Chinese investment gives MG new life

With plans for an electric car, British automaker looks to become 'a leader in the modern day and age'

All eyes were on MG Motor in 2011 when the century-old British car company rolled out the MG6 from its production line in Longbridge, Birmingham. It was the first all-new model that MG had introduced to the UK market in 16 years, made possible by fresh investment from its Chinese owner, SAIC Motor.

From then on, MG was on a strong path to growth, quickly launching another two models in the UK. In 2015, it opened a new showroom in Central London's Piccadilly.

Riding on this strong growth momentum, MG is already preparing to bring the next generation of energy-efficient smart vehicles to the market, with concrete plans to bring its first electric car to the UK market.

Globally, sales of MG and Roewe cars reached a total of 320,000 last year, a real testimony to how Chinese investment has brought the struggling British brand alive again.

"MG cars hold a special place in the hearts of British consumers, so we want to do our best to help the brand maintain its heritage. At the same time, we look forward to innovation and new technology, to make the brand a leader in the modern day and age," says William Wang, managing director of MG Motor.

Wang is full of enthusiasm and pride when he speaks about the MG brand's future in the UK, but he also candidly admits that since SAIC's acquisition of MG just over a decade ago, the investment has not yet reached the break-even point.

He says it will take a long time to build the brand's recognition under current Chinese ownership. Encouragingly, MG cars' sales in the UK reached thousands last year and this year, and Wang is looking to double this figure next year.

"We believe in the brand and have invested heavily into it, and I believe we are approaching break-even," Wang says.

MG Motor has its roots in two quintessential British heritage brands: MG, the British sports car manufacturer founded in 1923 that is best known for its two-seat open sports cars, and Rover, a British carmaker founded in 1878, initially as a bicycle business.

Both businesses had undergone many cycles of ownership changes before they finally merged as MG Rover, a brand that lasted from 2000 to 2005. In 2005, MG Rover ran into financial difficulties, and the two Chinese automakers SAIC and Nanjing Automobile acquired some of the assets of the business.

The next year, SAIC and Nanjing Automobile merged as one business. SAIC rebranded the British company as MG Motor. It kept a strong research and development team at the British plant in Longbridge, and kept another team there in charge of manufacturing, marketing and other support services.

In the initial years when SAIC was running MG Motor, it used MG's Longbridge factory for assembling the cars. It employed this strategy to help the cars maintain their British heritage-brand status.

The first MG car produced under SAIC ownership was the MG TF, a mid-engine, rear wheel drive roadster that was previously produced by MG from 1995 until 2005. This model was launched in 2008, but soon SAIC decided to temporarily end its production, since this old model was no longer compatible with new emissions standards.

In 2011, the MG 6 sedan was launched and was quickly followed by the MG3 supermini in 2013 and the GS SUV last year. This winter, MG will launch its all-new MG XS, a small SUV. This model, which was displayed at the London Auto Show in May, has already attracted considerable interest from the British media and public.

In addition to launching new products, Wang's team has worked extensively on growing the brand's reputation and increasing its network of dealers. It currently has 80 dealers across the UK, although Wang acknowledges that his team needs to do more to grow dealership numbers, to make services more readily accessible to consumers, no matter where they are located.

"We have also worked on providing good after-sales services, and we liaised with banks to make sure our customers can secure bank loans when they buy our cars," he says.

MG's key customers in the UK are a mix of older generation customers loyal to the MG brand and younger customers willing to try a new brand. "As time goes on, an increasing proportion of our customers are those who have heard of MG but never really had much experience. Our cars appeal to them because of their style, quality, design and value for money," Wang says.

Meanwhile, the R&D team at MG, called the SAIC Motor UK Technical Centre, has grown into a team of about 300 engineers, who work closely with SAIC's global R&D team to develop the latest MG and Roewe cars. Roewe is a brand that leverages on previous Rover car technology.

Over the past 10 years, SAIC Motor UK Technical Centre has received ￡10 million ($12.8 million; 10.9 million euros) of capital investment from its parent company, and it now has about ￡30 million of annual turnover each year.

David Lindley, managing director of the SAIC Motor UK Technical Centre, says the center focuses heavily on supporting the delivery of global products for MG and Roewe from initial vehicle concept and layout to elements such as styling, advanced engine design, technology research and research into new technologies such as autonomous vehicles and connectivity.

"Our R&D strength is reflected in our design, engineering, innovation and ability to make sure our vehicles meet all Chinese and European emissions standards," Lindley says.

He says that having an R&D team based in the UK means the company is able to gather up-to-date information about customer needs and regulatory requirements. This local team is also able to work with UK and European suppliers to come up with the best design that incorporates the best technology and resources.

"Historically, MG is known for its sports cars, but going into the future, we're keen to make it more mass market. With UK sales of MG cars set to increase, we are expecting our UK technical center to play a greater role in the business, too," Lindley says.

Lindley, who personally established the technical center in 2015, says he is proud to see it grow. "In the first two months, it grew from just myself and another few colleagues into having 70 people. Now we have 230 staff in the technical center, of which 40 are working in design and the rest are engineers.

"We were able to grow this team so fast from scratch because when MG Rover went into administration in 2005, around 1,000 engineers lost their jobs, and we were able to select the best people from these talents," he says.

Meanwhile, the way that SAIC rapidly expanded the production of MG cars by leveraging its China plants' manufacturing capability has allowed the supply of MG cars to reach many export markets, such as Thailand, Indonesia, Latin America and the Middle East.

Wang, the MG Motor managing director, says that despite the large Chinese domestic market, his team still sees the overseas market as very significant, for several reasons.

"First, overseas markets still present very big scales," he says. "Second, many mature markets have high quality and standard requirements; therefore, by being in these overseas markets, we are able to learn how to follow stricter standards. Third, having customer recognition in mature overseas markets is helpful for our brand image."

cecily.liu@mail.chinadailyuk.com

( China Daily European Weekly 08/25/2017 page30)