Blog : Why the history books are waiting for MG…
AROnline Contributor and former BMC/British Leyland manufacturing apprentice Richard Williams recently returned to Longbridge and that prompted some in-depth reflections on the fate of the famous factory.
Here’s his take on that and SAIC Motor’s stewardship of the historic and still much-loved MG marque…
AROnline’s regular readers might recall that, in my earlier article, Blog: MG – more jam tomorrow…, I mentioned serving an apprenticeship at Longbridge back in the late-1960s. Well, since that article was published last August, I have been back to Longbridge for a 50-year reunion with the other apprentices who started there with me in 1966.
I drove up to the factory on a beautiful sunny morning and took a look at the old North Gate through which we had all entered as a 16-year olds fresh from school. The modern shopping centre that now stands in its place certainly was very busy, but all vestiges of the foundry and engine factory were now firmly buried under today’s modern and very pleasant retail environment.
Town houses where industry once lay
I crossed the railway and headed towards where the South Works used to be, but that area is now occupied by very trendy town houses. Looking up towards the Car Assembly Building, I did spot part of the old Trentham building, but it looked like that was being dismantled. I then drove up to what used to be known as Q Gate in Lowhill Lane opposite Cofton Park to see the only parts of the factory which still remained. I was pleased I did as soon they too will be gone.
The real estate they stand on has got to be some of the best in that part of Birmingham – after all, the site is not only opposite Cofton Park but also overlooks the Lickey Hills on one side and has commanding views over Barnt Green and the green south Birmingham countryside on the other.
One thing is certain: when this hilltop is covered with expensive executive houses, no cars will ever be built there again. I do hope the old Design Studio will be left to denote where this fine factory, which employed so many people, once stood.
An accurate prediction
My earlier assessment that SAIC Motor’s best option would be to leave the site for St. Modwen to develop has, in the event, proved to be an accurate prediction. However, as a former BMC manufacturing apprentice turned car retailer, seeing how this once great manufacturing site has declined and realising that neither SAIC Motor nor any other car manufacturer will ever produce cars at Longbridge again makes me extremely sad.
So, where does this leave SAIC Motor and MG? Well, with the company’s planned UK manufacturing base being demolished, its only real claim to being British – apart from some design and engineering work – is now gone. MGs are now truly badge-engineered products – mind you, as mentioned in my last article, the Chinese are only taking their cue from BMC/British Leyland, which developed badge-engineering into a fine art.
However, given SAIC Motor’s apparent business model, it makes commercial sense to build the cars totally in China, ship them to Bristol, adjust them for the UK market and sell them through a select group of very loyal retailers, who – thankfully for them – do not have to rely on MG as they have their own loyal customer bases and successful used car operations.
MG Motor’s dealer situation
Interestingly, though, MG Motor UK does seem to have a noticeable amount of retailer ‘churn’ – of the 43 retailers listed in March 2010, only 12 still have the MG franchise. Admittedly, the total number of MG retailers does now stand at 74 (with two new appointments pending) but a significant number of retailers have relinquished the franchise since 2010 and more very good ones are reportedly following.
Here might just be the reason for that: with annual registration figures of 4188 units last year, a network of 76 retailers is unsustainable – in today’s viciously competitive and very fast-changing car retailing market, such numbers cannot provide a basis upon which MG retailers can grow by generating surplus funds to invest in their own businesses.
MG Motor UK has reported an eight per cent year-on-year increase in registrations for Q1/2017 but that masks a 24 per cent year-on-year decrease for January-February and, while 749 vehicles were registered in March, a significant proportion of those were probably transactions brought forward as a result of the increase in Vehicle Excise Duty on 1 April.
Resorting to distress selling?
MG Motor UK does, in any event, seem to have engaged in what amounts to distress marketing – the adoption of such a strategy is clearly shown by the number of nearly-new or pre-registered MGs now being advertised by the two large Retailer Groups with MG franchises: Arnold Clark and the now Sytner Group-owned CarShop.
A quick check shortly before publication showed that, between them, those two companies had around 140 nearly-new MGs on sale, so clearly at least some of the vehicles recorded as being registered have still to find a retail home… The smaller, owner-driven retailers will probably be very unhappy with that situation as the strategy must put discounting pressure on their own loyal market place.
Moreover, having examined the two current MGs (MG GS, above, and MG3) and compared them to what else is on the market, there is no way I would want to drive one. The plastic interior, with its peculiar smell, would put me off alone. I say this because, as a lad, the smell of a new car with its leather and wood was a wonderful selling point and, indeed, an essential element in the psychology of selling.
A stink of fresh, cheap plastic is quite the opposite…
Taking a lesson from the Koreans
I read Ian Parker’s correct and well-written comments in response to my original article and agree with him about the way the Korean brands entered the UK market with strong products, fair pricing and a very good consumer offer with warranties. However, I really do not think this would work for MG now because the company is simply not in a place to compete with the likes of Hyundai and Kia (below) – two brands which have established themselves by taking former MG Rover customers and looking after them well.
A further problem which SAIC Motor and, indeed, other Chinese manufacturers are facing is the rising costs of building a car in China. This was something I picked up on many years ago during successive visits to China for meetings with manufacturers.
The investment in infrastructure, both in roads and transport, building houses and factories was massive and the rise in prices was inevitable. This is why the UK has not seen an invasion of cheap Chinese cars – in fact, it is cheaper to produce cars in some European countries now than in China
How on earth can MG attract younger buyers?
Another factor at play against MG is that, at least in the volume car business, it seems that nearly all the brands are losing identity among the younger, new car buyers and a car is being more of a pure commodity and not a statement – in other words, if a particular model carries out the function that it is required for and the purchase and warranty package fit, then they will buy that product irrespective of the marque.
How many times do you hear normal day-to-day practical cars being discussed by the younger generations today? Not a lot – especially, as in many parts of our overcrowded country, driving is no longer the fun it was not so many years ago.
One Chinese manufacturer which I met up with in Hangzhou 15 years ago and not long after the company had begun to produce cars was Geely. The company seems to have a good formula. The fact Geely now owns both the London Taxi Company, the makers of the new LTC TX5, and Volvo Car Corporation speaks of well-founded worldwide plans – tellingly, as evinced by Keith Adams’ recent News story, Geely invested more than £300m in a UK manufacturing base near Coventry (above) when, in marked contrast, SAIC Motor was busy demolishing the two Car Assembly Buildings at Longbridge.
Geely is showing the way
There have been no large fanfares about these acquisitions and Geely has left much of the engineering and branding in the hands of the existing management – in fact, as Tata Motors has been done with Jaguar and Land Rover, both LTC and Volvo are very much keeping their respective brand identities.
Indeed, Geely will soon be launching a new standalone global brand called Lynk & Co (below), with innovative products and an equally innovative retail strategy – one that I think will work well.
So, what should SAIC Motor do with MG now? It is still a respected worldwide brand for bespoke sporting cars. There are still strong followings in the UK, USA and Europe. What SAIC Motor should definitely not do is to destroy any further brand credibility by badging a cheaply manufactured Chinese blob as an MG. This will lose them an enormous opportunity.
How to turn it around
Instead, in my opinion, SAIC Motor should look at the success stories of brand resurrection in the past and also take a note of Jon Moulton’s plan when he put forward his attempt to acquire MG. There are several examples of brand resurrections in the Automotive Industry which stand out – think Bentley and Rolls-Royce – but three others are of particular relevance to SAIC Motor. One is Skoda, one is Porsche and one is MINI…
The VW Group could easily have let Skoda go as a brand and just used its manufacturing capacity to produce VWs. However, with a clever marketing strategy, excellent quality-engineered products and a campaign to make its retailers feel like partners, Skoda has become the strong and profitable brand that it is today.
Another notable resurrection is Porsche. How many of us remember the days in the 1970s when Porsche’s model range and quality totally lost its way? The company’s sales plummeted along with the quality of its products, but look at them now. A clear strategic plan was devised based on a new model programme and an improvement in engineering quality. Nowadays, it seems that Porsche can do no wrong and has moved into – and been very successful in – market segments which few of us would ever have thought possible two decades ago.
Let MINI show you how it’s done
The other brand resurrection is the most interesting one and, perhaps, the example which SAIC Motor needs to follow with MG – MINI is primarily brand, rather than engineering led and a great idea. Take an old model name that was remembered with affection, build a completely new model that has a resemblance to the original and organise a funky advertising campaign focusing on the brand and not the product.
The first new MINIs were not the best quality products and were a bolt on for the BMW retailers, but were fun and, like the original Mini, had a universal classless appeal and were ‘cool’. The marketing people got it completely right, the product quality improved, the retailers became profitable enough to build standalone brand centres and MINI has become the success story it is today.
There are other examples from outside the Automotive Industry as well – take, for instance, Burberry whose descent into being a ‘Chav image’ brand nearly destroyed it but, with good marketing and high quality, the label has bounced back.
…and then follow on from Skoda
Back to MG, though – to resurrect the historic marque, SAIC Motor needs to take a lead from Skoda, Porsche and MINI and certainly not – as now seems to be happening – follow the model adopted by the likes of Chevrolet, Daewoo, Daihatsu and Proton with bargain basement inferior quality products and lacklustre marketing.
Unfortunately for SAIC Motor, MG does not have the back office infrastructure which the VW Group provided to Skoda from its UK base in Milton Keynes. SAIC Motor also lacks a European factory which, if given the right investment, would be able to produce a very high quality product. That’s why the example which SAIC Motor should adopt for MG is MINI.
There are very many exciting opportunities for those brave enough to take them in what are very fast changing times for the Automotive Industry. Carbon fibre and modern exterior plastics, hi-tech management systems, polycarbonates and electric motors are just a few examples of that.
…before looking at McLaren
What is needed is a sporting car made from these materials which will compete against the Jaguars and Porsches with their upper-range models, slightly broaching the McLaren territory. One may scoff, but it could be done. Cecil Kimber did it in the 1930s and a forward-thinking company could do it now.
The unfortunate thing for MG is that SAIC Motor’s parent company, SAIC Group, is owned by and ultimately accountable to the Shanghai Municipal People’s Government and so effectively state-controlled. I doubt if there is one person on the management team in both China and the UK with either an entrepreneurial vision or a full understanding of MG’s historic place in the market places of the UK (and the former Commonwealth countries), Europe and the USA.
SAIC Motor is a huge conglomerate with no one really accountable and can, perhaps, be likened to General Motors which has no understanding of niche products and only looks at volume and badge-engineering – for evidence of that, just think about General Motors’ track record with Lotus, Saab, Saturn and now even Opel and Vauxhall.
Hard decisions to be made
I think SAIC Motor has some hard decisions to make about MG’s future: either the company finds that rare beast of an entrepreneur who can survive in a corporate environment – and there are one or two about – or cuts its losses, cancels any plans to enter the European market, withdraws from the UK and sticks to making nondescript cars for the Chinese market and other Asian countries including India.
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.
The only hope might be if the MG brand was bought by an entrepreneur with a vision and deep pockets who was not only able to bring out the right product but also to launch that in the right way – someone, in fact, like Geely’ s billionaire Chairman, Li Shufu.
That said, though, I and no doubt most of AROnline’s readers would love this assessment of MG’s prospects of success to be proved wrong – perhaps, then, someone in a senior management position at Longbridge can give an insight into SAIC Motor’s plans for the brand which might do just that…
[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.]