We believe in slow but sure growth in India: MG Motor India's Rajeev Chaba

Rajeev Chaba, president and managing director at MG Motor India
MG Motor, owned by China’s biggest carmaker SAIC, is investing Rs 20 billion in the Gujarat plant it acquired from General Motors. The company is getting ready to launch its first product in the summer of 2019 and may take the total investment to Rs 50 billion to double capacity to 200,000 vehicles. Rajeev Chaba, president and managing director at MG Motor India, tells Ajay Modi despite the challenges in India the company may surprise everyone. Edited excerpts:

What are the challenges in making the GM plant ready?
The plant is old. We are renovating most of its facilities. We had to remove the body shop and lay it again. The same with general assembly area. Around 90 per cent of the plant is being revamped with a fair degree of automation. Only some of the equipment are fit for use. We also need to invest in a new press shop and a vendor park.  

Since you will operate from an old GM plant, will you have some baggage of GM’s legacy?
I doubt consumers take it that way. GM is a good partner to SAIC in China. But this venture is 100 per cent under SAIC. We do not have any input from the GM. I believe the consumers will look at what offer and assurance we have for them. It has to be a compelling proposition. 

Given the real estate cost for setting up dealerships, how will your dealers make money?
It is a big issue. Luckily, we are starting from a clean slate. We will work on the size of showrooms, experience centres, and have a combination of virtual and real showrooms. We will be asking dealers to take care of the customers well and we will look after their profitability. 

India is a fairly crowded market for passenger vehicles. What will your brand stand for?
We would like to under commit and over deliver. It is not going to be easy. We know eight-nine global players form less than 25 per cent of the market share in India. How can we be successful? In each and every aspect of consumer dealing, we will have to be careful from Day One. We will put a structure where our front line employees are empowered to take pro-consumer decision on the spot. The game of this business is execution and we will focus on that.

Would you operate across segments?
We will begin with the sports utility vehicles. The premium hatchback is doing well. I cannot say that we will be present in all the segments. But to be a meaningful player, we need to get into many segments.  

Most global car brands did not make money in India after years of operations. How it will be different for you? 
At the end of the day, every business has to make money. There is a gestation period. We know the company and its dealers need to break-even as soon as possible. We do not have to lose money on the product. Margin-wise contribution is going to be profitable from Day One.

What made MG Motor skip the Auto Expo last month even as you get ready for the 2019 launch? 
We believe in slow and sure growth. We will look to build the momentum slowly so that we peak at the time of launch. We do not believe in high-ups and high-downs with no engagement periods in between. We thought of renovating the plant first, start hiring, get the dealers and then build the brand. 

Given that many firms have struggled in India, is there a list of not-to-do things?
Being here is not a 20-20 match, it is a test match and therefore critical to have a strong foundation. It is surprising that we talk about investing in marketing and brand but we do not talk about investment in training and skill development. We may talk about investing Rs 10 million in an advertisement but giving an incentive of Rs 5,000 to a sales person becomes an issue. We need to balance the ad spends with the customer satisfaction initiatives. You should not introduce and withdraw products from the market frequently as it affects resale price and brand value.

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