Yeeow... A-yip-i-o-ee ay! MG Is Headed to O.K. (Oklahoma)
An interview with MG Motors North America:
Yeeow... A-yip-i-o-ee ay! MG Is Headed to O.K.
Special From Marty Bernstein
AIADA Contributing Editor
http://www.theautochannel.com/news/2006/08/03/017113.html
It’s not new news to anyone in the automobile business, but the iconic, heritage laden, prestigious British motor car brands are now part of global companies with varied successes.
Ford started it when they bought Jaguar several years ago. As this column is being written the Wall Street Journal reported Ford is investigating whether to sell some assets including Jag and possibly Land Rover which it bought from BMW a few years ago… but I digress.
The next Brit brands in play were Bentley and Rolls-Royce, both of which had fallen prey to sagging economies, limited sales and quality problems. In the infamous corporate, high stakes, $600+ million poker game between Volkswagen and BMW, Bentley was acquired by VW and BMW won Rolls-Royce and Mini.
This was well detailed by David Kiley in his book, Driven. At this time, it’s difficult to say who won. Bentley has a wider range of vehicles and has outsold Rolls-Royce, but the Mini, albeit much less expensive, has been a phenomenal success.
And recently, the fortunes of other British automobiles, Rover and the famous MG brand had fallen on bad times and were in the UK equivalent of Chapter 13. Rover was never a success in America, but at the end of WWII, returning GI’s brought home a really cute little MG sports car, the TC model.
Over the next years, other models were introduced including the MG-A, MG-B and MG-Midget, and sales for MG totaled over 500,000 vehicles until 1980 when MG left the American marketplace. This was a sad departure for many MG enthusiasts including, yours truly, who owned a red MG-A.
To the astonishment of many auto pundits and analysts, a Chinese automotive manufacturer, Nanjing Automobile Group, bought the remnants of both companies – tools, dies, plans and factory – for almost $100 million USD. Brits were shocked and appalled, but that’s only part of the story.
Less than a month ago at a media conference in Oklahoma City, Oklahoma (yes, Oklahoma just like the musical), officials of the Nanjing Auto Group announced the formation of MG Motors North America as well as plans to build a factory in Ardmore, OK.
The goals? To revive, resuscitate and resurrect the MG brand in North America. And to head the new global venture in the UK, Europe and North America, Duke T. Hale, a veteran automotive executive, was named president and CEO.
This was all the fodder I needed to have a lengthy telephone conversation with Duke as he was about to board an airplane.
The new look of MG Motors
MB: Duke, first of all, congratulations on your new assignment. DH: Thank you. It’s the culmination of over 25 years experience in the automobile industry with Mazda, Volvo, Isuzu and Lotus. It’s an opportunity I aggressively went after.
MB: It’s a quarter of a century since a new MG was sold in America, what is left of the brands’ equity except those in a certain age group?
DH: Most people of that age remember the MG-A, MG-B and the MG Midget, but we see two audiences for the MG. The one just mentioned is built-in because there are a lot of people in that group including boomers who recall MG’s. We think there will be strong appeals here, especially, the thousands of members of MG Cars Enthusiasts’ Clubs in North America.
MB: How will you reach a younger buyer? Will you follow the model established by Mini?
DH: We’re not opposed to taking a page or two from the Mini Cooper book. I’ve studied that closely. They did it very well and were very targeted in their approach. They were not blasting all over television – it was not a shotgun approach. A lot of event marketing, Internet, former owners and club members, bill-board, print and public relations and publicity. We will not copy their pattern exactly, but will pick the best and marry it to some of our own ideas.
MB: How will you determine effectiveness and impact potential?
DH: We’re about to find that out. We will do extensive research in North America and some has already started with focus groups. The goal is to find out what drives them -- including social interaction sites like My Space – to a brand. It will help us target that younger group of potential MG buyers. We need to generate and resonate in their minds that MG is cool or whatever the current term is to express cool.
MB: Mini used extensive pre-launch public relations and publicity, a new strategy at the time to introduce an old brand in a new way. Does MG have the same opportunity?
DH: Glad you mentioned that because you’re 150% accurate. Public relations and publicity will be one of the pillars of my marketing plan. As a matter of fact, one of the first people who joined MG was Kim Custer who heads our public relations and publicity area. Since our press media conference in Oklahoma a couple of weeks ago we’ve had over 300 different articles appear about the reintroduction of the brand.
MB: News coverage for Chinese auto manufacturers coming to America has been mixed; from positive to downright negative. What reaction has the MG news generated?
DH: Most of it was very positive. I did not read all of them; journalists being journalists, sometimes there are negatives, but the majority of them were positive.
MB: What have been the negative perceptions and reactions?
DH: The question in some has been -- “Can they produce and present a quality product built in China?” – which is a fair question. I have no issue with the media asking that. The proof will be in the pudding. I’m going to tell you we’re going to build a quality product and they’re going to continue to question it, but until the independent quality awards (IQ and CSI) first come out nobody is really going to know.
MB: Nanjing is one of China’s oldest, but smaller automotive manufacturers, isn’t it?
DH: There are some misconceptions about Nanjing being small, but not quite true. Nanjing has a joint venture with Fiat and Iveco truck. They are building cars of their own brand and also build commercial trucks. So, while some have slanted the news saying they [Nanjing] are “a small maker of cars” in my view they are not telling the total story.
MB: What is the total story?
DH: In addition to the JV’s, they bought MG for $97 million USD, a buy many people questioned. And by the way, they are building a new, technologically advanced production facility just outside Nanjing at a cost of $1 billion USD, exclusively for MG. They are also building a powertrain facility at a cost of $400 to $500 million, and an all new $100 million headquarters for MG. Are they committed? If you’re writing checks for over $1.5 billion for new facilities and that’s before the cost acquisition of MG and the assets they bought at auction from the old MG Rover Group and other expenses for product upgrades.
MB: That’s lot of money on a new venture with a brand that had not done that well over the years. Obviously, you and they believe the future has great potential, right?
DH: They’ve got to be at least $2 billion plus into the project right now. That’s not stuff they’re going do, that’s what they are doing. It’s not just a plan; they are building the buildings as we speak. I don’t know how much more commitment can be made than that.
MB: Several companies have talked about making cars in China and selling them in America, what is the opportunity you see?
DH: We have the opportunity as well as other Chinese manufacturers and some from Korea and India to produce vehicles at a lower cost. And since Nanjing will produce our powertrains, engines and transmissions at a low cost this gives us an advantage.
MB: But cost alone does not sell a new car, there are many other factors in the equation. What advantage does MG have as a Chinese car company?
DH: We are a European car! I am not positioning us as a Chinese car. MG is a recognizable European brand – research proves it still has positive equity. It’s European designed, that’s a fact; European engineered, that’s a fact; and they’re not going to be built just in China.
MB: Where else will MG’s be built or assembled?
DH: There are three sedans from China and there will be two sports cars – the roadster from the Longbridge factory in England and a coupe in Oklahoma. We think this positions us as a global brand as opposed to just another Chinese car. We have the opportunity to get a lot of mileage and power out of the brand and its European heritage; we are a global car company not just another Chinese car company.