LONDON -- MG has admitted it will probably cost the company more to build cars in a planned European factory compared with China but says the benefits will outweigh the negatives.
“I expect it to be more expensive to build local, but when you sell 200,000 cars per year, it’s time,” said William Wang, MG Motor’s U.K. and Europe head.
MG sales across Europe reached 99,789 in the first six months, compared with 42,296 in the same period last year, according to figures from market researcher Dataforce.
MG will likely build the MG4 in Europe, Wang told Automotive News Europe. The compact electric hatchback was the brand’s second biggest seller in Europe in the first half with 29,458 units sold. The ZS small SUV was the brand’s top-seller with 35,753 units sold.
The advantages to building in Europe rather than China will be the removal of a 10 percent import duty as well as faster reaction to customer needs, Wang said.
A European factory would also bring better links to the region. “Building local means you work together with local people. It’s more commitment,” Wang said.
The growing sales threat presented by Chinese automakers in Europe has seen industry bodies call for higher tariffs on imports to offset some of the competitive disadvantages European carmakers face locally, including higher energy prices.
Wang however said SAIC’s decision to build locally was not a political one. “We are businesspeople. We do not think too much about the political dimension,” he said.
The announcement from SAIC that it will build a European site will be a relief to European automakers, who will feel that they can compete on cost if the Chinese company has a factory in a European country.
MG has partly grown so fast because of its competitive prices, especially on the MG4, which starts at 28,590 euros in Germany compared to 39,995 euros for the Volkswagen ID3 with similar specifications.
Ford’s head of passenger car division in Europe, Martin Sander, recently told Automotive News Europe that he was not worried about competition from China in Europe as Ford moves to selling only electric vehicles in Europe.
“I am strongly convinced the moment the Chinese want to scale in Europe, they will also produce locally. And then I do not see why we should not be competitive with any other company,” he said.
Looking for factory site
SAIC will make a decision on where to locate the plant within two or three years, Wang said. Which country is still under evaluation, he said. “We need to check energy costs, labor costs … everything to find out which country is best. We need a very detailed calculation,” Wang said.
The U.K., MG’s biggest European market, is one option, Wang confirmed. SAIC still owns the Longbridge, Birmingham, plant that was part of the original MG Rover sale in 2005, initially to Nanjing Automotive and subsequently to SAIC. However, the assembly areas were levelled in 2021 as part of a plan to redevelop the site for housing.
