. In 2012, the State-owned automaker launched a strategy to market self-developed luxury car under the Hongqi name, a symbolic brand known as the car for senior officials before the 1980s. FAW Group wants the brand to be able to compete with its foreign rivals such as Audi AG and BMW AG. On a recent visit to FAW Car Co and FAW-Volkswagen in Changchun, Global Times reporter Chen Qingqing looked into how FAW Group is evolving today. This is the second part of a two-part story.

Employees work on an assembly line of FAW Car Co in Changchun, capital of Northeast China's Jilin Province on June 8. Photo: Cui Meng/GT

Stepping into the Changchun-based headquarters of FAW Car Co, one can see vehicles under the Hongqi brand on display in an exhibition room in the building's left wing.

Hongqi, meaning "red flag" in Chinese, used to served as the ride of top government leaders, which also had been used as parade cars during National Day parades.

The display illustrates how China's first homemade limousine was developed. FAW Car is a subsidiary of China FAW Group Corp, one of China's largest automakers.

A PR representative from FAW Group, who preferred to be unnamed, pointed out one vehicle in the room's center.

"Look at this parade car," he said, gesturing at a Hongqi CA770TJ limousine. "This one carried [late Chinese leader] Deng Xiaoping at the National Day parade in 1984."

Due to the government's ongoing anti-graft investigation against FAW Group and the company's unclear strategy for the near future, some people interviewed in this article asked to remain anonymous.

Although production of Hongqi limousines - high-end cars primarily used by government officials - was suspended in the early 1980s, FAW Group has not stopped finding ways to maintain the iconic brand.

"The Hongqi brand represents FAW Group's capability of developing its own brand, which can't be easily abandoned," said a former senior manager of FAW Group, who preferred to be unnamed.

FAW Car launched its Hongqi strategy in 2012 to revive the brand and compete with foreign rivals in the luxury vehicle market. In April 2013, it unveiled the first fruits of its labor - the Hongqi L5, followed by the Hongqi H7 one month later, FAW Group said in a document e-mailed to the Global Times on June 10.

Along with new Hongqi models, FAW Car sees another brand, Besturn, as a key part of its self-developed car strategy, according to the document.

Outstanding questions

Although the Hongqi sedan is an iconic car in China's auto industry, analysts still have questions about the brand's target customer and its core technologies.

At the Shanghai International Auto Exhibition in 2005, FAW Group announced it would launch the HQ3, a model of Hongqi limousine, in 2006, according to the automaker's website. The new model was expected to show the company's capacity for independent research and development (R&D).

However, the model was designed based on a Toyota luxury car, said a retired senior director of FAW Group, on condition of anonymity.

"A Chinese car should not be developed based on a Japanese platform," he told the Global Times on June 9.

Engineers from FAW Group, FAW Car and Toyota worked together for 11 months to complete production of the Hongqi HQ3, according to FAW Car's website.

"Former chairman Xu Jianyi has talked a lot about pushing forward self-developed car production. However, FAW Group has been too dependent on the technology of foreign automakers," said Ye Weiguang, a professor of applied technology at Changchun-based Jilin University.

Ye had issues with the company's target markets. He said that other models, including the Hongqi L5 and Hongqi H7, are headed in the wrong direction.

"For example, while many domestic automakers have been targeting middle-class buyers in recent years, FAW set the price of the Hongqi L5 luxury sedan at 1 million yuan ($161,044)," Ye told the Global Times on June 9.

According to media reports in 2014, FAW Car had sold fewer than 5,000 Hongqi H7s since the vehicle hit the market. FAW Group introduced five H7 models, which are available at prices ranging from 299,800 yuan to 479,800 yuan.

Around 1,000 H7 passenger cars from domestic brand Hongqi had been sold to the People's Liberation Army, the PLA Daily, the flagship newspaper of China's armed forces, reported on May 18,2014. It was the first batch of Hongqi vehicles to join the military's vehicle fleet after the Chinese government implemented a new official car procurement policy in January 2014 that favors domestic brands.

In another part of its self-owned brand strategy, FAW Car has launched the Besturn, which was developed based on technology used in Mazda sedans.

The Besturn B50, Besturn B70 and New Mazda 6 are produced on the same production line. They all have the same chassis platform, body configuration and production process, according to FAW Car's website.

When asked about FAW Group's capability of developing its own brands, An Tiecheng, the former president of FAW-Volkswagen (FAW-VW), a joint venture between FAW Group and Volks-wagen, acknowledged there was room for improvement.

"We do have to improve our technology," An said in an e-mail to the Global Times on June 11.

Upgrading production

In 2010, FAW Car established its second factory in Changchun, which is expected to produce 200,000 vehicles a year.

"We produce one car every 65 seconds on average," the PR representative told the Global Times on June 8.

"We've introduced advanced technologies such as RGV (Rail Guided Vehicle) and wheel alignment machine into the plant in order to upgrade the assembly process," he said.

About 700 workers follow a made-to-order process to produce the Besturn B50, B70, B90, X80 and Oley at FAW Car's mixed-model assembly line, according to the PR representative.

Although the PR representative said that Xu Ping, the new chairman of FAW Group, has not come up with a new strategy for the company yet, An noted that FAW Car will certainly highlight the Internet-connected car in the near future while upgrading its manufacturing process.

All of this is consistent with "Made in China 2025" - a plan unveiled in May by the State Council, China's cabinet, to encourage innovation, optimize industrial structures and boost efficiency in the country's manufacturing sector.

On the mixed-model assembly line at FAW-VW, which is designed to produce the Audi A4 and Q5 sedans, production schedules are displayed near the main entrance.

Workers write down problems that occur during the assembly process on whiteboards hung between stations on the assembly line.

"Employees can work and learn at the same time," Wang Guang'en, an FAW-VW engineer, told the Global Times on June 11.

According to the former senior manager of FAW Group, An has been tapped to be the president of FAW Car, a job that will be more challenging than leading FAW-VW.

"Still, with the management experience he got at FAW-VW, An is expected to help improve FAW Car's self-owned brand development," the person said.

"I wouldn't say that a 100 percent homemade car is not as good as a foreign vehicle; however, self-developed brands still need time to gain market share," An said.
Newspaper headline: Building brands

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