Sales recovery in sight with easing of Covid curbs across states: MG Motor

MG Motor India expects the growth to be much better than the industry's despite supply chain challenges and increase in input costs

MG Motor India expects sales to recover gradually over the next few months with various states removing restrictions on business activities due to improvement in COVID situation, as per a top company official.

The automaker, which sells models like Hector and Gloster in the domestic market, expects the industry to post a growth of about 20 per cent in 2021 calendar year as compared with last year.

As for itself, the company expects the growth to be much better than the industry's despite supply chain challenges and increase in input costs.

"As an industry, we were expecting 30-40 per cent sales growth this year taking us closer to 2018 numbers. But nobody had anticipated the second wave at that time. Now with what has happened, it would not be possible to get 30-40 per cent growth. There would be a growth over last year but now we expect it to be around 20 per cent," MG Motor India President and MD Rajeev Chaba told PTI in an interaction.

He noted that things were now getting better in terms of sales and production of cars.

"Hopefully, the worst of the second wave is behind us. June is already turning out to be better as compared with May and July is expected to be better than June, so numbers have started to go up. In May we touched the bottom as an industry and the numbers would start going up now," Chaba stated.

Coming to MG Motor, he said: "We probably would have over 70 per cent growth. So it is still better than the industry growth but little less than our earlier projections."

In 2020, the automaker had sold 28,162 units, as compared with 15,930 units in 2019.

Chaba however cautioned that despite markets opening up, the industry would continue to face supply chain challenges this year.

He noted that semiconductor shortage, increase in shipping costs and rise in raw material cost were a much bigger issue for the industry than availability of workforce at plants amid the coronavirus pandemic.

"Shipping issues, steel price cost, chip shortage, I think these issues are creating problems in stabilisation of the supply chain. In terms of COVID related issues like workforce and all, that is not a problem. So I think supply chain constraints will remain for some more time because these issues are not going to go away soon and I see the rest of this year to be impacted by these issues," Chaba noted.

He added that the company has initiated one shift operations at its Halol-based manufacturing plant and is looking to fully utilise the facility in terms of capacity and profitability.

The plant, which it bought from General Motors, can roll out a maximum of one lakh units per annum.

Chaba noted that the company has already vaccinated 80 per cent of its workforce and the rest 20 per cent would be inoculated by the end of this month.

When asked how the company is managing continuous increase in raw material costs, especially that of steel products, he said that almost every player in the industry has already hiked prices twice this year when usually it used to be a once in a year phenomenon.

"I will not rule out another price hike this year," Chaba said adding the company would continue to focus on technology and innovation as a differentiator for its model range for the country.

MG Motor India sells four SUV models --Hector, Gloster, Hector Plus and MG ZS EV--in the country.