FRANKFURT – The name MG was once synonymous with vibrant but picky sports cars from the UK. Today, the iconic octagonal badge serves a different automotive ambition: China’s quest to become a major a player in the global car market.
SAIC Motor, one of the Chinese manufacturers of the big four cars, bought the MG brand in 2007 and introduces it to a line of electric sports SUVs sold in Germany and other European markets. MG is an example of how Chinese carmakers are taking advantage of the transition to electric cars to challenge American, European and Japanese carmakers that have long dominated the industry.
Chinese car manufacturers come as electric cars an increase in popularity, which accounts for almost 10 percent of new car sales in Western Europe, and consumers are in the mood to buy, with savings collected during the pandemic. At the same time, car manufacturers reduce production due to lack of microprocessors.
MG already has 350 retailers in 16 European countries and is still expanding. Two other Chinese carmakers, Nio and BYD, are moving to Europe via Norway, the world’s most electrified major car market.
Nio, based in Shanghai, opened a representative office in Oslo at the end of September, the company’s first branch outside China. Shenzhen-based BYD delivered an electric SUV called Tang to Norway’s first customer in August.
Great Wall Motor, another Chinese manufacturer, has announced plans to launch sales of the compact and hybrid SUV in Europe next year.
Polestar, headquartered in Sweden but belonging to the Chinese company Geely Holding, has been selling a Chinese-made battery model in Europe and the United States since 2020. Many teslins on European roads were imported from the company’s factory in Shanghai. (This will change when the company completes construction of a factory near Berlin.)
Foreign carmakers such as Volkswagen, Mercedes-Benz or General Motors sell millions of cars in China, so they can hardly complain when Chinese carmakers intervene in their field. Although China is the largest car market in the world, its brands have only a fraction of the international market. Buyers in China also prefer foreign brands, although local carmakers are growing rapidly and have taken over 40 percent of the domestic market.
Nevertheless, the emergence of Chinese cars in Europe is another ominous sign for established carmakers already having enough trouble switching from internal combustion engines to batteries. Chinese carmakers also have the US in mind, although their impact has been minimal so far. Slovakia supplies more cars to the US market than China.
Chinese carmakers have learned from European companies that are now challenging them. The Chinese government has long demanded that foreign car manufacturers operate through joint ventures with domestic companies and share knowledge and experience.
SAIC, the owner of MG, has been Volkswagen’s partner in China since 1984. Now MG is moving into Volkswagen’s heart. MG is advertising its ZS, a compact electric SUV, at a starting price of 30,420 euros or about 35,400 dollars. If state incentives for electric vehicles are included, the car can be obtained for around € 24,000. That’s $ 4,000 less than the cheapest version of Volkswagen’s ID.4 compact electric SUV.
“Sous chef is opening his own restaurant,” said Matthias Schmidt, an analyst in Berlin who monitors the European electric car market.
MG said in a statement that his partnership with Volkswagen remained a “strategic partnership that benefits everyone”.
Europe is a difficult market for foreign carmakers. Just ask Ford Motor, which has only 4 percent of the market in the European Union, or Toyota, which, despite its power in the rest of the world, has just over 6 percent.
Previous attempts by Chinese carmakers to invade Europe have failed. In 2013, Qoros, a Chinese startup brand, announced plans for a network of agents in Europe, but opened only one.
The time may be better this time. Sales of electric cars, a technology highlighted by the Chinese, have doubled in Europe since 2020 despite the fall of the overall market. About 9 percent of new cars sold in Western Europe by August, or 644,000 vehicles, were battery-powered, Mr Schmidt said. Including plug-in hybrids, the share of electric vehicles was 18%.
Demand for affordable electric vehicles has exceeded supply, said Julian Emrich, a dealer in Bietigheim-Bissingen, Germany, north of Stuttgart. “A lot of people were interested, but there were no products, at least not products with a normal price,” Mr Emrich said.
When an MG representative sent him an email asking if he wanted to become a trader, Mr. Emrich said, “That was exactly what I was waiting for.” Unlike most traditional car manufacturers, MG did not require him to buy vehicles in advance. MG supplies cars and dealers earn a commission when they sell them.
It is unclear whether capricious European buyers will buy a Chinese car. When a MG representative approached Rumpel & Stark, Ford’s agent in the northern Bavarian town of Unterpleichfeld, regarding the sale of the Chinese brand, CEO Bastian Stark was skeptical. He demanded that the representative hand over the keys to the MG with which he had arrived.
Rumpel & Stark mechanics thoroughly inspected MG. Their judgment: thumbs up. “They said this car was good,” Mr. Stark and noted that MG is equipped with parts from established suppliers such as Bosch, Valeo and Continental, which have large operations in China.
Rumpel & Stark agreed to add MG to its showroom and sell three hybrids before it even put up a sign. Buyers were attracted by the price and relatively short delivery times. “I wasn’t involved in marketing at all,” Mr. Stark.
The European market is starving for vehicles because of global shortage of semiconductors. The waiting period for the MG hybrid is just four weeks and three months for the all-electric model, “which is fine compared to other brands at the moment,” Mr Stark said.
The wait for many European brands can be much longer, especially for lower priced models. Car manufacturers like Renault are dedicating rare tokens to higher-end vehicles that generate more profit.
While the market may be ripe for Chinese electric cars, political times may not be so ideal. Many European leaders share the concerns of their American counterparts Chinese trade practices, which accuses Beijing of subsidizing companies to give them an unfair advantage in international competition.
The Chinese government has invested heavily in electric vehicle technology, helping to establish an extensive network of suppliers to feed manufacturers.
After the September national elections, German political leaders negotiate the composition of the government this is likely to include the Green Party, which advocates a tougher line against China than Angela Merkel, the outgoing Chancellor. MG may be particularly vulnerable to concerns about the mixing of government and corporate interests because its parent company, SAIC, is majority state-owned.
European carmakers are keeping a close eye on Chinese rivals. “We take every new player extremely seriously,” Martin Daum, a board member of car and truck manufacturer Daimler, said in an interview. “On the other hand, we’re never afraid of competition.”
The German Automobile Industry Association responded to questions about Chinese carmakers by stating that countries should abide by World Trade Organization rules prohibiting government subsidies designed to provide a competitive advantage to companies.
“It’s important to keep markets open and a level playing field,” they say in the association.
MG said it “follows market-oriented mechanisms and respects relevant laws and regulations.”
Chinese carmakers are shaping up as international brands and belittling their origins. MG maintains some of its Britishness by designing cars in London. Nio’s global design center is in Munich, while Polestar is headquartered in Gothenburg, Sweden, near Volvo Cars, which is also owned by Geely.
Thomas Ingenlath, a German who is the CEO of Polestar, said that all car companies have tried to sell their products abroad and that there is nothing unusual in what Chinese companies are doing.
“It’s a completely normal thing,” Mr. Ingenlath Munich International Motor Show in September. “Car brands, wherever they are located, have export deals.”