MG in talks for contract manufacturing with Volkswagen India, M&M-Ford – Times of India

NEW DELHI: MG Motor is in talks with Volkswagen as well as the Mahindra-Ford JV to lease out their plants for contract manufacturing its cars in India. The move comes as the company — a British brand but a subsidiary of China’s SAIC — faces increased government scrutiny in view of the border tensions between India and China, especially when it comes to fresh investment plans.
“Talks have been initiated, and MG — which is currently manufacturing cars at its facility in Halol — is now looking at sourcing vehicles from other companies as part of a contract-manufacturing route,” highly-placed sources told TOI. “The talks are not casual. This is a serious conversation,” the sources added.
Talks had been initiated with both the VW Group — which is a Chinese and European partner of SAIC and MG — and also with Mahindra-Ford. “It needs to be seen where the synergies are deeper. The talks with both companies have happened separately. Finally, MG will go with only one partner,” one of the sources said.
The source added that “in all likelihood, chances of a deal with the VW Group look stronger in view of the existing robust relations” between SAIC and VW internationally. “VW is serious in joining hands with MG Motor in India. It helps them expand their international relationship to India, while also helping them utilise the idle production capacity at their India factories.”
When contacted, MG Motor India did not respond to a detailed questionnaire. A spokesperson for the VW Group in India said, “We do not comment on market speculation.” A spokesperson for Mahindra Group said, “There are no plans to contract manufacture for MG Motor.”
MG Motor had begun business in India by buying out the Halol (Gujarat) plant of General Motors as the latter exited India. The plant has an annual capacity of 1 lakh units, which is more than the current requirement of MG Motor. “MG has seen a strong growth curve in India, despite its Chinese lineage,” sources said.