China's home-grown automobile brand Red Flag may replace Audi as the designated vehicle of Chinese government officials, according to Bloomberg's report Monday.

"State leaders in many countries ride their domestic brand vehicles and I think our own officials should do so as well," said Dong Yang, vice-president of the China Association of Automobile Manufacturers.

On the other hand, however, the move could be considered a heavy blow to Audi.

"Audi has a long history of providing cars for government officials. Therefore, a substantial reduction of foreign brand purchases would impact Audi the most," said Klaus Paur, an expert with the research agency Ipsos.

Red Flag was built by China First Auto Works Group Corp (FAW), which has a 50-year history in China's automobile manufacturing industry.

The first Red Flag sedan was built in 1958, based on a 1955 Chrysler, and such sedans have since served officials at the minister level or above. At grand national anniversary celebrations, Chinese leaders always reviewed the military on the Tiananmen Square on a Red Flag sedan.