Is MG Hector the New Daewoo Cielo for India?

• Published On: 22 November 2019
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A new brand Daewoo entered in the Indian market with Cielo. But the car as well as the brand hit the dirt drastically that it eliminates their name from the Indian automobile industry. Many auto experts are raising the doubt that MG Hector is going to be the new Cielo in the Indian soil.

A new brand Daewoo entered in the Indian market with Cielo. But the car as well as the brand hit the dirt drastically that it eliminates their name from the Indian automobile industry. This was one of the most eye-opening incidents in the entire history of the Indian auto market. But, supposedly its time to repeat the history itself. Many auto experts are raising the doubt that MG Hector is going to be the new Cielo in the Indian soil.

Establishment of Daewoo Group:

Daewoo Group was the second largest auto conglomerate in Korea after Hyundai Group. In March 1967, Daewoo Group was founded by Kim Woo-jung. Initially the brand concentrated on labor-intensive clothing and textile industries. Something that involves high profit margins as South Korea offers large and relatively inexpensive workforce. But later the brand started diversifying into 20 divisions including trading, construction, automotive, etc. Its continuous dedicated efforts in the auto industry helped the brand to rank as the seventh largest car exporter and the sixth largest car manufacturer in the world. In 2001, Daewoo had established its name firmly in the auto industry with its expanded operations in 123 countries and automotive became one the most important ventures for them.

Each country came up with new challenges and tough competitions. This was true in European and US market and even in Asia. 50% equity held by Japans' Toyota in DCM-TOYOTA, which got renamed into Daewoo Motors India Ltd.

But the problem started developing when overseas investment got freeze. In 2000, the company’s labor union refused the restructuring plan for the company, as Daewoo was declared bankrupt.

Journey of Cielo as well as Daewoo in India:

Cielo was introduced by Daewoo while entering into the Indian market in 1995. Cielo was followed by Nexia and Matiz. It was projected that the company will become the 100bn company by 1998-99. But nothing goes well as it is considered that the implemented strategies to increase the sales were actually accompanied by poor market research, which eventually led to huge losses. More than 70000 customers cancelled their booking and Daewoo faced a loss of 351.4 million in 6 months as sales also declined to 1.22 billion from 2.70 billion.

The company tried several methods to overcome the loss. They borrowed foreign capital for further expansion, introduced the concept of direct selling, introduced price competitiveness and offered attractive servicing and warranty offers. However, these steps gave rise to good demand in the international market, so, they introduced heavy discount to attract global customers. But, in India it was complete failure.

They even tried entering the small car segment to attract more customers with Matiz. But it proved to be one more blunder for the brand, as challenging Maruti in small car segment was not a good decision. They had no idea how fast the small car segment can grow and overshadow Daewoo.

Their next step was to target the mid-size segment, as Daewoo thought it would be a good chance to capture and lead the segment. Here also, the mid-sized car segment got overcrowded by other players such as Opel, Maruti, Honda, etc.

So, the demands for Cielo and Matiz were almost negligible. This proved that even a rapid rate of success does not guarantee a stable market condition in the entire world. That got hence evidenced from the case study of Daewoo Cielo.

Some of the most key reasons of failure of Cielo in India are:

• Launch of operations in extremely hurried manner
• Inefficient Production Plant
• Overestimation of the market demand
• Failure of schemes
• Frequent changes in positioning from rich luxury car to premium family car to value for money car
• Focus on Cielo not Daewoo as a Brand in 1994 and focus on Daewoo as a Brand not on a particular product

These initiatives prove to build the pillars for the decline of Cielo.

Introduction of MG in India:

After almost a decade, the history has started repeating. It’s like we are having déjà vu!

For the last 9 decades, MG Motors has established a strong base among people globally and has been able to implant ‘the love for MG cars’ in the hearts of all users across the world. But, its ownership transfer to SAIC Motors Company of China and then entering the Indian market without studying the market properly ruined everything.

There are some problems that any MG Hector owner is facing and will continue crying for the next 5-7 years. Here is a glimpse of some of those dis-heartening facts:

Blunder if Chosen Manual Petrol Engine:

The diesel version of Hector is Rs. 1 lakh more than the petrol version; this attracts many customers to choose the petrol variant. But, the petrol variant has very low RPM, so driver will be frustrated to drive in heavy traffic. So, the solution will be to go for a manual diesel engine or automatic petrol engine. But those who have already purchased a manual petrol engine, have already made one of the biggest blunders of their lives.

Smaller Hector Wheels:

The second most vital gaffe from MG side was that they choose a 17-inch wheel diameter and 215-mm wheel width for this giant car. Both are much below the standard of what it should have been provided. Other cars of same dimensions or lower dimensions such as Hexa, Harrier or Compass, have better wheels and better control on roads.

Less Control on Roads:

When it comes to control on roads, Hector is nowhere even close Harrier or Compass. That is the reason drivers can feel that the car is going understeering, even on lower speed.

No Guarantee on Dual Clutch Performance:

None of the manufacturers till date has successfully launched a good performing dual clutch in their first car. Though you can get smooth ride where gear can be changed automatically and easily with the help of dual clutch, but there is no guarantee of its performance. Even Volkswagen and Ford who is renowned for such innovations, have left their ground and replaced the dual clutch with the automatic torque converter. The mechanics should also be well-equipped and aware of the details related to dual clutch mechanism, which is still not true in India even today.

Hybrid System Failure:

As per ARAI, a hybrid system Hector should be able to give 1½ Kmpl more mileage than a manual Hector. But, in reality it is not so. You can hardly get a difference of only ½ Kmpl. If MG would have designed it for Indian roads, they could have given 10 Kmpl better mileage, for which they would have given the privilege to charge the 40-volt car battery from the home AC socket. That would have run the car with the help of battery for 5-6 hours and the usage of fuel would be half.

Where we could have charged the car battery with Rs. 4 electric meter, we are now burning Rs. 40 of petrol to charge. So, this fake mechanism of hybrid in Hector is not at all designed for the Indian market.

Pathetic General Motors Past Records:

3 times General Motors has tried to bring different car brands to India and each time General Motors has faced the failure. First time, they brought Opel Astra and Crosa from Germany, then second time brought Daewoo Optra and Aveo and now in the third time from China brought MG Hector. Each and every time, GM has faced dreadful failures in India, plus this time it’s a Chinese product.

Though we all know that Hector is a car of Morris Garage, a British auto maker company, which was purchased by SAIC Motor Corp, the largest auto maker of China. But, SAIC MG Motors is a collaborated product of SAIC and General Motors, an American auto maker company. You will even be surprised to know that MG Hector was sold to other countries in the name of Chevrolet Captiva. But, to enter India, they had to leave the brand name of Chevrolet and took the support of a new brand MG. One more car of General Motors, Chevrolet Tavera was caught exploiting the pollution rules of India and many other blunders.

So, a car from the same maker is highly doubtful.

Slowly and steadily, it is getting clear that the promises made by MG Hector to its customers are fake or not up to the mark. And even if they stand up their promises, there is no value because the quality of each part is not at all decent.

The sales figures and the comfort level review from the owners are clearly demonstrating that MG Hector is going on the same lines of Daewoo and sooner and later it is becoming obvious that Morris Garage India will also face the same outcome of ending its journey in the country.