MG Motor is in advanced talks with dealer groups to fill critical urban points in its network. Commercial Director Guy Begonakis outlines his plans for the future.
MG Motor is headquartered in elegant Marylebone opposite the five-star Landmark Hotel. On the ground floor there is a WLMG dealer showing current MG models. Two old models are also on display, including a WA sports saloon that was introduced in 1938 after the London Motor Show and built until 1939 and the outbreak of World War II. Only 369 of them were produced. It was at the time the largest MG ever built in Abingdon. MG traces its history back to 1924, and considers itself a popular British car brand, making sports cars that are great value for money.
The MG Advanced Design Center is located in the headquarters building, which leads the design aspect of things globally. Its latest innovation is the Maze EV Compact concept that targets a younger audience and combines game design cues to inject “excitement, adventure and play” into EVs. The car also delivered the all-electric Cyberster sports concept that was revealed ahead of last year’s Shanghai Auto Show. The phrase “Designed in London” has the advantage of appealing to a wide audience and is an important part of MG’s mission in the export markets.
We’re here to meet Jay Begonakis, Commercial Director at MG Motor UK. He knows the brand from the inside out. Our closest reference to him in Motor Trader was in the mid-1990s when he was with a previous incarnation of the MG Rover brand. Fast-forward to December 2020 and join MG Motor as Commercial Manager, responsible for sales, after-sales and network development. He had a long stint as Sales Manager at Hyundai where he helped drive the huge increase in sales of the Korean brand in the UK. Most recently, he was the chief operating officer of the Richmond Motor Group. Working with a dealer group has given him a clearer understanding of what makes retail successful.
At the time of his appointment, he said returning to MG was “sort of homecoming” and he wanted to unlock the “incredible amount of potential” for the group. The network has grown with a long line of agent appointments over the past few years. The brand is represented by Macklin, Chorley Group, RRG, Holdcroft, HSH Motor Group, Wilsons, Perrys and Waylands.
MG Motor currently has 150 dealers on its books and aims to build a perfect network of 165. Dealership is wide, from owners to drivers who are attracted by low investment requirements and a touch of light standards, which often characterize a brand that is rapidly growing from a low base and needs physical locations to grow the sales.
Now that she has 150 merchants on her books, she’s faced with a new challenge: how to fill in the open points in the cities. Urban niches present their own challenges. Agents in the city, regardless of size, are expensive to run. Business rates are higher, and labor is more expensive. There are special challenges, like parking for example. Creating a used car project is more difficult because there is no space to display it. Electric vehicles present their own challenges for the future, with lower maintenance returns.
MG Motor aims to recruit dealerships for urban areas as it increases sales of electric vehicles. Pigounakis said the brand is in “advanced negotiations” with groups to fill open spots in urban agglomerations that are attracting strong demand for electric vehicles, which feature strongly in their lineup.
“Most of the market opportunities we have are in large metropolitan areas, primarily London. We have candidates with whom we are pre-negotiating. I would say 80% is sure to pay off. I can easily see a scenario by the end of this year where our franchise plan has been fully delivered,” he said.
But to succeed in cities with electric vehicles, Begonax said car brands must get better at getting involved. One way forward is to create multi-franchise showrooms with other brands that share as many back office functions as possible, including public charging points.
With 150 dealers on board, the brand is driving sales. MG sold 13,838 cars in the first quarter, compared to 6,161 cars in the first quarter of 2021. Last year it sold 30,600 cars and aims to buy between 51,000 and 52,000 this year. Like all the other devices, it had microchips and other parts of the deficiencies but didn’t suffer as badly as some. However, it could have sold thousands more cars last year without supply restrictions. In March, it stopped taking orders for ICE vehicles due to an increase in orders taken by dealers.
light touch standards
MG Motor prides itself on having a light touch when it comes to standards. Small merchants need minimal hiring standards and charging points.
“If you look at the standards and facility requirements that we have, and to be completely honest, any company would consider going into the market. It’s not like we’re saying you have to have a Scandinavian corridor that costs £25,000.”
Pigounakis argues that there are brands that have taken standards of “absolute extremes” and that MG is not one of them.
“You look at our criteria and all we try to do is make an exceptionally low-cost investment for merchants so that they can maximize return, get it and create an environment for our customers, that frankly matches expectations.”
However, there are groups investing heavily in the brand as they look at the product pipeline years later.
“People are choosing to invest at a much higher level than we are actually asking of them. We are now talking and appointing what I would describe as distributor partners in the Premier League.”
One such company is Waylands in Oxford, which is headed by John O Hanlon, recipient of the Motor Trader Outstanding Achievement Award in 2021. O’Hanlon was an early promoter of electricity with the NFDA Certified Electric Vehicle Scheme, which provides training to dealership staff on how to communicate With customers on electric vehicles in all aspects of the business.
According to Pigounakis Waylands, her start was “amazingly good” in the Oxford area. Oxford is the perfect stadium for electric vehicles. The city is keen to promote electric cars to achieve its carbon emissions reduction goals. The Air Quality Action Plan and its Low Emissions Strategy looks to provide reduced or preferential parking for low-emissions cars and promote the development of the city’s low- and zero-emission Automobile Club schemes. Other cities have similar plans.
The latest National Franchise Agent Attitude Survey gives a snapshot of where the brand is now when it comes to agent standards. MG is below the mean for the agents’ criteria and the trend was more negative than six months ago. Do small traders feel a little left out?
It’s a matter of timing, Begonakis said. MG used its recent conference to detail a more formal approach to the standards it requires, and while merchants were waiting for details, this caused some tension in the network. Begonakis argues that any potential concerns were allayed at the conference.
Traders were sitting there thinking ‘They’re going to raise the bar,’ none of which from a typical dealer partner is a welcome conversation.
“We planned to hold our conference in January to put all these concerns aside. But due to Covid, we delayed and suspended it on March 23.
“We took them through the standards in a little bit of detail. We said we didn’t actually introduce any new standards. What we did was merge them and rewrite them because they came out on a piece of the basis, over the course of four, five or even 10 years.”
“So all we did was standardize existing standards and make them more accessible and more relevant today.
“Now we want people to standardize their furniture instead of having what they want. Until very recently, as long as showroom furniture was uniform and tidy, that’s fine. Now we’re saying we really like, when you replace your furniture, to replace it with this. And in fact, that’s it. The most affordable and accessible furniture you will find in UK retailers today.
“Within a week of this being announced at our conference, it is likely that a third of our dealerships have placed requests to replace our entire showroom furniture with the new stuff even though we didn’t ask them to do so.”
He also noted that in the run-up to the conference, dealers were concerned about any possible introduction of the agency’s model. Pigounakis hasn’t ruled it out forever, but for now it’s definitely not on paper.
“Today we have no plans to go down that path. I think manufacturers have greatly overestimated their capabilities at the retail level.”
Pigounakis said he learned a lot about retail during his two-and-a-half years with Richmond Motor Group — a time he enjoyed. Begonakis argues that automakers do not have a full understanding of what it takes to attract and take care of customers. “I don’t think that’s something the manufacturers have fully realized.
“Likewise while we’re in this demand-pull environment, it’s easy to look at things like agency models. At some point you’re going to get into the thrust of the show and then that whole dynamic is going to change.
MG Motor has built a solid reputation for providing value-for-money vehicles. On the new car side, it currently offers six models in the UK including three all-electric vehicles – the MG ZS EV, MG5 EV and MG HS Hybrid. They all get a seven-year warranty as standard.
Pigounakis argues that it is current stocks and future models that attract the largest groups of traders.
“You’re not going to get the likes of Bristol Street and RRG investing in our brands if they don’t think this is a long-term sustainable brand to invest in. You know, our cars today are very good value for money. They’re well built, and the brand is great.”
Pigounakis doesn’t go into detail about the ID3-sized electric vehicle that will be launched in September. Described as an MG4 – although the name hasn’t been confirmed – it’s a big deal for the brand.
“I really think this car is going to be a stake in the land telling the world that we make cars that are as technologically advanced as any factory in the marketing place today.”
There’s also a heavily modified MG5 coming in November, and the MG electric sports car will follow. MG revealed pictures of the Cyberster concept ahead of last year’s Shanghai Auto Show. Developed by the team at the MG Advanced Design Center in Marylebone and is a two-door and two-seater sports car, it draws design cues from the classic MGB Roadster.
It is these products that will boost the brand and its sales in the coming years. But, again, for that MG needs a strong agent network.
“If you look at our registry run rate, we’re tracking about 52,000 cars this year, which is really confusing when you track that back three or four years ago,” he said.
“Now we have very reputable dealers in great facilities and high-profile locations that used to sell hundreds of cars a year instead of the dozens and 20s of the year.”
Pigounakis said that as a small brand it must have representation in key areas or else it will lose sales. If BMW, for example, had an open point, it would still sell cars in the region due to strong demand for the brand. It’s a different story for MG. No representation in a given region translates to no or low sales. Put representation in it and it generates interest and sales.
“If you’re a competing brand and you have a big open point, you’re not selling anything. The plus side with that is that when we set a date, every car we sell is incremental.”