Blog : MG – which direction for the future?
AROnline Contributor and former BMC manufacturing apprentice turned British Leyland retailer Richard Williams takes a closer look at the famous British-born MG marque’s prospects following the debut of the MG E-motion Concept at Auto Shanghai in April and the UK unveiling of the new XS B-segment SUV at last month’s London Motor Show.
Regular readers might recall that, in my two previous articles, Blog: MG – more jam tomorrow… and Blog: Why the history books are waiting for MG…, I was not only critical of SAIC Motor’s stewardship of the MG brand but also concluded with this pessimistic comment: ‘Sadly, my view is that, given the current products and SAIC Motor’s track record with MG to date, there can be only one outcome when the financial boys in the back room say enough is enough.
‘MG therefore seems destined to join the likes of other storied British marques such as Austin, Hillman, Jensen, Morris, Riley, Rover, Singer, Sunbeam, Triumph, Vanden Plas and Wolseley – a list which may soon even include Vauxhall – in the history books.’
MG’s new introduction
However, since the latter article was published back in April, SAIC Motor has exhibited the MG E-motion Concept at Auto Shanghai and MG Motor UK has unveiled the Ford EcoSport and Nissan Juke-rivalling MG XS SUV at last month’s London Motor Show – I therefore wanted to review my rather pessimistic conclusion about MG’s future in the light of those two announcements and the news that there are plans for a UK line-up of six models.
Firstly, though, a brief recap: as was said in the last article, MG’s current situation in the UK does not bode well for a profitable future for its UK distribution arm and its loyal, still largely owner-driven retailers. The brand has a competitive product in the low-cost end of the market, but its market message is confusing.
MG has traditionally been an innovative sporting brand, a unique niche product emerging from the bland mass market cars made by Morris. It developed a loyal market of free-thinking individuals who wanted a car that was a little different, that bit more exciting and individual than the mainstream volume market.
It was the strength of its brand alone that helped it to endure long after Austin, Morris and all the other BMC>MGR legacy brands ceased to exist. It still has a huge brand loyalty worldwide in America, Canada, Europe and the former Commonwealth countries – in short, a huge potential market.
So how will SAIC Motor capitalise on the incredible opportunity it has for this brand? Does it go innovative and upmarket following the vision of Cecil Kimber, who founded MG with Lord Nuffield’s backing and support, or does it go mainstream market with mass-produced, lower-end, value-for-money products competing with the Renaults and Suzukis built in low cost production facilities in Eastern European countries?
Let’s look at the options…
The cheap and cheerful mass market
Now that MGs are completely manufactured in China or Thailand it means that any vehicles destined for the UK market are basically the same as the ones for those markets. It would not make economic sense to produce three to four thousand vehicles uniquely manufactured for the UK market.
These vehicles, while competent, are in a fierce market place which is driven by cut pricing and cheap consumer finance offers along with plentiful pre-registrations. Once well established in this market place, it would be extremely hard – indeed, nigh on impossible – to move the brand more up market and place it in a more profitable niche.
Back in the 1980s, David Brown, a used car retailer, who really understood the UK car market, managed to sell a significant number of Protons using extended warranties and excellent consumer offers from a standing start.
What happened before
The quality of the vehicles was excellent and a very loyal customer base grew quickly. However, when the operation was taken over by the manufacturer, despite every effort, it proved impossible to move the brand profitably up market and so it withered on the vine – volumes fell and the brand withdrew from the UK market.
SAIC Motor’s marketing of its current products as MGs sends a confusing message to the prospective customers. Older customers ask themselves whether they are really MGs, whilst the younger prospective customers wonder what the current MGs stand for: excellent value for money or innovative excitement?
To give credit to MG Motor UK’s Head of Sales and Marketing, Matthew Cheyne, and his team at Longbridge, they are working hard to build a loyal retail network and slowly increase volumes with a modest marketing budget and very niche, low-end products – although, even in the current post-Dieselgate climate, the absence of a good diesel engine surely holds back a large potential of retail sales in the rural markets.
The prestige sports car and sports saloon market
This is what the MG marque is known for around the world: individuality, leading-edge innovation and, above all, fun.
A production version of the MG E-motion Concept is just the model that could propel MG back into worldwide recognition – especially, if accompanied by a range of funky electric SUVs of the type which have taken over from the two-door sports car market. With SAIC Motor’s enormous resources, it is not inconceivable that the company could launch these exciting models in the near future and put MG right back on the worldwide automobile map.
However, while an AROnline Editorial Team member who examined a Chinese-specification MG ZS during last month’s SMMT Test Day at Millbrook Proving Ground, tells me that the new model should be a competent and competitive B-segment SUV contender, initial indications are that the MG XS will be priced between the MG 3 and MG GS when it reaches UK showrooms later this year and therein lies a potentially significant problem – those three models and any production models based on the E-motion Concept’s new electric modular architecture would be poles apart, have totally different customer bases and would, above all, confuse the customers as to what the MG marque represents.
So what should happen now?
Well, here’s my take…
SAIC Motor needs to adopt a different retail model for the production version of the E-motion Concept and the other models based on its new platform – if the company acts quickly, it could move into the space being established by Tesla and, to a lesser extent, Lexus before the mainstream OEMs pile into the market – the name MG would fit perfectly.
Change the name of the current models to SAIC – after all, that is what they are and most people purchasing them, as well as the press, know who makes them. Don’t pass them off as MGs.
The team at Longbridge could then get some aggressive ‘deal-based’ marketing rolling on the ‘great value for money’ basis. They have the current network in place and, as sales grow, then this network would grow organically providing nationwide coverage and the potential to further increase sales. There will always be a retail opportunity in the car market for local retailers who are trusted by customers so there would be no reason to change this.
So where does this leave MG?
The E-motion Concept is already here and the high-performance SUVs sharing its electric modular architecture are, no doubt, well advanced. These products will do well in a direct sales environment similar to the model which Tesla has already adopted. With increasing legislation in the world’s polluted cities, what is merely a trickle of EVs will soon turn into a tidal wave and SAIC Motor/MG, with its existing brand name, could be at the forefront of that – but the company has no time to lose.
Geely Holding Group’s new start-up Lynk & Co brand has, as mentioned in my previous article, already begun manoeuvring carefully and gradually into the position MG should be taking. The fact that Geely Holding Group has just announced its acquisition of a controlling 51 per cent stake in Group Lotus plc should send nervous messages to Shanghai.
It would be fantastic to see a true resurgence of MG as the innovative motor car for individual drivers – the potential is there. It would be wonderful to see the MG teams in the UK and Shanghai grab the opportunity, but perhaps the other equally iconic British-born and now Chinese-controlled marque with similar brand values to MG’s will take the lead.
Am I any less pessimistic about MG’s future? Well, yes – but only time will tell whether that turns to cautious optimism…
[Editor’s Note: Richard Williams is still a Director of the company founded by his grandfather 106 years ago, Williams Automobiles Limited, and represented the smaller retailers on the National Franchised Dealers Association’s National Executive for many years. The company, which was highly commended in the Best Dealership category of the 2014 Automotive Management Awards, currently has franchises for three of the UK’s leading low-volume sports car manufacturers, Caterham, Lotus and Morgan.]