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Why it wont be a Cakewalk for MG Motor at India ?

30 May 2019 6 Comments Author: Motor Uncle

 

 
MG, Morris Garages, the Iconic British car brand owned by the Chinese Auto Co SAIC is all set to make its brand debut in India with the SUV, MG Hector. 
As always we begin with the good points. The strengths that can really catapult this debutante to the Performers Club :
 
  • New Brand brings with itself,  freshness, new energy, Innovation. 

  • The Culture is open, operates like a start up , encourages innovation. 

  • The Company goes overboard in wooing the employees and the dealers as they are extended family.  The Dealer personnel represent the brand and a new brand understands this completely.  

  • The Top Team at MG Motor is mostly from GM India. Even the Plant at Halol is the Old GM Plant. They have unfulfilled aspirations from the GM days which shall be harnessed for the success for MG Motor. It surely comes round as a watershed moment. 

  • The company leaves no stone unturned in launching a classy product with Top Notch performance and deliverables at every front. In the Automotive, it surely begins with the product as the consumer experiences it on a daily basis.

  •  The Product is surely a show stopper. Its feature loaded with several Segment First initiatives.  

     

 

Now Come the Challenges : 

 
The Passenger Vehicle Industry in India is between a handful players. Maruti Suzuki and Hyundai command close to 70% of Market Share. You add Tata Motors PVBU and M&M to the list, it crosses 80%. You add Toyota and Honda so 6 Auto Makers and you are talking about close to 93% of Market Share!
 
The Customer in India is very choosy and picky. For the Car Makers, the ROI and viability comes from volumes and they lie in small car segment, which happens to be a place where a lot of car makers have burnt their fingers.
 
And of course you need Rural Penetration and Products which are more mainstream and can Perform in Challenging circumstances.
 
Its Essentially Maruti & Hyundai who have tasted sustained success here. You need an extensive dealer Network, you need spares availability, You need trained Manpower following the Company SOPs.
 
You need the entre Supply Chain, Tech, Ops in Place. It has taken Maruti and Hyundai years and years to build this. Thats actually when you begin to make profits too. For Instance, Just the annual spare parts business of Maruti Suzuki across its Dealerships and MGP Outlets is around Rs 6,000 Crores. It took them 25 yrs to reach here. Do New Cos have that much time ?
 

"At the Same time, GM entered India before Honda, Toyota and Hyundai but could not sustain. It boils down to the Right Strategy & Vision."

 
The Business Partner who needs viability first is your dealer. If the dealer is making money, you can make them do anything from SOP to Customer delight, to employing expensive manpower, anything, Period!  A skill craft-fully mastered by Toyota In India.
 
MG Motor might also be adopting a Toyota Like Strategy for Dealer Network. Have lesser dealers. More touchpoints. First right of refusal for expansion lies with present dealer.  
 

Brand Acceptance can be a Big Challenge 

 
MG Motor is not the only new entrant around this time. We shall also see Kia Motors and Groupe PSA debut with Citroën. Kia shall be able to leverage their Hyundai Sibling Strengths in a Big way. Right from vendors, to processes to functioning.  When it comes to Citroën, they  can position themselves as a 100 Year old French Brand.
 
They shall have their local partner Hindustan Motors support ( wondering whether we can really count  that as  a support!). But the narrative of a French brand surely gives the positioning of Class, Great Design & Taste.
 
 
The Chinese antecedents might haunt the Brand MG atleast initially. "Chinese" as a Brand Tag, is where "Korean" was 15 years back. Daewoo faced it. Hyundai faced it from Maruti dealer personnel when it came to competition bashing.
 
Even GM faced it for the GM-DAT products like Spark, Optra, & Aveo. Eventually the "Korean Antecedents" ceased to be a taboo at Motown due to the overwhelming success of Hyundai and yes SRK! 
 
 

Possible Initial Competition Narrative against MG 

 
A very convenient narrative for competition dealership this time against MG can be, "Sir ji  its actually a Chinese Company. You know how Chinese products / mobile phones are - flashy and feature loaded but they dont last long.
 
Madam ji Even if they Say, its MG, Iconic British Brand, please ask them how much they sell in UK ? Its not even 5 %. Not a single model of MG is in Top 10 Selling Cars List of UK. See, I shall google and Show you. They sell majority cars in China.
 
They say leader in connected cars technology, Madam ji , Hyundai Venue has the Blue Link Tech at half the Price. Just the OTA updates & some features they have extra. Better to avoid sir ji, for security and to prevent car being attacked by Hackers!
 

"So this is one rendition. You can control , train your own dealer teams but not the competition ones!

A Great far Reaching Digital Campaign can help arrest such narratives from becoming popular opinions."

 
 

Motor Uncle's Opinion 

 
A relationship based on 'half truth' can't endure. So MG Motor should surely talk about the Iconic British Brand but at the same time, should not shy away from saying its owned by SAIC. In fact take it as an opportunity to share the humongous achievements, the colossal stance, the great achievements of the parent company.
 

"Establish MG Motor as well as SAIC as brands in the minds and hearts of the consumer before the competition bashing narrative grips the consumer's mind."

 
Remember how Baleno used to desold by Honda sales guys, 15 yrs back ? When a customer would take Baleno's name as an alternative, Honda Sales guys would ask , "Sir, are you thinking of Buying the Maruti Baleno instead of the Honda City?" Back then , just "Prefixing Maruti" would kill the premiumness of the Product.
 
The constant premium product market failures of Maruti eventually led to formation of Nexa, which surely turned the fortunes for the Baleno Brand!
 
The other day , we overheard one proud father mention on the phone, "My Son has bought a Creta"
He didnt say his son bought a Hyundai Car. Now the products aspiration and Brand even exceeds the car brand! A great situation to be in! 
 
At the same time it cant be a One Product wonder. No Company has tasted sustained success like this. 
 
Moreover in the Age of Shared Mobility, A Personal car Plus Personal Driver Business Case is in any case unviable! People are in no tearing hurry to buy a new set of wheels or even replace their existing car.
 

"Kaam chal jaata hai Uber and Ola se.  So Focussed Pan India Fleet  Penetration and Tie Ups would not be a Bad idea!" 

 
 
 

 

For any new entrant there are these 5 balls which need to juggled and balanced. 

 
1. Employee & Vendor Relations 
Thats literally where it begins. They are your first family. They spread an important message about you in the trade, in the market, in the Industry. They are also the info source for Industry, Media and Investors when all is not well. Managing them well surely pays the dividends. 
 
2. Customer Experience with the Product 
Products are becoming more and more world class, better and better and thus losing key differentiators. Customers want nothing but the best. It takes years to build the Brand and minutes to destroy it. Here we have the "Brand WIP!" MG would need to listen to the customers very carefully. Its human, its ok, to mess up. How fast we respond to fix it, is the KEY! That can be the opportunity to win!

3. Dealer Viability & Dealer Manpower R&R
Even now Nothing beats Toyota's Dealer Network Strategy. They made the initial dealers come up with a great infrastructure with just one Product Qualis.But then the dealers did it for "Toyota". Here MG would need to put constant energy to cajole, impress, retain. Would that be "The GM Way" or a brand new "Mg Way" is what we need to see.
 
4. After sales experience & Cost of Ownership
For a new company, launching an SUV in the range of 15L,  volumes shall be low. But one can take it as an opportunity. You have to impress less no of customers. You can really focus and do it well! The Price Range is such you are neither luxury nor entry level. So customer would surely show they are price conscious. You have to manage your economics well and not go the Kingfisher Way!   
 
5.  Resale value
This is eventually your report card based on your performance on the aforesaid 4 points. It eventually ensures your sustained success!
 
 
 We wish MG Motor all the Very Best to Surge Ahead and  Create History!!
 
Cheers!
 
Motor Uncle Team 
 
motoruncle555@gmail.com

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