China’s Hongqi, once favoured by Mao, eyes Stellantis Spain plant for European expansion

A China FAW Group Hongqi Golden Sunflower vehicle during the Beijing auto show. Photographer: Qilai Shen/Bloomberg

BEIJING -- Chinese luxury automaker Hongqi, famed as Mao Zedong’s preferred car brand, is in talks with Stellantis to build vehicles at one of the Fiat-to-Jeep owner’s Spanish plants as it expands in Europe, five sources familiar with the matter said.

Hongqi’s owner, state-owned automaker, is holding the talks with Stellantis via Chinese electric vehicle maker Leapmotor, two of the sources said. Both FAW and Stellantis are investors in Leapmotor.

The previously unreported talks could accelerate Hongqi’s European expansion and its plans to launch more than a dozen EV and hybrid models in the region by 2028, while helping it avoid spending hundreds of millions of dollars on a new factory.

“This was the way that Hongqi can start European production quickly,” said one of the sources, with direct knowledge of the talks. “Hongqi is using that network to gain a manufacturing base through Leapmotor and Stellantis.”

The talks are ongoing and may not lead to a deal. Hongqi, FAW and Leapmotor did not immediately respond to requests for comment. A Stellantis spokesperson declined to comment on specific Reuters’ findings.

“As part of its normal course of business, Stellantis holds discussions with a range of industry players around the world on various topics, always with the ultimate aim of providing customers with the best mobility choices,” the person said.

Chinese carmakers push Europe expansion

Best known in China as Mao’s national car brand, Hongqi is one of dozens of Chinese automakers expanding overseas with ambitious sales targets. They include state-owned groups Changan and Dongfeng.

Hongqi, which means “red flag,” is targeting sales of 1 million vehicles a year by 2030, with at least 10 per cent outside China, another of the sources said. Production in Spain would mark its first manufacturing foothold in western Europe.

This source said the company has also been looking at Hong Kong as a possible production location, which would face fewer tariffs on exports than mainland China, but no final decision has been made.

Leapmotor and Hongqi struck a deal last year for Leapmotor to supply an EV platform to Hongqi, helping support the older brand’s overseas expansion after decades focused on sedans for Communist Party leaders.

Hongqi said last year it would launch 15 electric and hybrid models in Europe by 2028 across 25 different markets and unveiled the EHS5, a compact electric SUV.

Stellantis sells Leapmotor models outside China and will start producing vehicles for the EV startup at its Zaragoza plant later this year. Two of the sources said Hongqi vehicles would also be built at the Zaragoza factory.

Reuters reported earlier this month that Stellantis is in advanced talks with Leapmotor to jointly develop an Opel-branded electric SUV using the Chinese company’s technology, which would also be produced at Zaragoza.

Reporting By Nick Carey, Qiaoyi Li, Gilles Guillaume. Additional reporting by Giulio Piovaccari in Milan. Editing by Adam Jourdan and Mark Potter