How China’s high-end Hongqi brand descends to sell low-end models?

The accumulative sales of FAW Car Corporation in the first seven months of the year stands 132,800 units, falling 16.4 percent compared with the same period of last year.

In particular, car, SUV, MPV and other models all experienced sales drop on a year-on-year basis. This uncovered the fact that the Hongqi H7, which has been launched in March, hadn’t taken much effect in raising the sales of the company. Hongqi, a brand born to be high-end, had always been adopted by Chinese government leaders. It now fell into a sticky situation that its high-end vehicles could make breakthrough in sales volume though backup the brand, while low-end products from Hongqi could hardly gain popularity for against the high-end brand image.

In March, FAW launched Hongqi H7 with 1.8T engine, with a selling price range of 299,800 CNY to 249,800 CNY, in order to cater to varied demand of consumers of different age, according to Hongqi’s announcement. In fact, the new version still only attracts business people of 30 to 50 years old, who are interested in the model because of feelings for cherishing the past. And the selling price doesn’t cater to the young consumers.

The car sales volume of Hongqi brand in the firs seven months lowered 13.4 percent compared with the same period of last year. The average monthly sales quantity of Hongqi since launching has kept in around 300 units, contributing little to the sales growth of FAW Car.

Hongqi brand deemed young generation the significant consumers and the personal market rather than government usage as the fundamental market.In 2014, the company consisted 69 percent of sales contributed by general people rather than government. But, its younger generation centered strategy hadn’t taken any obvious effect.

The brand tried to lowered its selling price over H7 1.8T by 50,000 CNY, and cut the price of 2.0T version by around 70,000 CNY and 3.0L version by about 800,000 CNY.