“Welcome, Benedict.” “Hello, MG.” British actor Benedict Cumberbatch greets his car, MG Hector, as he slides behind the wheel.
This series of ads—with Cumberbatch calling his car “a human thing”—heralded the entry of the auto manufacturer MG Motors’ internet-connected car into India in June. Barely two weeks after bookings opened, the company had to stop taking orders as the overwhelming demand had pushed the waiting period to seven months. In October, MG Motors became the 10th most selling car brand in India (overtaking the likes of German Volkswagen-owned Skoda and Japanese auto conglomerate Nissan in India), with just one model.
While MG’s Britishness is heightened by Cumberbatch selling its SUV (sports utility vehicle), the company is owned by SAIC Motor. SAIC stands for Shanghai Automotive Industry Corporation. Yes, Chinese. Essentially, Hector, which is among the first internet-connected cars in India, also marks a Chinese automaker entering India for the first time.
Under a very British guise, of course.
Looking at MG Motors’ stellar numbers, it would be near impossible to say that the Indian auto industry is reeling under the worst slowdown in nearly two decades. Rising insurance costs, a hike in road tax, mandatory safety norms—the industry has been pushed to upgrade while the country’s economic growth has slowed to six-year lows. Not to mention the new emission standards. India is upgrading to Bharat Stage 6, or BS-VI from BS-IV by April 2020.
This has also deterred consumer purchases and company investments. To top it all off, India is seeing a mass exodus of foreign carmakers. US-based Ford has announced it’s stopping solo operations and partnering with India’s Mahindra and Mahindra (M&M) since sales have dipped. Nissan says it’s going to slowly phase out the Datsun brand in India, and Chevrolet’s American owner, General Motors, left India in 2017.
Indian automakers are fighting to survive the perfect storm—of regulations, economy, and market forces. And Chinese companies, spotting an opportunity, are jumping right in to take the market. Apart from SAIC, China’s largest automaker, half a dozen other companies, including Great Wall Motors, Changan, Geely, Chery, and Weichai, have pledged to invest nearly $5 billion in India over the next three-five years. These companies have, together, sold 7.5 million units in 2018—that’s over 2X of cars and vans sold in India in the same period.
These companies have their own downturn back home. China, the world’s biggest car market with 28 million vehicles sold in 2018, clocked its first drop in annual sales in nearly thirty years in 2018.