FAW Car to Sell Equity of Hongqi to FAW Group in China at 830 Million RMB

Gasgoo (Shanghai, September 22^th)-FAW Car in China announced to sell equity of Hongqi to FAW Group on September 18.

Sales of Hongqi H7, which has been developed aiming to reconstruct brand image, were only 2,961 units in 2013 and even decreased to 2,589 units in 2014. Fortunately, that increased to 5,037 units.

The company has faced great challenge due to competition in the PV market in China. Hongqi, a high-end brand developed by the company, has been in the preliminary phase of brand development, unable to bring any profit to FAW Car. Considering sustainable development of Hongqi and the company, FAW Car has decided to sell the brand equity to FAW  Group.

FAW Car and FAW Group have cooperated to carry out improvement in technology for developing Hoingqi H7, which may last 26 months from April in 2015. They have invested 277 million RMB on the project and anticipate earning 571 million RMB. 32% of the projected has been completed by June 30 of this year, unable to make any profit. However, sales of car dropped in the first half in China, which leading to poor performance of FAW Car, of which products have mainly been cars of old modes.

Revenue of FAW Car was 8.49 billion RMB in the first half with a year-on-year decrease of 38.31%. Net profits attributable to shareholders of listed companies suffered a loss of 830 million RMB with a year-on-year decrease of 613.64%.

There will be evaluation on equity in the following months.