Slowly, but surely, JSW MG Motor is putting in place the pieces needed to become a serious player in India's automobile landscape.
05 Aug 2024 | 8729 Views | By Ketan Thakkar
JSW MG Motor India — a joint venture of India’s JSW Group and China’s state-owned SAIC Motor — has no intention of being just another fringe player in India’s burgeoning automotive market. SAIC, one of China's ‘big four’ automakers has big plans for its Indian subsidiary and the homegrown JSW ...
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JSW MG Motor India — a joint venture of India’s JSW Group and China’s state-owned SAIC Motor — has no intention of being just another fringe player in India’s burgeoning automotive market. SAIC, one of China's ‘big four’ automakers has big plans for its Indian subsidiary and the homegrown JSW Group. It is eyeing a top position in the country, particularly in the New Energy Vehicle segment or emerging electrified vehicle space. For now, though, the company is more focused on putting in place the foundation for future growth, including taking on a more ‘Indian’ image, expanding the product portfolio, and investing in manufacturing and distribution.
'Indian' to the Core
As announced earlier, JSW MG Motor India has "Indianised" the company through a shift in ownership structure and corporate philosophy. A key part of this strategy is introducing an Employee Stock Options (ESOP) program for its 2,500 employees nationwide. "We want to create an Infosys movement in the automotive industry," Chaba explains, emphasising the potential for "wealth creation and wealth distribution" through this initiative.
Recently approved by primary stakeholders JSW Group and Shanghai Automotive Industrial Corporation (SAIC), the ESOP scheme marks a pivotal moment in the company's history. Under the new structure, JSW MG Motor India will be 51% owned by Indians, with the Chinese stake expected to dilute further, possibly through a future IPO. The current ownership breakdown includes a 35% stake held by JSW Group, 11% by financial investors, 5% by employees, and the remainder by SAIC, which owns the MG brand.
"We have already announced the scheme and sent it to both shareholders. And hopefully, we will be able to create that kind of wealth in the next three to five years," Chaba adds, highlighting the long-term vision behind this move.
Ambitious Product Pipeline
With the backing of its new joint venture partner, JSW Group, MG Motor is embarking on an aggressive product strategy. The company plans to launch one new product every ten weeks over the next year, a move that Chaba describes as "Vision 2.0" for the brand in India.
"I am happy to say that five new products are approved for launch next year. Two will be premium products, and three will be mainstream products," Chaba reveals. This diverse range of offerings will span price points from Rs 15 lakh to Rs 50 lakh, significantly expanding MG's market presence. The first model in this aggressive launch plan is expected to be the Cloud EV, a crossover sports utility vehicle priced between Rs 15 lakh and Rs 20 lakh. This new entry will complement MG's existing electric offerings and be placed right between the entry-level Comet EV and ZS EV at the top.
Following the Cloud EV, industry sources suggest that MG may introduce a Bingo hatchback and a D-segment SUV based on its global Starlight SUV model. The company is also exploring premium offerings, with plans to open dedicated outlets for models like the Cyberster and MG7 EV. Chaba remains tight-lipped about specific details but says "Just imagine an SUV with good, huge inside space. Visualise that vehicle; it's an intelligent SUV. It will be loaded with features as has been the tradition of MG. It will be a smart CUV scheduled for a September launch.
Expanding Capacity and Reach
JSW MG Motor India is investing in expanding its manufacturing capabilities to support its ambitious growth plans. The company has earmarked Rs 5000 crore for capacity expansion, with plans to increase production from the current 100,000 units to 300,000 units annually.
"We should expand fast. As we speak, we will increase our capacity from 1,00,000 to 3,00,000 (units). And when you have 3,00,000, you can do other products within the plant. So, that's our plan. So, we should aim to produce and sell 300,000 cars in three to five years," Chaba explains.
This expansion includes acquiring land to add a new manufacturing line at the company's Halol facility in Gujarat. Additionally, JSW MG is setting up a battery assembly plant within the Halol factory to ensure high levels of localisation for its electric vehicles.
The company is also rapidly expanding its retail presence, with plans to increase its network from 400 outlets to 600 outlets. This expansion aims to cater to new buyers in India's hinterland and strengthen MG's market position.
Driving the Electric Revolution
As one of the early movers in India's electric vehicle market, JSW MG Motor India continues to emphasise EVs. Despite recent concerns about slowing EV adoption rates, Chaba remains optimistic about the sector's growth potential. "In the first five months, 45,000 EVs have been sold, which is approximately 17-18% growth. With the new launches this year... from 93,000 to 1,20,000, a decent 30% growth. So, now it is not as high as last year's 50-60% growth, but if the overall industry is going to grow by 7-8%, the EV market will grow by 30%, which is not bad," Chaba notes.
JSW MG Motor India has already made significant strides in the EV market. In the first six months of 2024, electric vehicles accounted for almost 40% of the company's total sales, with over 10,000 EVs sold. The Comet hatchback EV is approaching sales of 1,000 units per month, while the premium ZS EV consistently sells over 750 units monthly.
With the upcoming launch of the Cloud EV, positioned in the Rs 10 lakh to 20 lakh segment, MG aims to strengthen its EV portfolio further. "With the addition of our new launch and other products in the market, we expect the electric vehicle sales momentum to continue in the coming years," Chaba adds.
Navigating Challenges
Despite its ambitious plans, JSW MG Motor India faces challenges in the current market environment. The company has seen its average monthly sales dip below 5,000 units, leading to increased dealership inventory. However, Chaba remains confident that the upcoming festive season and new product launches will drive growth.
"We expect the second quarter to be better than the first, and the momentum will further accelerate with the festive season. I expect the market to grow by 7-8% in the current financial year," he says. The company is targeting sales of 70,000 to 75,000 units for the current financial year.
JSW MG Motor India is putting all the right pieces in place to carve a bigger space for itself in make an impact on the Indian automotive industry, from empowering employees through stock ownership to aggressively expanding its product lineup and manufacturing capabilities. Moreover, by offering a diverse range of EVs across different price points, the company is working to make electric mobility more accessible to Indian consumers. The coming months will be crucial for JSW MG Motor India as it seeks to execute its ambitious plans amid a slowing market.
The company’s monthly volumes remain sub-par; if it can recreate its past mojo with the new launches, it may fulfill its vision of creating an "Infosys moment" in the automotive industry. With the government of India too keen on relooking at opening up FDI from China, JSW M G Motor India may well disrupt the market with its high-tech and innovative products from China and pave the way for growth and wealth creation in one of the world's largest and most dynamic auto markets.
As Rajeev Chaba and his team steer JSW MG Motor India through this exciting phase, the industry will be watching closely.
This feature was first published in Autocar Professional's August 1, 2024 issue.