Has customer experience overtaken hardware engineering brilliance as carmakers’ next battleground?
JSW-MG Motor has announced it will launch a new chain of showrooms, branded MG Select, for its upcoming and premium cars, in India. The range on offer will include plug-in hybrids, strong-hybrids, and EVs. MG Motor has also said it will launch four new cars through this channel in the next two years, with the first model expected in the first quarter of 2025.
In its first phase, MG will roll out its Select dealership network in 12 “key” cities in India. The target audience: Millennials and Gen Z. “What will truly distinguish MG Select is its ability to seamlessly blend personalisation with a high-end experience that speaks to India’s new generation of experience-driven buyers,” says Gaurav Gupta, chief growth officer, JSW-MG Motor India.
The MG Cyberster, which was unveiled earlier this year, is likely to be the first product to be sold from the MG Select retail channel. MG currently retails 7 models in India, which also includes 3 EVs, with vehicles priced between Rs 7 lakh (MG Comet EV) and about Rs 42 lakh (MG Gloster).
Until not so long ago, auto makers grappled largely on their engineering prowess with their marketing pitch built on performance, reliability and dollops of swag. These qualities continue to matter for the consumer, but they have become table stakes. The new battleground for brands is customer experience.
In a sense, Maruti Suzuki showed the way when it launched its premium retail chain, Nexa, in 2015. The growth of Nexa — which retails Baleno, Ignis, Ciaz, XL6, Grand Vitara, Fronx, Jimny, and Invicto — has been impressive, with sales surpassing 2.5 million units in March 2024.
Why is MG Motor, which has a small 1.4% share of the market, looking to join the party? It hopes to bridge that gap between ‘affordability’ and ‘accessibility’, says the company. “While affordable implies something that fits within a limited budget, accessible emphasises reachability without necessarily compromising on quality or prestige. Today’s consumers are highly discerning and value-conscious, often prioritising purchases that offer a balance of quality and experience,” explains Gupta.
India’s passenger vehicle market currently stands at around 4.3 million units, with the luxury segment accounting for only about 1%, which is around 45,000 cars. Despite this modest share, there is a significant shift in how consumers perceive ‘luxury’ today, say observers, and for many ‘affordable’ and ‘accessible’ are not necessarily contradictory.
So can MG Select pull off a Satya Paul in automobiles? Yes, India’s luxury market is thriving, but will the younger customer cohort patronise MG’s Select and make it a success?
Picking up speed
Experts say MG Motor must play its cards right to leverage the first mover advantage in this segment. “MG’s Select gambit is similar to how BMW created a more youthful luxury image compared to Mercedes Benz. There are enough Gen Z and Millennial customers who can buy a luxury car. The 35-44 age bracket is the highest earning demographic in India (firmly in the millennial bucket),” says Subhabrata Sengupta, partner, Avalon Consulting.
The auto maker must sharpen its focus, experts say. “The ideal customer profile would be young professionals who own businesses or work in higher management in international brands,” says Devasheesh Mathur, professor, strategy & general management, International Management Institute, New Delhi. “They shop around the world. They aspire for global brands and luxury.”
The numbers look promising. According to a Bain and Company report, affordable luxury in India is expected to touch $1.5 billion by 2025 at a CAGR of 25% during 2023 to 2025, outpacing the overall growth rate of the luxury market, which would be around 20%.
But the bar is already high. For a huge segment of consumers, hopping onto the internet — and not into another vehicle — is the first step in the car purchase journey. They can also book a test drive online and have the car delivered at the doorstep. Interestingly, the watch time of “test drive” videos on YouTube has grown by more than 65% in the past two years, as per Google trends data.
A car showroom visit comes much later in the journey, but it is a mandatory last stop since a high-end car is a highly considered purchase.
Besides the shift in consumer behaviour, MG Motor must also contend with the wide retail network of established luxury players. BMW, for instance, has one of the largest dealership networks in the luxury car market, with 40 dealerships across the country.
What will clinch the deal ultimately will be the brand’s ability to rapidly scale and refine solutions that excite its customers while keeping costs in check.