MG grows in Germany: Breakthrough for the 100th company anniversary?

Chinese electric cars are rolling in unstoppably in ever-increasing numbers. Already in the first quarter, an impressive 28 percent of the imported electric vehicles were labeled "Made in China" - three times as many as the previous year. But the real triumph began only in May, when the Chinese brands saw their sales soar with triple-digit growth rates. One name stands out in particular: MG Motor, which was bought by SAIC from the ruins of the British MG Rover Group in 2005. For a long time, it operated very discretely only in the UK, but now MG has overtaken many brands across Europe. In May 2023, 1,780 brand new MG cars were registered in Germany, an increase of 118 percent. This further accelerates the growth of the Chinese manufacturer SAIC, to which MG Motor belongs: In the first five months of the year, 6,766 new cars already bore the characteristic octagon on the hood, an increase of 108 percent compared to 2022. A company spokesperson explained:

"In 2022, around 15,000 new vehicles from MG Motor were registered. We continue to strive for moderate growth in a competitive market environment and have set ourselves the goal of achieving around 20,000 new registrations in 2023."

MG thus clearly stands out from the group of Chinese brands, which were not all able to grow in the same way: Nio, partly already celebrated as a premium competitor to Mercedes and BMW, was able to sell only 205 vehicles by May 2023. For BYD, the situation looks even bleaker with just 165 vehicles. At least Link & Co., active in Germany for two and a half years and belonging to Geely like Volvo, was able to bring 1,546 cars on the road.

The dealership network still makes the difference

MG's success is not only based on cost-effective production in China but also on a sophisticated sales strategy, as our colleagues from Auto Medienportal have found out. While Nio, for example, follows Tesla's model and relies on pure online sales, MG is building a dense network of dealers: The brand already has over 130 trading partners in Germany, and their number is steadily growing.

Back into the showrooms of BMW: Now no longer as a subsidiary, but as a second brand

The colleagues from Auto Medienportal have followed up on the spot: The latest additions are four operations of the renowned Weller Group. Burkhard Weller is the largest BMW dealer in Germany and expresses enthusiasm about MG:

“MG's price positioning is extremely promising. There are already enough expensive cars: BMW offers electric vehicles for 70,000 euros. MG, on the other hand, offers comparable vehicles for less than half. The MG 4, comparable to the VW ID 3, is already available from 32,300 euros. A large portion of the newly registered MG vehicles are models of the 4 series. Furthermore, the brand boasts that it is the first to offer a fully electric station wagon - the MG 5.”

Another factor that helps MG succeed is the fact that dealers like Burkhard Weller have free spaces in their car dealerships: With most manufacturers transitioning to the agency model, they have to rent the showroom space and accordingly scale it down. Weller says:

”Previously, when we didn't have to pay for it, the showrooms were never big enough. Now suddenly a third of the space is enough.”

At four of Weller's 24 BMW locations, MG vehicles are now also in the showroom.

The requirements that MG dealers have to meet are manageable: While brands like BMW, VW, or Mercedes even stipulate which tiles their cars must be presented on, MG is content with an MG pylon and the MG logo at the dealership. An MG spokesperson explains:

"Excessively ornate showrooms would ultimately be reflected in the vehicle price, and we keep an eye on that."

With 25,000 euros, you can be an MG dealer

A dealer who wants to become a partner of the brand has to invest around 25,000 euros. MG also relies on the agency model: The dealer sells the cars on behalf of the brand and receives a commission for it. Thus, the financial risk is manageable.

Currently, sales via MG agencies account for 70 to 80 percent of the brand's total volume. Fleet sales, online sales, and car subscriptions are added. Overall, four out of five MG vehicles are currently sold through the agency model. Could MG Motor thus become the new Volkswagen? Burkhard Weller, who also sells VW Group brands Seat and Cupra, wouldn't go that far:

"But MG Motor will undoubtedly build a strong position as an import brand in its own segment."

Whether or when the other Chinese brands will achieve similar successes remains to be seen. Industry experts, however, fear a veritable triumph of the Asian electric vehicles in the long run because: A major competitive advantage of the Chinese car brands lies not only in cost-effective production but also in the fact that the country is technologically on par with the western competition in e-mobility. And in the key technology of lithium-ion batteries, Chinese companies are even leading: Four of the ten largest battery manufacturers for electric cars come from China, three from Korea, and three from Japan. At the top is China's CATL.

It is by no means certain whether the European car manufacturers can withstand this Asian offensive without losing massive market shares. Because with the transition to electric drives, the cards in the industry are being reshuffled. Mercedes, Audi, and BMW are moving into the luxury segment, where customers primarily focus on the brand. Volkswagen, Ford, Renault, or the Stellantis group do not have this option. Burkhard Weller, who has also represented Toyota since 1979, therefore sees the success of the Chinese primarily in the volume segment.

MG 4 and VW ID.3 are assembled in China in the same factory

Painful for VW: The parent company of MG, SAIC, the largest car manufacturer in China based in Shanghai, is the most important partner of Wolfsburg. In the joint factory of VW and SAIC, the electric models VW ID 3 and MG 4 are produced in parallel.

What does that mean?

It took a long time for MG to reach its current strength: The Chinese took over the brand back in 2005 – almost 20 years ago. And after initially experimenting with little innovative products only in the UK, the major breakthrough was lacking. It only came with the now truly competitive electric models along with an increasingly dense dealer network – classic virtues. The success proves MG right: So much so that they are even daring to return to the brand's original theme with the "Cyberster" – the roadster.