MG Motor is in advanced talks with dealer groups to fill critically important urban points in its network. Commercial director Guy Pigounakis spells out his plans for the future.
The MG Motor headquarters is in fashionable Marylebone opposite the five-star Landmark hotel. On the ground floor is the WLMG dealership featuring the MG models of today. Also on display are two legacy models, one a WA sports saloon which was introduced in 1938 after the London Motor show and built until 1939 and the outbreak of the second world war. Just 369 of them were produced. It was at the time the largest MG built at Abingdon. Tracing its history back to 1924, MG bills itself as an iconic British motoring brand, sporty manufacturing, value-for-money cars.
Located in the HQ building is the MG Advanced Design Center, which spearheads the design side of things globally. Its most recent creation is the concept Maze EV compact which is aimed at a younger audience and combines gaming styling cues to inject ‘excitement, adventure and play’ into EVs. It also delivered the Cyberster concept all-electric sports car revealed before the Shanghai Motor Show last year. ‘Designed in London’ has a cachet that appeals to a broad audience and is an important part of the MG message in export markets.
We are here to meet Guy Pigounakis, commercial director at MG Motor in the UK. He knows the brand inside out. The earliest reference we have for him in Motor Trader is in the mid-1990s when he was with an earlier incarnation of the MG Rover brand. Fast forward to December 2020 and he joined MG Motor as commercial director, taking responsibility for sales, aftersales and network development. He did a long stint as sales director at Hyundai where he helped deliver the well-chronicled surge in sales of the Korean brand in the UK. Most recently he was head of operations at Richmond Motor Group. Working with a dealer group has given him a clearer understanding of what makes for successful retailing.
At the time of his appointment, he said returning to MG was “a bit of a homecoming” and he wanted to unlock the “amazing amount of potential” for the group. The network has grown with a long succession of dealer appointments over the past few years. Macklin, Chorley Group, RRG, Holdcroft, HSH Motor Group, Wilsons, Perrys and Waylands all represent the brand.
MG Motor currently has 150 dealers on its books and has a target of building an optimum network of 165. The spread of dealers is wide, starting with owner-drivers attracted by the low investment demands and light standards touch, which so often characterizes a brand that is growing fast from a low base and needs physical sites to grow sales.
Now that it has 150 dealers on its books it faces a new challenge: how to fill the open points in cities. Urban outlets present their own challenges. City dealerships, regardless of size, are expensive to run. Business rates are higher, labor is more expensive. There are particular challenges, like parking for example. Building the used car business is more difficult because you have no space to display them. And electric vehicles present their own challenges for the future, with less revenues from servicing.
MG Motor is aiming to recruit dealers for metropolitan areas as it ramps up sales of electric vehicles. Pigounakis said the brand is in “advanced negotiations” with groups to fill open points in conurbations that attract strong demand for electric vehicles, which feature strongly in its line-up.
“Most of the market opportunities we have are in the large metropolitan areas, London being foremost amongst them. We have candidates we are in advance negotiations with. I would say 80% are certain to come 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 EVs, Pigounakis said car brands will have to get better at sharing. One way forward is to multi-franchise showrooms with other brands sharing as many back office functions as possible, including generic charging points.
With 150 dealers on board, the brand is ramping up sales. MG sold 13,838 cars in the first quarter compared with 6,161 in Q1 2021. Last year it sold 30,600 cars and is aiming for between 51,000 and 52,000 this year. Like all others it has been hit by the microchip and other parts shortages but it has not suffered as badly as some. That said, it could have sold thousands more cars last year without the supply restrictions. In March it stopped taking orders for ICE cars because of the surge of orders taken by dealers.
Light touch standards
MG Motor prides itself on having a light touch when it comes to standards. Smaller dealers need to have minimum standards of staffing, and charging points.
“If you look at the standards and facility requirements we have, to be perfectly honest, any business would consider entry into the market. It’s not like we’re saying you’ve got to have Scandinavian archway that costs £ 25,000. ”
Pigounakis argues there are brands that have taken standards to “absolute extremes” and MG is not one of them.
“You look at our standards and all we’re trying to do is achieve an exceptionally low cost space investment for the dealers so they can maximize the return, they get on it and create an environment for our customers, which frankly is commensurate with their expectations. ”
That said, there are groups that are investing heavily in the brand as they look at the product pipeline years down the line.
“People are choosing to invest at a much higher level than we’re actually asking them to. We’re now talking to and appointing what I would describe as Premier League dealer partners. ”
One such is Waylands in Oxford, which is headed up by John O Hanlon, winner of Motor Trader’s Outstanding Achievement Award in 2021. O’Hanlon was one of the early promoters of electric with the NFDA Electric Vehicle Approved scheme, which provides training to dealer staff on how to communicate with customers on EVs in all aspects of the business.
According to Pigounakis Waylands has had a “staggeringly good” start working the Oxford territory. Oxford is the perfect pitch for EVs. The city is keen to promote electric vehicles to meet carbon emission reduction targets. Its Air Quality Action Plan and Low Emission Strategy is looking to offer reduced or preferential parking for low emission vehicles and promote the development of low and zero emission car club schemes in the city. Other cities have similar plans.
The latest National Franchised Dealer Attitude Survey gives a snapshot of where the brand is now when it comes to dealer standards. MG is below average for dealer standards and the trend is more negative than six months ago. Are smaller dealers feeling a little left out?
Pigounakis said it was a matter of timing. MG used its recent conference to detail a more formalized approach to the standards it requires and as dealers awaited the details this caused some nervousness in the network. Pigounakis argues that any potential concerns were allayed at the conference.
“The dealers were sitting there thinking ‘They are going to run up the standards’, none of which from a typical dealer partner is a welcome conversation.
“We planned to have our conference in January to put all these concerns to one side. But because of Covid we delayed it and held it on 23 March.
“We took them through the standards in a little bit of detail. We said is we haven’t actually introduced any new standards. What we’ve done is consolidate them and rewrite them because they’ve been issued on a piece of basis, over four, five, even 10 years.
“So all we’ve done is consolidate the existing standards and make them more accessible and more relevant today.
“We now want people to standardize their furniture as opposed to having whatever they want. Up until very recently, as long as showroom furniture was uniform and tidy, that was fine. We’re now saying we’d actually like you, when you replace your furniture, to replace it with this. And actually this is the most affordable and accessible furniture you are going to find in retail in the UK today.
“Within a week of announcing that at our conference, probably a third of our dealers have placed orders to replace their entire showroom furniture with the new stuff despite us not even asking them to do that.”
He also pointed out that in the lead-up to the conference dealers were concerned over any potential introduction of the agency model. Pigounakis did not rule it out forever but for now it is definitely not on the cards.
“Today we have no plans to go down that route. I think manufacturers have massively overestimated their ability at the retail level. ”
Pigounakis said he learned a lot about retail in his two and a half years with Richmond Motor Group – a tenure he enjoyed. Pigounakis argues that carmakers do not have a full grasp on what it takes to attract customers and look after them. “I don’t think that’s something manufacturers have fully grasped.
“And equally while we’re in this demand pull environment it is easy to look at things like agency models. At some point it will go into supply push and then that whole dynamic will change, ”he said.
MG Motor has built a steady reputation for supplying value for money cars. On the new car side, it currently offers six models in the UK including three plug-in cars – the MG ZS EV, the MG5 EV and MG HS plug-in hybrid. They all get a standard seven-year warranty.
Pigounakis argues that it is the current stock and future models that are attracting the bigger dealer groups.
“You won’t get the likes of Bristol Street, 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 extraordinarily good value for money. They’re well built, the brand is fantastic. ”
Pigounakis does not go into detail for the ID3-sized all electric car to be launched in September. Billed as the MG4 – although the name has not been confirmed – it is a big deal for the brand.
“I genuinely believe this car will be a stake in the ground that tells the world we’re building cars that are as technologically advanced as any manufacturer in the marketing place today.”
There is also a heavily facelifted MG5 coming in November, and this will be followed by the MG Electric sports car. MG revealed pictures of the Cyberster concept car before the Shanghai Motor Show last year. It was developed by the team at the MG Advanced Design Center in Marylebone and is a two-door, two-seater sports car, drawing styling cues from the classic MGB Roadster.
It is these products that will boost the brand and its sales in coming years. But, again, for that MG needs a strong dealer network.
“If you look at our registration run rate, we are tracking towards 52,000 cars this year, which when you track that back from three or four years ago is just mind-boggling really,” he said.
“We’ve now got very high profile dealers in fantastic facilities and high profile locations that are used to selling hundreds of cars a year instead of tens and twenties across a year.”
Pigounakis said that as a small brand it has to have representation in key areas or else lose sales. If BMW, for example, has an open point it will still sell cars in the area because of the strong demand for the brand. For MG it is a different story. No representation in a given area translates into no or low sales. Put representation in and it generates interest and sales.
“If you’re a challenged brand and you’ve got a large open point, you just don’t sell anything. The upside of that is when we do make an appointment, every car we sell is incremental, ”he said.