China's SAIC Backing Out From Investing In India, What Happens To MG-JSW JV Now?
China’s state-owned SAIC Motor, the parent company of MG, is reportedly stepping back from its India commitments. The automaker has decided to dilute its 49% stake in the joint venture with JSW Group. It will also halt fresh investments in the country. While SAIC insists it won’t exit India completely, the move raises a big question - what happens to the MG-JSW joint venture now? In this article, we will discuss some possibilities...
Why Is SAIC Pulling Back?
The trouble began in 2020, when India imposed restrictions on investments from China. The same year also saw border tensions between the two nations rise, souring business ties between them.
Since then, SAIC’s efforts to expand locally have been stuck in government red tape. Its proposal to set up EV production unit here was rejected, while subsequent plans have faced heavy scrutiny. Even a recent discussion by Indian and Chinese leaders to improve relations hasn’t cleared the path.
JSW Expected To Step In
SAIC entered India in 2019 with big plans, investing over $650 million and acquiring General Motors’ Gujarat plant. It had an installed annual production capacity of 1.2 lakh units. By 2023, it brought JSW onboard with a 35% stake worth $300 million, valuing MG Motor India at $1.2 billion then.
Now, with SAIC looking to dilute further, JSW offered to buy out most of its holdings to become the single largest shareholder in the JV. Both parties reportedly disagreed on the valuation after the Chinese company sought a higher price for the stake. Negotiations around the deal, are reported to be already underway.
Strains Inside The JV
It isn’t just geopolitics hurting the partnership now. JSW Group has been in talks with rival Chinese carmaker Chery for a technology deal to roll out EVs under its own brand name. That seems to have upset SAIC, deepening the cracks within the joint venture. We hope to learn more about this in the next year or two. The direction JSW takes in its Chery plans will be decisive in shaping SAIC’s approach as well.
MG Motor’s Growth And Struggles
Despite the uncertainty, MG Motor has grown steadily in India. Sales jumped from 16,500 units in 2019 to over 61,000 in 2024. The company is also the second-largest EV player after Tata Motors, thanks to models like the Windsor EV. The Windsor has in fact, been dominating its segment.
But the financial picture is less rosy. MG Motor is still loss-making, with cash flow under pressure. According to its annual filing with the Ministry of Corporate Affairs (MCA), JSW MG Motor India posted a loss of Rs 586 crores in fiscal year 2024. The same amounted to Rs 826 crores in the previous fiscal.
A $240 million proposal for making investments in EV manufacturing is now being reviewed by the government. Offloading stakes to JSW will bring in some money.
The Road Ahead For MG–JSW JV
SAIC says that it has no plans to make a complete exit. It will continue supplying technology and products to the joint venture. It will, however, reduce its financial exposure here. If the deal goes through, SAIC will sell as much stake as it wants. This may even put JSW in the driving seat.
SAIC will then remain a technology partner and will bring new products to our shores. If this happens, owners of MG products will have no reason to worry. The sales and ownership experience will remain smooth and unbothered.
If the two fail to meet eye-to-eye on valuation, things can get messy for SAIC. It may then look for other buyers. Considering its current stake in the JV, the chances for success here are narrow.
If its attempts for the same fail, we may even see the Chinese carmaker make a market exit - much like what General Motors and Ford did in the past.
This would be terrible for people who already own MG cars and SUVs. These will then lose their resale values drastically, and the availability of spares and service may also become difficult. We have seen these happen with GM and Ford vehicles.
MG’s line-up has a bold portfolio of EV models. EVs already have low resale value, and will thus be the most affected by the exit, if it were to actually happen.
The uncertainty isn’t likely to last long. The Joint Venture’s future in the cutthroat Indian market depends on the direction that the two parties take.
MG’s Upcoming Products
From what we know yet, JSW MG Motor India has interesting launch plans. The latest products from the carmaker are the M9 and the Cyberster. These are sold through the ‘Select’ retailer network. MG is now setting up more of these facilities in different Indian cities. MG has also kept its dealers happy, as revealed by the Dealership Satisfaction Study (DSS) recently.
In the upcoming years, we expect JSW MG to launch several new models. It will launch the Majestor next. The ZS EV, which is selling well, will also be replaced by the MG S5 EV. The company is also known to be testing rebadged versions of the Wuling Binguo and Bingo SUVs in India. These, when launched, will challenge the Tiago.EV and Punch.EV.