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Market Insight: Can MG keep growing without bargains?

Chinese brand MG built volume on cut-price cars – can it a sustain pricier model mix?

4 Mar 2024

MANY of us will remember when now-mainstream automotive brands from Nissan and Toyota to Hyundai and Kia started out as an unknown in Australia with cheap, feature-filled models that built brand awareness before, eventually, sales volume began ticking along. 

Fast forward to the 2020s, and in seven short years MG is now well underway to establishing itself as a volume brand in Australia.

How did the once-British car-maker turned Chinese automotive brand under the SAIC umbrella come out of nowhere in seven years into the top 10? And can it stay there, let alone build up an even bigger presence?

After a failed attempt to enter the Australian market in 2013 with the MG6 under an independent distributor, MG returned with more determination in 2016 as a factory-owned subsidiary.

With just four dealers representing the marque, in 2017 (its first year in the VFACTS tally), it sold just 600 cars. Even then, about half of these were heavily discounted 2013 MG6 medium hatchbacks the company had to clear.

It has been a consistent upward march since then. From the arrival of the MG ZS in 2018 and the introduction of a seven-year warranty, MG has been riding on a wave of ever-higher sales across an ever-expanding retail network that today includes more than 80 dealerships that sold a combined 58,346 MGs in 2023 to secure the brand seventh place in Australia’s sales charts.

Sales more than doubled year-on-year each 12 months from 2017 until 2022, when obviously such a growth rate could no longer be sustained. Even more recently, sales growth was an impressive 17.7 per cent from 2022 to 2023. More than half of the brand’s annual sales to date comprise price leaders the MG3 and ZS.

With the ageing MG3 and ZS both shaping up for replacement – in the former’s case, a new model which will be much more sophisticated but also a fair bit more expensive – where from here for MG in Australia?

Can the brand so well established as a low-price leader with long warranty keep up volume with more sophisticated – and expensive – product?

According to a MG Motor Australia spokesperson, it is going to keep emphasising value, but low prices are not necessarily part of that equation. 

“MG has carved out a strong market position in Australia and NZ by offering vehicles that provide exceptional value for customers. We aim to cater to a broader consumer base by delivering affordable yet feature packed vehicles,” they told GoAuto.

“By emphasising value over lower prices, we are striving to strike a balance between competitive pricing and a comprehensive package of features, safety, reliability thanks to our seven-year unlimited-kilometre warranty, and customer satisfaction with our Precise Price Servicing. This positioning allows MG to differentiate itself and appeal to a diverse range of buyers around the country.”

MG points to the MG4 as an example of such positioning. Although the MG4 is one of the cheapest battery electric vehicles available in Australia, starting at around $40K, that is a long way from the entry-level $20K or so MG3 and MG ZS.

Such technology costs money to develop, and to produce, and to have the infrastructure to support it, according to MG.

MG said that “MG’s pricing strategy is closely tied to ongoing investments within research and development in our product offering, as well as the development of charging infrastructure ... MG knows that establishing a robust charging and dealer network is crucial to addressing consumer concerns and increasing EV adoption.

“There are costs associated with developing charging infrastructure with advanced technology and safety inevitably influencing pricing. We are continuing to re-invest in innovation, ensuring the long term viability of our range and providing customers with a positive ownership experience.”

MG’s direction is clearly an electric one – as of course it is with many other manufacturers – but with that it seems the days of cheap MGs may soon be gone.

“As the demand for electric vehicles continues to rise globally, Australia represents a promising market for MG's range of electric vehicles. With our focus on accessibility, innovation, and quality, we believe we are well-positioned to cater to the evolving needs of Australian consumers who are increasingly seeking new transportation options,” the spokesperson told GoAuto.

MG has a busy new-product year ahead, the company confirmed. "MG can confirm the Cyberster is planned to arrive in Australia in the second half of this year. We're looking forward to revealing the car to Australians, including specifications and pricing closer to launch.

“In addition, we can also confirm an all-new MG3 available in both ICE and hybrid, as well as the all-new HS will launch in Australia in 2024.”

Already the Cyberster is reportedly going to be expensive – some reports suggest into six figures, a long way from a $20K drive-away hatch wearing the same logo reminiscent of when Nissan’s local line-up spanned from $17K Micra to $230K GT-R.

Perhaps these are early signs that the days of any new $20K car is limited, and that having lots of models selling in smaller individual volumes is how to keep or increase the size of the sales pie.

MG is already pointing to the fact it, like any other manufacturer spending on new technology, will have to make a gradual transition away from low-price cars.

If MG can do it or not is for someone else with a better crystal ball, but the fact that a new automotive brand can arrive and establish itself in the top 10 in seven short years tends to suggest in this brave new electrified world anything is possible. 

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