Why are MG cars so cheap?

Why are MG cars so cheap? Obviously if you asked someone at MG they’d answer with “they’re not cheap, they’re affordable, and amazing value”, but the most obvious answer is - because they’re made in China.

This may come as a shock to many readers, who might assume MG is still the same storied old brand from England that used to make sexy, sporty little roadsters and not much else (it was founded in Oxford, UK, in 1924).

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Back in 2005, Chinese manufacturer Nanjing Automobile Group bought the rights to the MG badge, along with the rest of MG Rover Group (Rover was another UK marque that did not survive and if you'd driven its cars, you'd be grateful), and then, in 2007, Nanjing was swallowed whole by SAIC Motor - a Shanghai-based car manufacturer that is, in turn, owned by the Chinese state, and which owns MG to this day.

Just pause on that for a moment. Imagine if the Australian government was in charge of building cars locally, if it had bought Ford and Holden for example. Motor vehicles built by committee, car companies run by governments that can change their priorities - between EV and burning oil for example - every few years. Just, wow.

Fortunately, China’s communist government does not change and the almost limitless financial backing the Chinese state can give to the companies it owns and runs - often with the stated goal of competing with and beating the western world - is a significant advantage for a brand like MG/SAIC.

To be clear, when the Chinese bought MG it wasn’t exactly a going concern, but they obviously saw value in the badge, as opposed to selling cars called things like “Yangwang” or “Build Your Dreams”.

In 2011, the first new MG model in more than 15 years was launched; the MG 6, and it was notionally built, or partly built, in the UK at MG’s Longbridge plant, but also partly in China.

This allowed the brand to continue proclaiming its British-ness but in 2016 the company shut down its operation in England and all MGs since then have been designed and built in China.

Cars built in China are cheaper partly due to the effect of economies of scale and SAIC is quite huge; indeed it is the largest single-marque exporter in China.

In 2024, it sold 707,000 vehicles in total. For comparison, the entire new car market in Australia in a typical year is around 1.2 million.

It’s also a lot cheaper to build cars in China because the wages for the people that do it are amongst the lowest in the world (although not as low as Mexico and India).

Workers in an SAIC factory are reportedly paid as little as $3.60 to $6.60 an hour, which means the labour costs of building an MG are going to be far, far lower than those going into a vehicle built in the US, Europe or Japan.

When it comes to EVs, which MG, like most Chinese car companies, has a heavy focus on, Chinese manufacturers also have a huge price advantage because China controls so much of the global EV battery market (and batteries are the most expensive part of an EV), so it can access them at lower rates.

According to the International Energy Agency, China is projected to hold more than half of the global EV battery market by 2030. More than 70 per cent of all the EV batteries that have ever been made were produced in China.

It should thus come as no surprise that China dominates the global EV market in general, with a 62 per cent market share.

According to Nikkei Asia, China also holds a significant share in the production of key battery components, such as cathodes, anodes, electrolytes and separators.

In Australia, MG has taken advantage of its ability to produce and import cars that are cheaper, in a wholesale sense, than competitors from established brands in this country by adopting an aggressive pricing strategy.

It has promoted a lot of 'dynamic pricing' or drive-away pricing and you will often see or hear advertising suggesting it is offering the cheapest vehicle in a particular segment.

At the time of publishing, the cheapest new MG car you can buy is an MG ZST 1.5 CVT Vibe, with a drive-away price of just $23,888.

MG offers sharply-priced vehicles across many segments from hatches to small and mid-sized SUVs, and even a new electric roadster, the $115,000 Cyberster, which is clearly designed to bring to mind the MG sports cars of old. It’s also clearly not a cheap MG car.

MG also offers hybrid and EV power plants. According to Compare the Market, “MG cars in Australia generally have a lower resale value compared to more established brands like Toyota or Mazda”.

This is an important factor to keep in mind when considering how cheap they might seem in terms of upfront costs.

In terms of safety, MG is not an entirely maximum five-star rated brand. The MG HS (petrol) and MG 4 Electric have five-star ANCAP ratings, but the MG ZS hybrid only gets four stars, the MG 3 has three stars and the MG 5 has zero stars (safety system upgrades are expected “early in 2025”).

So, in summary, MG cars are cheap because they are made in China, one of the cheapest places to build cars, and EVs in particular, in the world, and they are thus able to be aggressively priced in Australia.