Companies

Despite speed bumps, MG Motor confident of doubling sales in 2021

Nandana James Mumbai | Updated on March 27, 2021

Says will continue to focus on SUVs, localisation efforts

MG Motor India aims to double its sales to more than 60,000 units in 2021 on the back of its product and network expansion strategy, even as it remains cautious of challenges like the rise in commodity prices and supply chain disruptions, said a top company official.

This month (March) will also mark the highest-ever monthly sales for MG Motor in India, with sales expected to be over 5,000 units, Rajeev Chaba, President and Managing Director of MG Motor India Ltd, told BusinessLine in an interview. In February, the Chinese-owned British brand had sold 4,329 cars in India, a 215 per cent year-on-year increase.

MG increased its network from 100 touchpoints in 2019 to 200 touchpoints in 2020, with plans to further add another 100 touchpoints by the end of this year, he said. It would be launching its fourth product, which would also be an SUV – codenamed Model K – in the third quarter of this year. In 2020, MG Motor India sold around 30,000 cars, nearly double of what it sold in the previous year – 16,000 cars. It is planning to double its sales to 60,000 units this year as well.

“The demand right now is very robust and solid for the industry in general, and for us in particular. However, there are two-three reasons to be cautious of. One is that the price of inputs has gone up substantially. And I think this is kind of unprecedented. Second, there is a huge supply chain disruption in the automotive industry because of the chips shortage and also shipping. This is keeping us on our toes. The third is, we are seeing the revival of the economy in general… but the only thing is the pandemic. Nobody knows exactly how it will shape up,” said Chaba.

Price hikes coming

MG Motor effected a price increase in the first quarter of the calendar year and it’s planning to increase the price again by 2-3 per cent in the second quarter due to the increase in input costs, said Chaba. Most of the players would go for a second round of hike in April, he added. “So, will it dampen the demand? This is what I think we need to be careful of,” he added.

The company also recently announced a waiting period of 2-3 months for all its models. Chaba attributes this to the chip shortage and related supply constraints as well as the slightly “overwhelming demand” MG has seen even amidst the pandemic.

“So, despite all this, March will be the highest ever for Hector, the highest ever for the EV (MG ZS EV) and the highest ever for Gloster. All the three car lines will peak with their highest numbers in March,” said Chaba.

On whether MG plans to enter the mass volume segments, Chaba said that SUVs will remain the company’s focus area for now. “I think our hands are full with the launches that we’re having right now. In the future obviously when you need to get into more volumes, you need to get into the mass volume or the mass segments, as we call it in India – th less than four metre (segment). So, I will not rule that out. But at this point of time, our hands are full and we are eagerly working on the launch of the fourth car,” he explained.

MG is also working on a second EV model which would be priced below ₹20 lakh and roll out by the end of next year.

The company will also be prioritising localisation and plans to increase localisation by 10-15 per cent across its models during 2021 and 2022, with around ₹500 crore earmarked for this.

“We are looking at every opportunity and possibility of localising whatever we can on all the car lines. Localisation is a very important strategy. At this point of time, we are a loss-making company… I think this localisation should help us reduce our losses. And then we need to get to a breakeven point, hopefully,” said Chaba.

Published on March 27, 2021

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