Sales recovery 'tactical' due to pent-up demand, not sustainable: MG Motor

 

The recovery seen in auto sales in the past couple of months is not a sustainable one and there is a question mark on how the industry would fare next year as the sector is hugely linked to the economy, according to MG Motor India President and MD Rajeev Chaba.

Following the reopening of the economy after lockdown, auto sales have gradually picked up month on month since June and gained further momentum with the onset of festive season in September.

"We should not think this is a sustainable recovery. This recovery is very tactical because of pent-up demand, because of lockdown, because of some shifting from public transportation to private transportation and maybe some very few people who just want to buy cars now because they want to have some feel good factor," Chaba told PTI.

He said the market is coming back to last year's level in August and September although the April-June quarter was a wash out.

However, Chaba said, "This is all tactical but sustainable demand or the robust demand depends on the economy. Automotive industry is hugely linked with the economy of the country and vice versa. Auto industry helps the economy and the economy helps the auto industry."

Sales in September, October, November and December will be fine but still industry will be down by 23-25 per cent overall for the full year, he said adding, "From January onwards, it will depend on the robustness of the economy and the positivity of sentiments and certainty around (COVID-19) vaccines, and maybe government's stimulus further to the economy and may be to the auto industry as well."

"That's why I have my fingers crossed from January onwards," he added.

Some automakers had said that there are 'green shoots of recovery' in the industry based on the performance in September, when auto majors Maruti Suzuki, Hyundai Motor led the recovery march of passenger vehicle (PV) sales in the domestic market posting high double-digit growth.

Tata Motors, Honda Cars India, Skoda Auto India, Kia Motors India also witnessed robust increase in their September sales. While companies like Mahindra & Mahindra and Toyota Kirloskar Motor saw decline in sales, they said demand is picking up and there is a lot more confidence in the dealers.

The manufacturers are banking on festive season demand to carry forward the momentum.

Commenting on the MG Motor India's position, Chaba said since the gradual lifting of the lockdown, the company has been inching up towards normalcy.

"We are almost 80 per cent of pre-covid levels in terms of normalising the supply chain as well as demand. Luckily we still have some orders and we are able to do around 3,000 cars a month right now. In terms of demand, it is almost pre-covid level for us," he said.

He further said, "We still have around 9,000 orders for both Hector and ZS EV. So hopefully by October in terms of supply chain, it should be pretty normal, unless COVID-19 plays on its own and it deteriorates. Otherwise, we are on the path of good recovery.

MG Motor India sells 3239 Hector units in November, eyes expansion

MG Motor India on Sunday said it has retailed 3,239 Hector units in November.

"The sustained momentum highlights how our debut offering in India continues to win the hearts of our customers," MG Motor India Director Sales Rakesh Sidana said in a statement.

The company is focused on expanding its service network to cater to the service needs of customers, he added.

"Most of the expansion in the next few months will be on dedicated service outlets," Sidana said.

MG Motor India currently has over 150 centres across India and aims to further strengthen its network count to 250 centres by March 2020.

MG Motor unveils India's first car-less digital showroom in Bengaluru

The latest MG Motor digital showroom in Bengaluru is everything that a typical car showroom does not look like. Most importantly, it has no cars on display. Envisioning the future of retailing, the car manufacturer has unveiled the country’s first carless digital studio which is driven by visual immersive technology to give potential customers a 360 degrees tour of the vehicles before they make the buying decisions.

Started on a pilot basis, the company aims to take this car-less showroom concept to several locations across India as it drastically reduces the cost of operations.

“The purpose of setting up a car-less showroom is that typically in big cities, one cannot open big showrooms in busy neighbourhoods. Through this concept, the cost of operations goes down to one-fourth the cost of a normal car showroom, which is between Rs 20 lakh and Rs 25 lakh (per month),” said Rajeev Chaba, President and Managing Director, MG Motor India.

“This can revolutionalise retailing as we can go to several touch-points closer to the customers at a much lower price,” he added.

Spread in a small area of 600 square feet, which is much lesser than the size of a regular automobile showroom, the digital studio welcomes a customer with an artificial intelligence (AI) based human recognition screen. Once a customer enters the showroom, the screen captures his/her picture and asks some basic questions. Based on that data, it customises the potential buyer’s profile so that the salesman can communicate with the customer in a personalised way.

Next you move to a navigator which is connected to a giant 9 feet visualizer. There are three variants of the tour that the visualizer provides based on the time available with the customer -- that is 5 minutes, 10 minutes and 15 minutes 3D tours. By giving the voice command of “Hello MG”, one could activate the visualizer. One can get a 360 degree view of the exteriors, interiors, and safety features of the car either via touch screen or voice command. The engagement tool provides a close experience of navigating through the car, without the car, such as adjustment of seats, dimensions, opening and closing of sunroof, switching on and off of lights, opening of boot space. It also gives the option of scanning through the engine and innards of the car which is not possible in a physical vehicle. The visualizer also assists a user to scan through the interactive iSmart screens, which are fitted in the company’s flagship Hector models.

MG Motor has tied up with Mumbai-based start-up Eccentric Engine for its automotive visualization platform. “We believe that the future of automotive sales is omnichannel. We look forward to partnering with MG Motor to visualize their products through more futuristic touch points,” said Varun Shah, co-founder, Eccentric Engine.

Once a customer is done with the visual tour, he/she can opt to test drive the car, which will be available in the parking lot outside the showroom. Bookings for the vehicle can also be done simultaneously from the same place.

With competition intensifying in the utility vehicles segment, a lot of players are shifting gears and moving towards technology to attract buyers. Hyundai Motor is providing an AI-based technology service called Blue Link which provides an easy flow of critical information between the user and the car. This technology has an inbuilt SIM card and a 24x7 call centre that has features like live tracking, crash and panic alert. It also has a remote engine start feature limited to automatic variants.

General Motors is also looking at embedding Google technology in its cars to enable voice activated controls, starting 2021. Even Amazon is in talks with car companies to embed its voice enabled technology Alexa in vehicles.

MG Motor India to increase production due to high demand for SUV Hector

At a time when the auto sector is facing a slowdown, MG Motor India has managed to get an overwhelming response for its new SUV, Hector. It was the automaker's first India launch. The company is now increasing its production to meet the demand and has lined up four more launches in next two years.

China’s SAIC-owned British brand Morris Garages (MG) stopped taking bookings after the company received 27,000 bookings and is now in the process of ramping up its monthly manufacturing capacity.

“Our first product, MG Hector, has received an overwhelming response and we are unable to cater to such high initial demand. We have, therefore, closed bookings temporarily as this will help ensure timely and orderly deliveries to our customers who have shown tremendous confidence in MG," said Rajeev Chaba, president and managing director, MG Motor India.

MG Motor is planning to ramp up production capacity at its Halol unit in Gujarat to 3,000 by September from around 2,000 units in August. The company is also considering to add a second shift, which will give employment to another 500 people.

Chaba added that the company was also working with its component suppliers to ramp up production in a gradual manner without compromising on quality. Till the domestic partners gear up with the capacity, the company plans to import few of the parts.

Localisation is one of the key factors to be cost competitive.

While the current localisation would be around 75 per cent, the company expects to increase with the supplier eco-system ramping up production.

Chaba said key reasons for Hector's success is its technology, features, style, size, safety, good reassurance and pricing.

The company expects to continue with this USP with the upcoming four more launches. Over the next 2-3 years the company is planning to focus only on SUV and MPV segments, including an electric SUV EZS, which will come at the end of this year. Going forward, the company may look at the hatchback segment.

On whether MG will develop India specific platform like other OEMs, who have announced, Chaba said “I doubt anybody today has developed or is developing an India specific platform. They just pick the best possible platform, which they have globally and make changes for India. We will also do the same,” he said.

MG India, according to Chaba, is not in the race of market share, while refusing to disclose any volume targets, he said, the company will focus on building the fundamentals which will help to build the brand. Fundamentals include quality, experience, total cost of ownership, resale value among others.

MG Motor India is planning to increase its touch points to 250 by end of this year from the current 125.