Home Car News MG Hector Contract Manufacturing At Mahindra, VW Plant In India?

MG Hector Contract Manufacturing At Mahindra, VW Plant In India?

MG Motor currently retails- Hector, Hector Plus and ZS EV in India with the upcoming Gloster to hit showrooms soon

MG Motor India had earlier announced last month that it would invest an additional Rs 1,000 crore in the country to help the manufacturer execute its plan of launching more new cars. MG has had a good run in India ever since its first car- Hector was launched in July last year until recently in September when sales dropped significantly.

Amidst current criticism faced by the brand for its Chinese heritage along with issues with importing from China, MG Motor is looking for contract manufacturing of its products in India. As per a Times of India report, the company is already in talks with brands such as the Volkswagen Group and Mahindra-Ford joint venture.

Current Scheme of Things

In recent times, MG Motor like all Chinese firms had to bear intense government scrutiny amidst growing border tension between India and China. Currently, MG Motor India manufactures and assembles its products at its Halol facility in Gujarat which was bought from General Motors, after it shut all its operations in India.

MG India car plant
MG India Halol Plant, near Vadodara in Gujarat.

Via contract-manufacturing route, MG Motor plans to lease out manufacturing plant from either VW Group or Mahindra. They will then use this leased out plant to manufacture their own cars. If this happens, MG will most likely be producing their best selling Hector SUV at these plants in the future.

The current capacity at its Halol manufacturing facility is about 75,000-80,000 units per year which MG wants to scale up to 1 lakh units per year for its future launches. Discussions have commenced with both VW Group, which is a long term associate of MG Motor in Europe and Mahindra-FORD. MG has had separate talks with both the companies.

The chances of striking a deal with VW Group seems more likely given the existing robust relations between SAIC, MG Motor’s parent company and Volkswagen in international market. Neither of the companies has commented on anything officially in this respect. Mahindra, on the other hand, has denied outrightly denied any such rumours.

Cause of this development

Despite its Chinese lineage, MG Motor has gained immense popularity due to its impressive products on offer. This current development might be the outcome of the recent regulations brought in by the central government. In accordance with the latest updates in FDI norms, due to its Chinese lineage, the company will first need to take approval or clearance from DPIIT to make any fresh investments.

Therefore, to avoid undergoing such a cumbersome process of seeking approvals and clearances to expand its business in the country, MG Motor is planning to contract manufacture in other facilities. The British-origin brand’s next product in line is the full-size premium SUV- Gloster which will be officially launched tomorrow. Gloster will be MG Motor’s flagship product in India.

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