Hongqi and Stellantis Finalize Spain Production Deal in Global Luxury Push

Chinese luxury automaker Hongqi, a brand historically associated with China’s leadership, is in advanced negotiations with Stellantis to begin vehicle production at one of the European automaker’s plants in Spain, according to multiple sources familiar with the discussions. The talks, which have not been previously reported, could mark Hongqi’s first manufacturing foothold in Western Europe and accelerate its expansion into the region’s electric vehicle (EV) market.

Partnership Facilitated Through Leapmotor

The negotiations between Hongqi and Stellantis are being mediated through Leapmotor, a Chinese electric vehicle manufacturer in which both companies hold investments. Hongqi is owned by FAW Group, a state-owned Chinese automaker, while Stellantis—formed from the merger of Fiat Chrysler and PSA Group—has been expanding its collaborations with Chinese brands to optimize production capacity and reduce costs in Europe.

“This was the way that Hongqi can start European production quickly,” one source with direct knowledge of the talks told Reuters. “Hongqi is using that network to gain a manufacturing base through Leapmotor and Stellantis.” The arrangement would allow Hongqi to avoid the substantial investment required to build a new factory from scratch, potentially saving hundreds of millions of dollars.

If finalized, the agreement would see Hongqi vehicles assembled at Stellantis’s Zaragoza plant in Spain, one of the company’s key production hubs in Europe. The move aligns with Hongqi’s broader strategy to expand its presence in overseas markets, particularly in Europe, where it plans to launch more than 15 new energy vehicle (NEV) models—including EVs and hybrids—by 2028.

Strategic Expansion for Both Companies

For Hongqi, the partnership represents a critical step in its global ambitions. The brand, whose name translates to “Red Flag,” was once synonymous with China’s political elite, famously used by former leader Mao Zedong. In recent years, it has sought to reposition itself as a premium automotive brand, targeting annual sales of 1 million vehicles by 2030, with at least 10% of that volume coming from outside China.

Stellantis, meanwhile, stands to benefit from improved capacity utilization at its European plants, many of which have faced underuse amid shifting market demands. The company has been actively seeking partnerships with Chinese automakers to lower operational costs and strengthen its position in the competitive EV sector. Earlier this month, Stellantis held discussions with Dongfeng Motor about similar collaborations, including potential factory-sharing arrangements in Europe, according to a Bloomberg report.

A Stellantis spokesperson declined to comment on the specifics of the Reuters report but stated: 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.

Broader Trend of Chinese Automakers in Europe

Hongqi’s push into Europe reflects a broader trend among Chinese automakers, which are increasingly targeting overseas markets to offset slowing domestic growth and intensifying competition. State-owned rivals such as Changan and Dongfeng have also announced plans to expand into Europe, leveraging partnerships with established Western manufacturers to navigate regulatory hurdles and localize production.

The talks between Hongqi and Stellantis remain ongoing, and no final agreement has been reached. However, if successful, the deal would position Hongqi as a key player in Europe’s rapidly evolving automotive landscape, particularly in the premium EV segment.

Neither Hongqi, FAW Group, nor Leapmotor responded to requests for comment at the time of reporting.