Following months of speculation, it is finally official: Indian business conglomerate JSW Group has picked up a 35 per cent stake in MG Motor India, entering into a joint venture (JV) with MG’s parent company Shanghai Automotive Industry Corporation (SAIC Motor). The shareholder agreement and share purchase & subscription agreement were signed by SAIC President Wang Xiaoqiu and JSW Group’s Parth Jindal at MG’s UK headquarters, in London, England. This JV will focus on expanding MG’s vehicle portfolio in India (with a focus on ‘green’ vehicles), enhancement of local sourcing, improvement of charging infrastructure for electric vehicles (EVs) and expansion of production capacity, as per a statement from the JSW Group.
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Earlier this year, MG Motor India announced it will hand over a majority stake in the company to Indian suitors. As part of the strategic 5-year ‘MG 3.0’ plan, the carmaker – a wholly-owned subsidiary of China’s SAIC Motor – aims to have an Indian entity as its majority stakeholder.
Commenting on the JV, Wang Xiaoqiu, President of SAIC Motor, said, “The automobile business is a global industry, and like in any other similar industry, access and collaboration are crucial for its healthy growth. SAIC has always adhered to the ‘win-win cooperation’ approach while steadily improving our core capabilities and expanding our scale of production and sales. In the growing Indian automotive market, both partners shall work closely to bring in the best of innovation, in creating greener and smarter mobility products and services for our consumers, seizing market opportunities, continuously expanding the brand influence and market share of our products, and achieving greater success for MG in India.”
MG’s product strategy for India has been in a state of flux for a while with investments from China being put on hold.
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JSW Group’s Parth Jindal said, “Our strategic collaboration with SAIC Motor aims to grow & transform the MG Motor operations in India with a focus on green mobility solutions. The JV paves the way for bringing world-class technology-enabled futuristics suite of automobile products including the new generation of intelligent connected NEVs and ICE vehicles. The JV’s focus on broader localisation initiatives will yield financially accretive synergies through economies of scale while providing the highest level of customer service to the Indian consumer. One of the key focus areas of this joint venture will be to pursue the development of the EV ecosystem and to take a leadership position in this space.
MG previously revealed it will raise funds to the tune of Rs 5,000 crore, which will be utilised to set up a second plant in Gujarat to boost total production capacity to 3 lakh units annually. MG’s facility in Halol, Gujarat, presently has a production capacity of 70,000 units, which the manufacturer will scale up to 1.2 lakh units by the end of FY2024.
MG’s investments have been on hold for the last few years, as Indo-China relations soured following a series of clashes at the India-China border since 2020. With intense scrutiny on any foreign direct investment (FDI) proposals emerging from China, MG’s plans have essentially been put on ice. This is the reason why a number of Chinese carmakers, including Great Wall Motors, took a U-turn on their India launch plans despite having analysed the market and charted out a business plan in the last few years.
Going forward, MG’s India line-up is expected to focus heavily on battery electric vehicles.
With JSW acquiring a large stake in MG Motor India, future investments are likely to be approved without any major hiccups. This will be crucial for the brand to continue its India innings, as its long-term plans have been clouded with uncertainty for some time now, owing to the frosty ties between India and China. To put things into perspective, MG Motor has had a single new product launch in India in the last two years, which was the Comet EV, earlier in 2023.
In a bid to strengthen its plans for alternative fuel technologies, the company has confirmed it will also explore the possibility of forging a joint venture for local cell manufacturing, production of EV parts and even hydrogen fuel-cell powertrains.
Under the 3.0 programme, MG will launch up to five new models by 2028, ‘most’ of which will be battery electric vehicles. The carmaker estimates electric vehicles will make up anywhere between 65 to 75 per cent of its total sales in India in the next five years.
