Used car and aftersales growth is ahead for the MG dealer network

This year is a period of reorientation for MG Motor UK. After four years of heavy focus on the fleet, Motability and rental markets, which delivered rapid growth in its overall car parc, it has its sights on the steadier, stagnant even, retail new car market.

It is positive news for MG dealers, who are also starting to see the benefits of a larger 1-5 year car parc and the opportunities that offers them in service, repair and used car sales.

That doesn’t mean MG will accept a drop in new car registrations, which neared 82,000 in 2024, well ahead of value-market rivals Citroen, Dacia and Skoda, and even outselling Vauxhall. In an interview with Automotive Management the brand’s commercial director Guy Pigounakis says he would be “mortified” to sell fewer cars this year than last. “Absolutely will not happen,” he adds.

There will be some growth, but MG accepts the years of exponential growth are finished.

“If somebody said to me we’ve got to do 100,000 cars this year we could do those 100,000 cars, and the benefit of that to us as a manufacturer is probably more parts sales, more cars on the road, more used cars and more brand awareness, but from our dealer partners’ point of view we’d be diverting some stock away from them, that they could retail, to fill those high discount channels,” said Pigounakis.

The battle is getting bloodier with the likes of BYD and Omoda, both fellow Chinese brands, discounting to win sales. In a UK new car market that is slow to grow overall their ambitions will come at other brands’ expense, typically the ‘legacy manufacturers’. Plus later in the year, with the ZEV Mandate in play, some manufacturers will act to ‘shore up’ their position.

Pigounakis says MG is in a fortunate position of not having to react to short-term problems. It has a good mix of EV versus ICE sales, and the products it has recently introduced, such as the petrol-engined MG3 and ZS which both start at below £20,000, offer good sales opportunities, even if they might seem to be against the industry’s direction of travel.

Nevertheless, he admits he has warned MG dealers that he might restrict supply of these in quarter four if he needs to protect the balance. It has expanded its EV range too this year, introducing the MGS5 crossover SUV to partner its best-selling MG4 electric hatchback.

This autumn another car will be introduced, competing in a new segment for the brand. It is expected to be an electric city car.

MG finds its strategy of aggressive list prices and few optional extras keeps it simple for both dealers and retail customers and it is achieving ‘cut-through’ to buyers even in a challenging market. Its strapline is ‘Get More’ and that’s particularly valid. Pigounakis believes retail buyers are more price sensitive than they have been for a long time. Those nearing the end of a mainstream brand’s three or four year PCP that was signed on a low APR are now discovering their cost to change has risen significantly if they want something new from the same brand with similar equipment levels.  That plays into MG’s hands.

Even more buyers can be tempted by the nearly new cars on dealers’ forecourts. MG does the majority of its rental sales on buy-back agreements so there is sufficient supply of low mileage, sub-one-year stock. That means even a barely used AM Award winning electric MG4 or petrol HS could be in a buyer’s hands for £15,000 and a 10,000 mile MG3 could sell for under £12,000.

“I’d say they’re almost without peer in that sector,” says Pigounakis. Currently around 80% of MG dealers are buying nearly-new cars from the brand, which is now offering ten times as many per month as it was 18 months ago. He said the programme is not mandatory but it is in dealers’ interest to be involved. One issue has been the high volume of single derivatives that were provided to rental firms, but MG is broadening the mix now and expects that to entice more dealers to buy stock.

MG is working on some changes to the approved used car programme this year. Pigounakis seens no issue with its competitiveness, given used MGs have the balance of their seven year warranty. So the alterations, determined from working with the dealer network, will likely relate to stocking charges and stepping up national marketing of used MGs, something which has generally been left to individual dealers.

He says the biggest barrier to greater used car success is the ability of MG’s remarketing suppliers to prepare enough cars to meet demand. Quick to state this is not a criticism of those partners, he adds that the well reported shortage of technicians and facilities are the cause. “We probably could have sold three or four thousand more cars last year if we had the whole logistical chain sorted out.”

In aftersales dealers are now starting to reap the benefits of MG sales growths. Go back three years and PDIs and part-exchange refurbishment was most of the work MG technicians would be doing, but they are now starting to get more of the significant service and maintenance jobs. With that, and with two thirds of MG dealerships sharing the location with another franchise, comes some challenges around lead times, so this has led MG to structure an extra 1% into the dealer margin linked to aftersales KPIs, to keep MG owners in focus.

Pigounakis adds: “Dealers have got to make money, and they’ve other brands and customers, that they have responsibilities to so, candidly, if we want to get more than our percentage share of voice in a workshop then we’re going to have to pay a little bit.”

A criticism of MG, which dealers have flagged to Automotive Management, is that the national sales company itself has not scaled up enough in line with its volume growth, to support the dealerships.

Pigounakis accepts the criticism, particularly for the aftersales customer care side. The AA is now managing MG’s call centre, and the carmaker is partnering a major rental company in a new programme to ensure MG drivers can stay mobile if their cars are off the road having repairs.

Some of MG’s early partners, who helped the brand re-establish a foothold in the UK under Chinese ownership, have been casualties of its ambitions in the last five or six years. To quadruple its UK sales it needed franchisees able to invest heavily in staff and facilities in preparation for selling hundreds of cars. The profile of the MG dealer network today is less about owner-driver businesses and more about AM100 dealer groups as partners from Arnold Clark to Waylands came on board.

Pigounakis said some of the older dealers are still leaving and are not happy about it. “It sounds awful and I’m not criticising them, but they kind of don’t understand why we’ve moved in the direction we have. And some of the dealerships can’t physically handle their share of 80,000 cars, they don’t have the facilities and they don’t have the balance sheet to support the funding required to run that scale business.”

Since the growth with AM100 groups around a third of the MG network is in solus showrooms. The brand prefers, but does not mandate, solus representation, but Pigounakis appreciates that the increased energy and National Insurance costs plus the intense competition for retail buyers makes it harder for dealerships to get a strong return.

The 155-site network is hoped to reach 160 outlets by the end of 2025, which gives MG 92% coverage of the UK. In some cases a dealer group may open a dealership in a main market town a few miles from an existing small dealer, and MG is happy to see how that plays out over time rather than issue terminations.

“I’m quite proud that we take a very light touch approach with our dealer partners. I think by and large we have good relationships with our partners.”