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How MG is trying to make a 90-year-old brand ‘new’ again

Burton took the view that if MG made the commercial conditions right, dealers would stock them – it shouldn’t be imposed on them. So he changed the dealers’ standards: “I’d rather incentivise and encourage dealers than say this is what you must do, otherwise you fail to comply with our standards. That’s not the way to get the most out of your network.”

On margins, with the MG3 the company introduced no-haggle pricing, rather than build in a “big fat distributor and dealer margin” that ultimately is given away. It had tried the latter with  the MG6, but dealers weren’t hitting the volumes because the car was overpriced.

“We took that on board with the MG3 and decided on a range of fixed margins with no haggling on price. Our dealers are able to then present to the customer with a fair price. And it’s working for them. They are retaining good margin, £800-£900 a unit, or 5% to 8% depending on the model.”

MG sees itself competing with Kia, Hyundai, and Škoda. As those carmakers have moved up the price chain, MG wants to capitalise on the value-oriented buyers left behind: “The consumers we are talking to are coming from the likes of Hyundai and Kia, and mainstream B-segment car owners, someone who has a three-year-old Fiesta, but can’t afford the price hike for a new one. A top-of-the-range MG3 is £10,000, a Fiesta is more like £13,000.”

MG is sticking with the industry-standard three-year/60,000-mile warranty, both in terms of need and the negative impact on a car’s price. The company concluded a five-year policy would add about £850 to the list price.

MG has narrowed down its ‘ideal’ customer to two key groups: 45- to 60-year-old men – the historical MG customer – and 30- to 45-year-old women.  

“The MG3 is a great proposition for a young driver – low insurance, cheap to buy, to run and easy to drive. But most don’t have the disposable income to buy their own new car, and it tends to be the parent who’s funding it. So we took the view that we’ll target the parent.”

And regarding the 30- to 45-year old woman, who’s probably got a young family, MG research is showing the car’s right for them because as, while it’s a small car, it can accommodate child seats, passengers and shopping.

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