Morris Garages, that is, MG, just launched its RX8 in Mexico.
While the name may conjure up images of the last Wankel-powered sports car from Mazda, it actually designates (minus the dash in the name for the Mazda sports coupe) a large SUV that has the Toyota Land Cruiser in its crosshairs.
MG did the press launch in the sand dunes near the Bay of Kino in the state of Sonora and this SUV proved to be very capable.
And the best part is that it sells in Mexico for 777,000 pesos, or about $38,000, which is less than half of what a Land Cruiser used to cost in Mexico ($86,495). Toyota ended production of the Land Cruiser for 2022, but it lives on in the form of the Lexus LX model.
Punching above its weight class
Sure, the MG RX8 is powered by a 2.0-liter 4-cylinder turbocharged engine with 221 horsepower, while the Land Cruiser had a 5.7-liter V-8 with 318 hp under the hood. But the MG RX8 does not feel underpowered, it was actually quite peppy and with enough power to overtake other vehicles on the road confidently.
This large 4×4 has a design that is appropriate of its market positioning and seems solidly built. It has full LED headlights, dual panoramic sunroof, Qi wireless smartphone charger, three-row leather seating, 20-inch aluminum wheels and infotainment with CarPlay and Android Auto.
And it is backed by a 5-year or 62,500-mile bumper to bumper warranty, while the powertrain has a 7-year or 93,750-mile warranty. Remember: it is a great value — you could buy two MG RX8s and you would still not be able to cover the admission price of a Toyota Land Cruiser.
Some history may be necessary to provide a better context. MG is a British brand that is now part of the SAIC Motor Corp. in China which acquired the brand in 2007. MG sold cars in Mexico until 2005 returning just last year; it has been very successful, selling more than 10,000 vehicles in less than 12 months.
Selling in Mexico while coveting the U.S.
It´s no secret many Chinese automotive manufacturers have their eyes set on the U.S. market. Their presence at different editions of the North American International Auto Show during the past decade or so should be a clear indicator.
Their first actual attempt was in 2007, when an ill-fated endeavor called Chamco announced its intentions to sell SUVs and pickups from Hebei Zhongxing Automobile Co. Ltd., or ZX Auto China, in the U.S.
They would be produced in Mexico using CKD, or knockdown, kits. Chamco even lured automotive legend Steve Saleen to certify its vehicles. It was one of the companies that exhibited at the Detroit Auto Show. But by 2008 Chamco collapsed.
The interest of the Chinese automotive firms in the U.S. is an undeniable reality. Changan (the second-largest company in China per sales volume) has a research and development center in Plymouth, Michigan.
The largest automotive company in China is SAIC, and it already has presence in the U.S. Its headquarters are in Birmingham, Michigan, and it also has an Innovation Center in Silicon Valley. These are but two examples of Chinese car companies who have discreetly established a footprint in America.
U.S. has Chinese-made vehicles
Currently there already are vehicles sold in the U.S. made in China and selling rather well. Most notably, the Buick Envision, which is produced in China by SAIC, GM´s partner.
Mexico could be the springboard for Chinese automotive manufacturers to enter the U.S. market, where they could stablish plants to produce export vehicles to the U.S. under the benefits of the United States-Mexico-Canada Agreement, or USMCA, casually known as NAFTA II.
Chinese cars are already selling in Mexico in large numbers. Chevrolet is currently selling south of the border the Captiva, Tornado Van and Groove made by SAIC. SAIC also manufactures the Cavalier and Aveo sold in Mexico.
SAIC has a large presence in Mexico already because not only their vehicles sell under the Chevrolet brand, but they also sell MG, which it owns.
Stellantis just launched the Dodge Journey, made by GAC Motor and Peugeot sells its Landtrek pickup made by Changan. Besides SAIC, more Chinese automotive companies already have presence in Mexico, like BAIC, Changan and JAC.
JAC has the distinction of being the only Chinese automotive brand that already sells EVs and assembles in Mexico. Their plant in the state of Hidalgo receives SKD (semi knockdown) kits in which the vehicles arrive requiring the final stages of assembly.
Expanding their reach
More brands are poised to enter Mexico, like BYD, which is already doing engineering testing of electric SUVs in that country.
Surely, they are not merely looking to conquer the Mexican market which is expected to sell approximately 930,000 units this year, and in a robust year that number swells to about 1.5 million units. Mexico most likely is not just a goal, but a steppingstone into the U.S. market which is expected to total about 15 million units this year and rise to more than 17 million in 2023, according to analysts’ estimates.
It’s important to know China is making strides in electric vehicles, which are becoming crucial worldwide as some countries have already announced their plans and deadlines to ban internal combustion engine vehicles.
“(When it comes to) EVs, China is aiming for the whole world. Of course, the U.S. is a very attractive market, but the Chinese manufacturers are aiming for the whole world because the technology they have is about to enter a ‘boom’ everywhere,” said Isidoro Massri, director of JAC Mexico.
“Mexico could become an interesting ally for the Chinese car companies, because of trade tariffs advantages and good international relations with other countries it has the opportunity of becoming a country with some the largest attraction of foreign investment and factories to create products in Mexico to export to the U.S. and other parts of the world.”
Investment is on the rise
The pace of Chinese investment in Mexico is increasing noted Iván Rivas, head of the Economic Secretariat in the northern state of Nuevo León in 2015 after a new Chinese investment project was announced.
In 2016 and 2017 saw one new Chinese investment project announced in the state of Nuevo León, but for 2018 the pace increased to two new projects. Moving to 2019 there had been a boom in new projects from China, because eight were announced.
By 2020 the state of Nuevo León was on a roll because there were seven new projects announced and this year has seen the pace go up to 13 new announcements.
The main investment projects from China in the state of Nuevo León are Hisense, which will manufacture refrigerators, stoves and air conditioning units, and Kuka Home which will manufacture furniture.
Currently 381 investment projects are being negotiated in the State of Nuevo León, and 75 of those are from Chinese companies.
This information is just for the state of Nuevo León, which, according the Federal Economic Secretariat, holds the third place when it comes to Chinese investment with 8.2% of investments, after Mexico City with 28.2% and the state of Jalisco with 22 percent.
So, the arrival of more Chinese investment in Mexico as well as new brands, some of which already have American headquarters as well as R&D centers in the U.S. appear to be a clear indication of the intention of automotive manufacturers to enter the U.S. market in what could be a not distant future.