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SAIC steps on the gas in prep for India marathon

Murali Gopalan | Updated on April 19, 2018 Published on April 19, 2018

Rajeev Chaba

Gearing for India innings For SAIC, India has the potential to be a big market in which it could be a significant player. (File photo of a factory of SAIC GM Wuling, China)

With MG Motor as its global face, the Chinese automaker will choose from a slew of platforms at the back-end

In 2017, SAIC Motor of China sold nearly seven million vehicles, twice as much as India’s total output of cars.

In the process, it accounted for a fourth of China’s tally of 29 million cars which puts in context the country’s formidable status as the world’s largest automobile producer. For now, the US and Japan are ahead with India in the fourth place but China is comfortably head and shoulders above the rest.

SAIC is now preparing for its India innings which will kick off with the launch of an SUV in 2019. It acquired the General Motors plant in Halol, Gujarat, last September and is working at breakneck speed to get off the mark in its new avatar as MG Motor India.

“We are revamping the old plant and rebuilding the entire place with a new press and body shop while tweaking the paint shop,” says Rajeev Chaba, President & Managing Director, MG Motor India. Vendors are also setting up shop at a rapid pace and the levels of localisation are expected to be over 80 per cent.

“MG is SAIC’s global brand and will be the face for global growth at the front-end. The platform it will use for the car could be anywhere from their many joint ventures or their own brand,” adds Chaba.

Some of these JVs in China with Volkswagen, GM, etc, have joint platforms and SAIC has the right to launch some of these depending on the agreement with their partners. To that extent, there is a huge range/choice of platforms to pick up for the Indian market.

Chaba reiterates that the MG brand at the front-end goes in line with SAIC’s strategy for global markets and has nothing to do with steering clear of any Chinese association. After all, he adds, MG has changed ownership many times for over eight decades before becoming part of the SAIC brand kitty.

As Chaba points out, this is akin to Tata Motors buying out Jaguar Land Rover but the British brands continue with their own identity. Likewise, Geely of China acquired Volvo Cars which sports no such ownership association in overseas markets.

SAIC, of course, is keen to grow its presence beyond China and India has been on its radar for some years. After all, it teamed up with a struggling GM during the 2009 global slowdown to ensure that operations here were not impacted. At that point in time, the duo looked at bringing in the Wuling series of pick-ups to India as well as competitively priced cars. “When SAIC come to India, it was all experimentation and learning where the company spent time understanding the suppliers, systems and so on. They learnt about the market, customer psychology in terms of mileage, the kind of engineering required for India and the ability to react to change quickly,” says Chaba.

Hence, even when nothing really emerged from the joint venture with GM in India (even while the two are hugely successful partners in China), SAIC had done its homework well. It learnt valuable lessons from the GM joint venture and understood that India has the potential to be a big market in which it could be a significant player.

At one point in time, it looked as if GM was all set to reboot its innings in India without its Chinese ally but then decided to call it a day and withdrew from Halol a year ago. It was into this very plant that SAIC has stepped into now.

One fact that has emerged loud and clear is that MG Motor does not intend to get anything from Wuling in the foreseeable future even at the back-end platform level. This is obviously a psychological move relating to reasons of brand recall where it is best that the Wuling association with GM that took seed in India some years ago stays buried.

Wooing India’s GenNext

This time around, it is a completely new landscape where SAIC, led by MG Motor, will pull out all the stops to woo India’s growing and aspirational GenNext with its range of products. Launching an SUV is only natural, given the boom in this segment but then there is strong competition in this space from the likes of Hyundai, Mahindra, Maruti, Tatas and Renault.

Come to think of it, the biggest rival could actually be Kia Motors which will also be ready with its SUV next year and it will be interesting to see how this tug-of-war between a Korean and Chinese company pans out. Chaba, however, would rather focus on the building blocks that are being readied for the long haul ahead.

“We are trying to do things in a different way in terms of good employee relations, the community, various things around our plant, corporate office, good culture and values. We now need to go to our dealer partners and grow together with mutual respect,” he says. It is also his faith that MG Motor’s treatment of dealers is going to be among the “best in the industry” where they will operate like equal partners. The dealers will need to ensure optimal customer satisfaction while Chaba and his team will do their bit in handling processes in what will hopefully become a world-class dealer management system.

It is also apparent from the frenetic pace of activity at the plant that SAIC is keen on making a mark in this part of the world. After all, it is the first Chinese automaker in India whose performance will be monitored closely by other aspirants like Geely, Great Wall and Changan.

“There is no silver bullet in the car business in India to ensure success. The whole value chain right from start to end is so important in terms of each and every element/touchpoint that you cannot afford to go wrong,” says Chaba. This is where localisation and costing become critical in a price-sensitive market like India.

Speed is also something that SAIC will focus on while reacting to customer requirements in India. This has been one important takeaway from its first round here with GM and indications are that the Chinese will set new benchmarks in getting back to the market with the quickest solutions.

Chaba, however, would prefer to take one thing at a time. “We want to establish the brand in a slow and steady way so that it peaks before launch,” he says. While market response to the SUV and subsequent products will be critical, SAIC has identified India on its long-term radar which could, therefore, see the establishment of an R&D and engineering centre.

Vehicles produced here could also be shipped out to right-hand-drive markets like Australia and the UK. Chaba says it is a bit too early in the day to think so far ahead and would rather “under-commit and over-deliver” in this competitive market.

Published on April 19, 2018
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