The iconic Red Flag from FAW a symbol of the New China. [China Daily]

FAW Group, the second-largest Chinese motor group, plans to increase R&D spending on its own-brand vehicles by 50 percent over the next five years.

Xu Jianyi, general manager of the State-owned company based in the northeastern city of Changchun, announced at the Beijing auto show that FAW plans to spend 19 million yuan in own-brand R&D from 2011 to 2015, up from 12.9 billion yuan the previous five years.

FAW, established in 1953 and considered the progenitor of China's automotive industry, aims to boost its sales to more than 4 million vehicles a year by 2015, with more than half of that from its own badges, Xu said.

Last year, the partner of Volkswagen, Toyota and Mazda moved a total of 1.94 million vehicles, 40 percent of which were its own brands Red Flag and Xiali in passenger cars, Jiefang trucks and others nameplates for mini buses.

By 2012, FAW plans to introduce 26 all-new and upgrade passenger car models ranging from small to luxury vehicles.

It will also launch a bevy of new medium and heavy-duty trucks and mini buses in the period.

With the aggressive R&D investment and new product plans, FAW is apparently striving to regain the crown as China's biggest auto group.

The company was the country's top automaker by sales until 2006. It was surpassed by SAIC, another government-owned auto group that has with Volkswagen and General Motors as partners mainly due to slackening sales of its own-brand vehicles.

In the first quarter of this year, FAW was outsold by Chang'an Motor Corp, another State-owned auto group.

According to data from the China Association of Automobile Manufacturers, FAW sold 630,800 vehicles in the period, lower than the 728,000 units from Chang'an, which acquired two smaller Chinese mini bus producers last November.

FAW is also on the verge of being outstripped by Dongfeng Motor Corp, which moved 623,600 units.

Like many of other Chinese and foreign automakers, FAW is also keen on the new-energy sector.

It said it plans to sell its own-brand plug-in hybrid and fully electric vehicles in a small volume this October.

The group said it will build a sound sales and service network for the vehicles by 2012.