The Hongqi H7 sedan, priced at between 299,800 yuan ($49,000) and 479,800 yuan with two choices of engine displacements, a turbocharged 2.0L and 3.0L, will initially target officials at the ministerial level or above, said the company. Wang Jing / China Daily

China's First Automobile Works Group Corp hopes to revive the flagging fortunes of its iconic Hongqi brand with Thursday's launch of its newly developed H7 model.

The Hongqi H7 sedan, priced at between 299,800 yuan ($49,000) and 479,800 yuan with two choices of engine displacements, a turbocharged 2.0L and 3.0L, will initially target officials at the ministerial level or above, competing with German luxury brand Audi's A6L, said the company.

FAW said this was due to limited production capacity.

"Focusing on fleet customers is a correct strategy to revive such an iconic brand," said Yale Zhang, director of automobile consulting company AutoForesight (Shanghai) Co Ltd.

Moreover, Zhang said the "central government's strong support for the development of domestically branded vehicles and calling for domestic brands to be used as official cars provide an opportunity for Hongqi's revival".

FAW's Beijing showroom for its Hongqi brand will open to the public in June.

The 500-square-meter showroom is located on Jinbao Street, China's most eye-catching shopping street, which is crowded with stores from world's most expensive luxury brands especially car brands, including Rolls-Royce, Lamborghini, and Aston Martin.

Hongqi's store is next to Italian super sports car brands Ferrari and Maserati, and opposite luxury brands Gucci and Burberry.

"The model is still what I remembered from many years ago, indicating its prestige as a car for national leaders," said a passerby. "It's hard to imagine who, as an individual consumer, would purchase such an official car."

Zhang said: "With only one model, it's still too early to set up a distribution channel for individual customers. After reaching a certain level of sales in the official car sector, Hongqi should develop more smaller and cheaper models for the private market."

According to FAW Chairman Xu Jianyi, over the next five years, the State-owned automaker will invest 10.5 billon yuan to improve Hongqi's research and development capability and launch two SUV models, a multi-purpose vehicle for business use and a mid-sized limousine coach for ceremonies and parades.

Born in 1958 as China's prime protocol car, Hongqi made its name thanks to its use by top national leaders such as Mao Zedong and Deng Xiaoping, as well as important foreign political guests including then US President Richard Nixon during his icebreaking visit to China in 1972.

However, the brand became a memory when production was halted in the 1980s because of high costs.

FAW tried to revive the brand in the 1990s by resuming production using foreign technology, but this bid failed as a result of poor sales.

Hongqi's major competitor Audi, which has dominated China's official car sector since 1996, said that no more than 10 percent of its total sales came from government purchases. However, analysts said that its image as an official car has driven its sales to business leaders and for private use.

"Hongqi is finding it hard to compete with Audi in the private market at the moment. So it needs to focus on official use and gradually improve its quality and brand," said Zhang.