China's Red Flag Woos Luxury Car Buyers As the first Red Flag built by First Automobile Works was being driven to a company gathering for its unveiling on Army Day, Aug. 1, 1958, it steadily leaked oil. "The engine was Cadillac, the chassis was Chrysler, and the body we built ourselves," Hua Fulin, one of the sedan's chief designers, told the Chinese magazine Auto Business Review in 2007. In the rush to meet the deadline - the Red Flag was intended as a gift to the military - "There was no point trying to make everything match," Mr. Hua said. It was fine as long as it could move. Until production was shut down in the early 1980s, the Red Flag was the official automobile of top Chinese leaders. Now the government is hoping to revive the iconic homegrown brand as the vehicle of choice for the elite in a country where rows of black Audis have become synonymous with power. China accounts for nearly a quarter of global auto sales and surpassed the United States to become the world's leading automobile market by volume in 2009. Despite a growing number of domestic manufacturers, foreign brands make up the majority of car sales. Last December, the newly appointed Communist Party chief, Xi Jinping, urged government officials to be seen more often in domestic vehicles. "It doesn't give a good impression if we always use foreign brands," Mr. Xi said, according to the Guangzhou-based 21st Century Business Herald. Hoping to lead the pack is China's oldest auto manufacturer, now called FAW Group Corp., with its revamped Red Flag. Having failed several times over the past two decades to make the brand a commercial success, the company introduced its latest model on the mass market in May after a five-year "Red Flag Revival" project. Priced between 299,800 and 479,800 renminbi, or $50,000 and $78,500, the new Red Flag H7 sedan carries the same trademark sunflower emblem on its steering wheel and red flag hood ornament as its predecessors, but it otherwise bears little resemblance to the original 1958 model. In an interview with Xinhua, the state news agency, Zhang Xiaojun, president of the FAW Car Sales Co., said the goal of the 5.2 billion renminbi, or $841.6 million, project was to make the brand a model for domestic high-end automobiles. The "foreign monopolization" of China's high-end vehicles will be "smashed at one stroke" by the new Red Flag, FAW announced on its Web site. The sales pitch targets nostalgia. "What makes the car special is the brand heritage," said Zhu Zhonghua, manager of the Beijing dealership. When the government shut down Red Flag production in 1981, citing the car's high fuel consumption, the brand retreated from sight, aside from a few parked collectibles and aging taxis. Now Beijing is putting its weight behind the Red Flag and other domestic brands. In early 2012, the Chinese Ministry of Industry and Information Technology released a draft catalog of vehicles for government procurement, which make up about 3 percent of all auto sales in China. No foreign brands made the list. Domestic manufacturers hope that this government support will translate into increased commercial market share. Chinese automakers have struggled to gain consumer confidence at home because of quality and service issues. The Chinese Ministry of Foreign Affairs has also taken up the banner to champion domestic cars. In June, Foreign Minister Wang Yi started using the H7 as his official vehicle. The government also presented 20 sedans to Fiji, just in time for the South Pacific island nation to host a meeting of the Group of 77 developing nations. As the Chinese ambassador, Huang Yong, presented the cars, he emphasized that the Red Flag was "self-innovated, developed and manufactured by China." In July, Mr. Zhang of FAW said that Chinese government departments had purchased more than 1,000 H7 sedans since their debut in May. Mr. Zhu, manager of the Beijing dealership, said it had sold ""about 100 vehicles"" in the first month to officials, executives of state-owned enterprises and private businesspeople. The embassy of Papua New Guinea has purchased an H7, and the dealership is negotiating with other embassies, he added. At the Shanghai auto show in April, FAW exhibited three models of its L-series limousine, at first glance identical to the cars that transported leaders like Mao Zedong and Deng Xiaoping in decades past. However, the H7 sedan is the only model that will be offered for sale in 2013, and only in black. Mr. Zhu said that he was confident about the new Red Flag's prospects, in part because the company's ""technology is now just as good as that of the joint ventures."" But China's growing legions of car buyers may need some convincing. "It's a brand that everyone certainly loves, but they don't buy it," said Tycho de Feyter, founder of the CarNewsChina Web site. Chinese consumers, he said, ""want everything foreign. They want Audi, and they want Benz, because they think it's better."" If any Red Flag model might attract buyers, Mr. de Feyter said, it would be the retro-looking L-series limousines exhibited in Shanghai. I think they will actually sell, because many wealthy Chinese will look at it and see it as a special car and want to buy it. The H7, he said, "looks too much like a Toyota."