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China’s SAIC keen to walk the talk in India

Murali Gopalan | Updated on October 25, 2018 Published on October 25, 2018

MG Motor India, its local subsidiary, is going flat out with its product plans

It’s an interesting brand concoction that Rajeev Chaba puts in perspective.

“MG brand is designed by the British at the UK Design Centre, engineered by the Chinese in their global design/engineering centres and produced in India by Indians,” explains the President and Managing Director of MG Motor India.

In short, SAIC Motor Corporation is the Chinese parent whose products will be sold under the MG brand in India. The company, MG Motor India, has its operations in Halol, Gujarat, the former home of General Motors.

Taking over from GM

SAIC stepped into the picture once GM decided to call it quits at Halol, and is now going flat out to get its first product, an SUV, out in the market next year. The MG front-end is keeping in line with its strategy of showcasing this British brand, which it acquired some years ago, for overseas markets.

“SAIC’s strength and resources are able to give wings to the MG brand to go global. MG has struggled with ownership resources and it has found its place now,” continues Chaba.

Yet, it is fair to assume that Indian buyers will still relate to its products with the Chinese DNA in mind and this will be the biggest challenge for MG Motor India. How this pans out in a market that is more familiar with Japanese and Korean cars, in addition to American and German brands, will be interesting to see. Doubtless, the Chinese have been successful with their cellphones but an automobile is a different ballgame.

Despite this, there is no taking away the fact that SAIC is truly formidable in terms of its overwhelming presence in China. It wrapped up 2017 with nearly seven million units sold, almost twice the total number of cars sold in India.

SAIC also has a successful alliance with Volkswagen in China which, like GM, has propelled it to the premier slot in the Chinese market. Now compare this to India and you see VW struggling to grow market share while GM has stopped retailing cars here.

In fact, SAIC had thrown a lifeline to GM in 2012 during the huge global meltdown, which was threatening to cripple its Indian operations. The two had drawn up big plans, which eventually fizzled out, but it was clear that the Chinese auto-maker had studied the market well during this period. When its American ally decided to bid India adieu, it was ready to throw its hat into the ring and is now determined to take the story forward.

“In the last five-six years, MG’s growth is more than 50 per cent every year including China where it began with one plant and now has three. This year, the sale of MG and Roewe (the local brand for China) is around six lakh units and targeting a million next year,” says Chaba.

In this background, it is only natural for the company to grow its presence overseas. The MG brand was launched in Thailand four years ago and is “already successful” in what is largely a Japanese bastion. Likewise, there are big plans for Indonesia with the Maxus brand in commercial vehicles, which could soon spread across the ASEAN region.

“SAIC is very serious about India and it has all the resources as well as the will to be successful. It also knows what it takes to succeed from the experience of many other OEMs in the country,” says Chaba. A former veteran of GM, he is only too familiar with the India terrain where Suzuki and Hyundai are the ‘Big Two’ with 70 per cent of the market. Along the way, there have been casualties like Peugeot (now making a comeback), Daewoo (which shut down and was acquired by GM) and GM, while others like Ford, VW and Renault-Nissan are struggling. Toyota and Honda are well-known brands but still need to do a lot more in the numbers game.

“SAIC has invested a lot in new technologies and it is the leader in China as well as being in the forefront globally. We are ambitious about India but need to make sure the foundation is right in terms of manpower, dealers and so on,” elaborates Chaba.

Electric plans

The company’s decision to launch an electric vehicle a year after the SUV is particularly interesting considering that not much headway has been made in this space. The Centre is keen to give a boost to e-mobility but there are way too many challenges ahead in terms of fiscal sops and creating charging infrastructure.

“We want to be one of the first movers in EVs and will seek the right ecosystem to be successful. We want to be a leading player in this space but time will tell if we manage to pull it off. We are hopeful and optimistic and the key is to see if customers find our value proposition compelling,” says Chaba.

By April 2020, India will move to Bharat Stage VI emission and the Supreme Court has made it clear that none of the present BS IV vehicles can be sold in the market. This is where manufacturers will have their work cut out in meeting the costing challenge for new technologies and it may just present a huge opportunity to SAIC.

Chaba agrees that India will perhaps be the most important region for the company in the coming years simply because of its size and potential. “If we do well, India could be the biggest overseas market for SAIC in the next two to three years. Our capacity is 80,000 units at Halol and if everything goes well, this will be filled in three years,” he says.

The next phase of growth opens up a lot of opportunities “but that depends on the segments we wish to participate in and the foundation we have created”. And while SAIC has given its Indian subsidiary full freedom in operations, Chaba would rather take one step at a time while establishing the MG brand.

Single brand umbrella

He is also categorical about the fact that it is better to have a single brand umbrella under which there can be a plethora of products ranging from cars and SUVs to perhaps commercial vehicles if the need so arises.

“It is better to give a big width to one brand since multiple brands can dilute the objective as well as create problems with network expansion, product allocation, etc,” says Chaba. “Global success stories tell you that it is better to widen the brand and include the portfolio within since it will become a costly exercise otherwise.”

Going forward, MG Motor India will soon acquire its own corporate office near Delhi as well as flagship store. By doing this, it will be sending across a statement of intent to its supporting ecosystem of suppliers, dealers, and customers.

Chaba is also keen to have a diverse workforce which, beyond hiring more women, will also draw people from two/four-wheelers and non-automotive to ensure a good mix. “Eventually we need to walk the talk and it is not going to be easy. We know the issues that need to be tackled in India and are aware what needs to be done,” he says.

The writer was in Shanghai at the invitation of MG Motor India

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Published on October 25, 2018
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