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Dichotomy of the Auto Industry

While we have been hearing of car manufacturers stopping production lines and lamenting to the government for measures of revival, one company in specific seems to have recorded an outstanding initial booking, not riding the tide.

MG aka Morris Garage which launched in India through a variant called Hector have hit record sales amidst this auto slump.

Not heard of it… well neither had I…so time for some Wikipedia.

MG, is a British automotive company, now owned by Chinese state owned automotive SAIC motor, launched in India on June 27, 2019 in the SUV category through a model called Hector, in direct competition to Mahindra XUV 500, Jeep Compass etc. Starting at ₹12.18 lakh, the Hector comes in four variants—Style, Super, Smart and Sharp and a total of 11 configurations. But did it sell because it was reasonably priced, or because it was of British make or because it offered 11 configurations …..Not really

“The Hector’s USP is its iSMART Next Gen technology which includes an embedded connectivity solution, maps and navigation services, voice assistant, pre-loaded infotainment content, emergency and information services, and built-in apps. It comes with an embedded M2M sim that ensures that the car remains connected.”

To explain it in layman terms, it is India’s first internet car or as MG calls it “a human car”. Not only does it have all the features that make driving a luxurious experience with all the tech embedded in it, but it also offers it at reasonable prices. Above all what has caught the attention of the Indian bourgeoisie is MG’s vision & need for continuous innovation.

Morris Garage is launching its Electric SUV, the five-seater ZS in January thus embracing the move of the Indian government towards adoption of electric vehicles. With the latest BS VI norms and FAME India scheme, MG along with Kia Motors have had the first mover advantage in penetrating and capturing market share while most auto makers were waiting for the government to rid them of their present miseries.

Now one might ask that why would industry stalwarts not think of what MG thought of. Well mainly because right now the manufacturers consider themselves disadvantaged in the EV scheme. The government has promised a tax rebate of 1.5 lakhs to consumers who avail vehicle loans to purchase EVs but have not incentivized the manufacturers on any count. Local manufacturing isn’t supported with the present infrastructure. This leaves the manufacturer with two options. The first is to import parts and the second would be to make initial investments. Not to forget the cost of making engines BS VI compliant. Naturally these costs will have to be recovered in order to make the business profitable. India is a price sensitive market. So, most manufacturers are caught in a dilemma. Given that India is amidst a slowdown, no manufacturer wants to block capital in projects which seem to project bleak cashflows.

MG’s acquisition of the General Motors Halol plant in India and jumping on the bandwagon of India’s green mobility market is indicative of the potential of India’s EV market. MG plans on leveraging the strength of their parent SAIC motor by importing the technology while working towards building charging infrastructure and battery recharging stations to aid customers with post sales services thus facilitating the use of EVs. Kia motors & Hyundai have also made their initial moves in this industry.

This illustrates two underlying sentiments. The first is that maybe the slowdown is sectoral and is not felt across the upper mid-level and high-level income category. After all a company couldn’t have filled its order books had there not been people with money willing to spend on their product and we are talking big monies here. Secondly, the sector of the Indian public which is the target segment for EVs is not entirely averse to the idea of an EV. Maybe MG, Kia and Hyundai have been able to address a subliminal concern of “how do I maintain my car post purchase” and herein lies their success. The educated class that understands the need to shift towards EV’s for a cleaner and greener future may not be averse to high initial investments if they are assured of future savings and ease of maintenance.MG’s initial success could be attributed to many things: changing consumer buying behavior, its strategic prowess and risk-taking abilities or as skeptics would call it the case of dark horses. However, MG has managed to make hay even when the sun was not shining, and this calls for some appreciation and detailed attention from other auto-makers of the nation

From Shayoni Mukherjee (Editor- TJEF)

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