Opinion

MG is back, but will it succeed?

Once a British builder of low-volume sports cars, now a ‘mainstream’ manufacturer owned by a Chinese giant, and chasing a piece of the action in Australia. So, what are MG’s chances?

27 Oct 2016 12:29 PM

Ash Westerman

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IT WOULD seem, at first glance, to be a venture fuelled by little more than blind optimism and naivety. Actually, even at second glance, it still looks a bit that way.

The mission is for British brand MG, now owned by China’s automotive titan SAIC, to enter the Australian market with two models, in the B- (light car) and C-segments, and establish a beachhead here that the company can build upon with small SUVs and subsequent models.

On the upside, the two models kicking things off – the MG3 and MG6 Plus – are aimed at the high-volume end of the market. Competitors for the MG6 Plus are Toyota Corolla, Mazda 3, and Hyundai i30, which, collectively, are never outside the top 10 sellers in the country. The dominant light car, which the MG3 goes up against, is the Mazda 2, which normally sits within the list of top 20 sellers. So there’s ample activity in the targeted segments. That’s the good news. The flip side is that this is the narrow-margin end of the market, where companies need sales volume to make money, because the profit on each car is small. MG won’t talk numbers, but with a dealer network of just 10, we’d tip that the calendar will be well into 2017 before sales tick over into four figures.

The big hurdle for the MG3 is that it’s a manual-only vehicle in an automatic world. MG won’t say if or when an automatic transmission will be offered. The less than 30 percent of buyers in the light class who do opt for a manual do it largely for cost reasons, buying the cheapest entry-level model. If this follows with the MG3, the company can expect even skinnier margins as it shifts the base Core model at $13,990, while buyers with more to spend buy an automatic elsewhere.

We’ll reserve judgement until we drive the cars in the coming weeks, but clearly MG in Australia has a monumental challenge on its hands.