Internal and external troubles, where is SAIC MG Road? | Electromotive force

Recently, the information about the EU's tariffs on Chinese car companies has continued to ferment on the Internet. BYD, Geely Automobile and SAIC Motor have all been subject to countervailing duties of 17.4%, 20% and 38.1%, respectively. The EU has raised taxes, and the most injured car company is SAIC, and the most injured brand is SAIC MG.

Regarding the EU tax hike, SAIC MG bluntly said on social platforms: targeted. Because in the future, SAIC MG will have to pay tariffs as high as 48.1% for pure electric vehicles imported into the European market, which is much higher than that of other car companies. However, SAIC MG also responded domineeringly to Europe's tax hike, saying that it would not back down and would not stop going global.

After Europe strengthens trade barriers, how to break the situation of SAIC MG in the future has also become a concern for the industry. You must know that SAIC MG has a large market share in the European market, with a market share of 72% at one time. After this tax increase, SAIC MG will inevitably suffer a big blow in the short term.

However, in China, the world's largest automobile market, SAIC MG's influence has gradually declined, and how to find a new way out is a topic that SAIC MG has to think about under internal and external troubles.

external pressure

Judging from the available information, the EU intends to impose temporary countervailing duties on pure electric vehicles imported from China from July 4. However, the current EU tariff on imported cars is 10%, and if Europe starts to impose trade tariffs, the tax rate on pure electric vehicles imported by SAIC MG to Europe will be as high as 48.1%, which is higher than that of other Chinese brand electric vehicles. As a result, there was an incident in which SAIC MG publicly stated that it was targeted on social platforms.

SAIC MG is targeted in the European market, which is inseparable from two major factors. On the one hand, SAIC MG's models are too popular in the European market. Taking 2023 as an example, SAIC MG's cumulative sales in Europe will be 230,000 units, with a market share of 72.7%, which is equivalent to every 10 models sold in China to the European market, and 7 models are from the SAIC MG brand. This is also the twelfth consecutive year that SAIC MG has won the European sales championship of Chinese auto brands, and BYD, Geely, Great Wall and other car companies are ranked after SAIC MG.

There is a set of data that further confirms the rapid development trend of SAIC MG in Europe. According to statistics, in 2018, SAIC MG's sales in Europe were more than 9,000 units, but by 2023, it has grown to more than 230,000 units, and the market performance has increased 25 times in six years.

Not only that, the MG4 EV under the SAIC MG brand will sit on the top spot in European pure electric compact car sales in 2023, with a total annual sales volume of 109,900 units, and even in the United Kingdom, France, Spain and other countries and regions, it has also successfully squeezed into the best-selling pure electric vehicle sales list for many times, and won the grand slam of the annual car awards of major automobile countries such as Britain, France and Germany.

However, the market share of automobiles in one country and region is limited, and as SAIC MG's market share in overseas markets continues to increase, the market share of local European automakers will continue to shrink. In Europe, due to the protection of local companies, it has to raise the import tariff threshold, forcing SAIC MG to raise the price of its vehicles and weaken its market competitiveness.

On the other hand, local European automakers are slow to make the transition to electrification. In fact, the annual sales base of SAIC MG is not too high, and it is not as good as a car company's monthly sales performance in China, and the average monthly sales of MG4 EV in Europe are less than 10,000 units. It is reported that at the beginning of this year, European auto brands such as Mercedes-Benz and Audi directly announced that they would slow down the process of full electrification and give up the process of achieving full electrification before 2030, which also provided an opportunity for Chinese car companies to develop in Europe.

On the one hand, the new energy business of European car companies has not improved significantly, and on the other hand, Chinese electric vehicle companies are rapidly attacking the city, which will inevitably cause a sense of crisis in Europe. In this case, Europe can only find a way to try to hinder the expansion of China's new energy vehicles overseas. SAIC MG has a large market share in the European market, so it has become a key target.

In fact, thinking from the perspective of Europeans, it is not difficult to understand that Europe has raised the entry threshold of MG pure electric vehicles. Think about it from another perspective, if the market share of imported cars entering the Chinese market continues to rise, resulting in the sales of Chinese car companies continue to decline, then the entire automobile industry chain will be affected.

Many people may wonder, why Europe is mainly targeting SAIC MG and not BYD? After all, whether in terms of domestic sales or global results, BYD's performance is stronger than that of SAIC MG.

In this regard, it is inseparable from the historical and cultural advantages of SAIC MG in the European market. You must know that MG is a brand born in Oxford, England, and its market position in the UK was once like that of China's Hongqi Automobile, so MG's appeal in Europe cannot be underestimated. Although it has been acquired by SAIC for more than ten years, SAIC has also planted its completely independent products in the century-old MG, but MG still has a high reputation and influence in the European market, and has a high status in the minds of many Europeans, and even some Europeans will think that MG is still a high-end brand belonging to the UK.

In contrast, BYD is an "outsider" in the European market. In addition, because Chinese brands mainly took the low-end route in the early years, the quality of vehicles was uneven, so in the minds of some Europeans, Chinese cars are still synonymous with low-end. There is no doubt that the stereotype of Chinese cars by Europeans has influenced the development of Chinese brands such as BYD and Geely in Europe. In fact, this phenomenon also exists in the domestic auto market, although independent models have made great progress in design, but there are still many consumers who find it difficult to accept spending hundreds of thousands of dollars to buy a domestic car. This is the influence of perception, but once a consumer's perception is formed, it is difficult to change.

In addition to the brand image, it is reported that SAIC MG's models will also be tuned and designed for the European market, such as the above-mentioned hot-selling model MG4 EV, which has the driving performance that Europeans like, and even the price is relatively cheaper. It is reported that the MG4 EV will start at £26,995 locally, while the Volkswagen ID.3 will start at £35,700, so SAIC MG's models can replace many local models in Europe. All of this is an important reason why SAIC MG's achievements can be unbeatable in the European market.

How to break the game?

On the one hand, the reason for the affordable price of SAIC MG models is that SAIC MG has a strong technical base, which has created models with excellent product power at a lower cost, and successfully attracted European consumers. On the other hand, European tariffs on Chinese imports have not been too high. However, now that Europe has raised the tariff threshold for SAIC MG, the price advantage of SAIC MG's models in the European market will be further weakened.

Europe is SAIC MG's largest overseas regional market, in the face of such a large piece of cake, SAIC MG has no intention of backing down, and responded domineeringly to the EU's reinforcement of trade, saying, "If you are targeted because you do it right, insisting on not giving in is a kind of character, and SAIC MG's pace to the world will not stop!" And 48.1% is the distance that MG is ahead of Europe. ”

In the face of trade barriers in Europe, there is no clear news on how SAIC MG will adjust the pace of going overseas, and the possibility of building a factory in Europe to produce electric vehicles in the future is not ruled out.

It is understood that last year, SAIC MG announced that it would build a production base in Europe, and is selecting a site to plan to produce electric vehicles and light trucks locally.

In fact, behind the increase in tariffs in Europe, it may be to force Chinese car companies to build factories in Europe, so that Chinese car companies with leading new energy technology can drive the development of the new energy industry chain in Europe, so that Europe can make up for the new energy lessons and further enhance market competitiveness.

In the face of Europe's difficulties, it is unknown whether SAIC MG will adjust its plant construction plan in the future. However, from the perspective of other Chinese car companies, other brands have seen the change in the attitude of the European market towards Chinese electric vehicles, and have had to suspend their plans to go overseas in the European market, such as Great Wall Motor, which was to enter the European market with great fanfare two years ago, and recently dissolved its European headquarters in Munich, Germany. On the other side, there is also news that the brand plans to cancel all parallel export channels from June 30. These measures may be in response to the EU's imposition of tariffs.

Of course, for SAIC MG, there is another way out, which is to produce vehicles in other countries and export them to Europe. It is understood that at present, SAIC MG has laid out a production base in Southeast Asia, as long as SAIC MG transfers the production line to Southeast Asian countries, then the export of vehicles to Europe can well avoid the problem of tariffs.

In fact, the process of upward development of every industry in China is basically inevitable from external suppression, and companies such as Huawei, ZTE, SMIC, and DJI are all without exception. However, to be optimistic, external suppression and containment are both challenges and opportunities, taking Huawei as an example, when Huawei was sanctioned by the United States, it made more Chinese people know about Huawei and had a lot of fans.

The imposition of tariffs in Europe this time, although it is a blow to SAIC MG, also contains opportunities. SAIC MG also said: both bear its crown, must bear its weight. This sentence reflects the fearless spirit of SAIC MG. Perhaps SAIC MG also wants to make full use of the opportunity of being suppressed by Europe to enhance its reputation in the domestic auto market.

However, the market performance of SAIC MG and Huawei is a little different is that Huawei has always had a good reputation and popularity in the domestic mobile phone circle, and its products are also popular with consumers, on the other hand, SAIC MG has been close to being on the edge in the domestic market, and since 2020, MG's market sales in China have declined across the board, and it is gradually lonely. It is reported that the total monthly sales of SAIC MG in the domestic market are less than 10,000 units, and the sales of its models are only in single digits.

For a long time, Europe is the focus of SAIC MG's focus on the market, the importance of the domestic market is far lower than the European market, and the design of its models is mainly for overseas market development, manufacturing and tuning, which is also one of the main reasons for the gradual decline of SAIC MG's performance in the domestic market. However, now SAIC MG has not done well in China, and now it is being hit by Europe. While this situation is worthy of sympathy, the question of future survival is also a real concern.

The internal worries are not stopped, the external troubles have arrived, and the situation of SAIC MG can be described as very passive. If external troubles are passive factors, then internal worries are more caused by SAIC MG's inaction. So, with such good technology and products, why can't SAIC MG do well in the Chinese market before?