FAW mulls merging Besturn, Xiali sales networks

Shanghai, October 27 (Gasgoo.com) On October 18, FAW Group reduced the prices of its Hongqi sedans and the Hongqi HQ3 was renamed "Hongqi Shengshi" at its Beijing launch. The next day, the 2009 Besturn model was also released in Beijing, for two models of Hongqi and Besturn to make their debut together after the two brands had their networks merged.

However, insiders revealed that one of FAW Group's ultimate goals is the integration of Besturn and Xiali sales networks for its independent brand strategy. This strategy is expected to be fulfilled in two steps: one is to boost the sales of Hongqi and Besturn brands through an integrated network, and the next step is to merge the Xiali brand into this network across the country. The Chinese car giant expects the three in-house developed brands to become the pillars of its future operations.

"FAW has realized that the inter-penetration of network resources is one of the best and most cost-effective ways to expand presence and boost sales in the auto market nationwide for the time being. The high-level management of FAW Group is now discussing with the top executives of its independent brands about the possibility of integrating their sales channels," said the FAW insider, adding that the Besturn and Xiali brands will share a common network for sales sooner or later.

Previously, FAW positioned the time-honored Chinese Hongqi (Red flag) brand for the upmarket consumers and launched its premium HQ3 model ceremoniously. But due to its narrow network, the Hongqi HQ3 sedan has had so low sales that some industry experts are worried that this old Chinese auto brand will disappear from the market if Hongqi can expand its market, which highlights the urgent need to merge the Hongqi brand into a larger sales network.