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Automobiles

China-owned MG challenges Japanese dominance of SE Asian auto market

British brand under SAIC tops Suzuki in Thailand, strengthening foothold in the region

MG rolled out the Extender pickup truck to increase its market share in Thailand, setting a sales target of 20,000 units a year. (Photo by Rie Ishii)

BANGKOK -- Cars produced under the long-established British-brand MG by a joint venture between China's SAIC Motor and Thailand's conglomerate Charoen Pokphand Group are racing ahead.

Since its entry into the Thai auto market dominated by Japanese carmakers several years ago, MG has gradually strengthened its presence, overtaking Japan's Suzuki Motor in terms of market share in the first nine months of this year.

MG captured a 2.5% share of the Thai auto market between January and September, making it the eighth biggest carmaker in the country. MG is now going on the offensive against Japanese rivals at an accelerated pace by launching pickup trucks, which are popular in Thailand, and electric vehicles.

"I like its European-style design. Its price is also affordable," a 25-year-old male company employee working in Bangkok, who gave his name as Mike, said with a smile. He bought a new MG car.

Mike's first automobile purchase was a Mazda, but he chose the MG3 subcompact car as his second vehicle. The MG3's prices start at 519,000 baht ($17,200), cheaper than rivals such as the Mazda3, whose starting price is 969,000 baht.

In recent years, Chinese manufacturers have been trying to break into the Southeast Asian market dominated by Japanese automakers such as Toyota Motor and Honda Motor. The fact that MG, under SAIC, has increased its sales to the level of some Japanese peers in Thailand shows that the stronghold of Japanese cars is not impregnable for Chinese automakers.

In Indonesia, a leading market in Southeast Asia along with Thailand, SAIC has gained a market share of about 2% by selling inexpensive sport utility vehicles under the Wuling brand. In Malaysia, the region's third-largest market, China's Zhejiang Geely Holdings, parent of Geely Automobile Holdings, invested in national car brand Proton in 2017 to gain a foothold in Southeast Asia.

SAIC Motor-CP started production of MG cars in Thailand in 2014 in the joint venture between SAIC and CP Group, which have stakes of 51% and 49% respectively.

SAIC Motor-CP turns out MG cars using design inherited from SAIC-acquired MG teamed with China's low-cost production expertise.

In terms of sales, CP Group is flexing its muscles. After only a few years since its establishment, the joint venture already boasts a network of about 100 dealerships across Thailand.

As Thailand's new car sales rose only 2% in the first nine months of 2019, MG has posted better-than-average sales, selling 18,689 cars, up 6.2% from a year earlier. The brand enjoyed particularly strong sales in September, up 7% from a year earlier, while Japanese carmakers saw their sales decline, hit by Thailand's slowing economy.

Japanese cars are very popular in Thailand, occupying nearly 90% of the country's new car market. But MG's share rose to 2.5% in the January-September period, exceeding Japanese carmaker Suzuki Motor's 2.4%. Its plant still has excess capacity to catch up with bigger foreign rivals, including Mazda Motor at 6% and Ford Motor at 5%.

In August, MG rolled out pickup trucks, which are popular in Thailand, to increase its market share. Pickup trucks that can be used as both passenger cars and commercial cars account for nearly half the country's new car market. MG unveiled new one-ton pickup trucks, among the largest of its kind in Thailand.

Pongsak Lertruedeewattanavong, vice president of MG Sales Thailand, said the company wants to give consumers a new option. The auto dealer hopes to make the pickup truck one of its mainstay models, selling 20,000 units a year.

MG made a preemptive move to capture the market. In June, the automaker started selling EVs produced in China. The price starts from 1.19 million baht, about 40% cheaper than Nissan Motor's Leaf electric cars.

MG is trying to boost sales by providing home EV chargers and vehicle insurance free of charge. It aims to sell 2,000 units a year, but has already received orders for more than 1,000 units.

The Thai government is actively promoting a shift from gasoline-powered vehicles to EVs and hybrid vehicles in an effort to advance the country's car industry. Japanese automakers -- which have invested in Thailand for many years -- are slow in responding to electrification as they already have big gas-powered vehicle plants.

The predicament could see them losing their edge in Thailand, with Energy Absolute and other local automakers also planning to produce EVs.

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