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How MG is growing at the expense of Toyota, Mazda and Hyundai

The MG ZS was the second-best selling small SUV in Australia in January, beating out the Mazda CX-30 and Toyota C-HR.

As one door closes, another opens. It’s an old adage, but it could also be key to MG Australia’s sales strategy to date.

While 2020 was a struggle for most brands, the former sports car maker enjoyed huge sales growth with its light hatchback and pair of SUVs. MG sales were up a whopping 162 per cent in 2020, when the market finished down more than 11 per cent thanks to the pandemic-induced restrictions.

Why such huge growth? Well, it seems in large part because MG is picking up the pieces the bigger brands are leaving behind. MG is building its growth on affordable cars in the key markets – light cars and small SUVs – which is allowing it such rapid success.

MG3: King of light hatchbacks

We’ve written a lot recently about the demise of the affordable first car, at least from the big-name brands. The Toyota Yaris and Mazda2 have both increased in price (and quality) while Hyundai –once a leader with the Accent – has abandoned the segment altogether.

Meanwhile, the MG3 has arrived with a starting price of just $16,990 drive-away to appeal to those who want to buy a new car on a budget.

All of which left the MG3 to enjoy huge growth in 2020 and finish on top of the market, notching more than 7000 sales (7158 to be precise). That was a 78 per cent increase on 2019 despite the pandemic, and came at the same time Yaris sales dropped by almost 50 per cent and the Mazda2 did the same.

It’s a trend that looks set to continue in 2021, with January data showing that the MG3 continues to lead the pack, up more than 73 per cent on 2020, while the Yaris remains in decline, still down 50 per cent on January 2020.

Obviously, the biggest brands have made a strategic decision to sacrifice these sales, primarily because city cars carry small profit margins, but it has allowed MG to gain a foothold in the market and lay the groundwork for its growth – just has Hyundai and Toyota did when they first arrived in the Australian market.

MG ZS on the rise

The Chinese brand’s small SUV enjoyed a successful 2020, nearly doubling its sales, but it’s off to a flyer in 2021; which should have the established brands concerned.

In January, the ZS was the second best-selling small SUV behind the Mitsubishi ASX by just 25 sales. That meant it beat the likes of the Toyota C-HR, Mazda CX-30, Hyundai Kona and Nissan Qashqai in the highly-competitive market.

It’s no fluke either, with the ZS recording a strong finish to 2020 with more than 1000 sales in November and December too as the market picked up. It’s obviously still early in the year but there’s a very real possibility the ZS could end 2021 as one of the best-selling small SUVs, and that would be a massive achievement for a brand that’s still so new to Australia.

MG HS has work to do

It’s not all ice cream and parties for MG though, as once the prices head north of $30k for the bigger HS mid-size SUV, it gets harder for the brand to compete against the big-name brands.

It’s still a relative minnow compared to the big fish in this pond, MG sold just 2600 HS units in 2020 compared to the 38,537 RAV4s Toyota managed to move. Its nearest target is the Volkswagen Tiguan, but it still managed 5611 sales in ’20, so MG will need to achieve significant jumps in sales to enjoy the same success it enjoys with its cheaper models.

This year has got off to a positive start, with sales up more than 125 per cent in January but even that won’t be enough to have Toyota worried anytime soon.