MG's Spanish factory signals localisation drive as Galicia emerges as new automotive hub

MG's parent company SAIC Motor has confirmed plans to establish its first mainland European manufacturing facility in Spain, choosing Galicia as the location for a €200m ($227m) industrial and logistics complex that will combine vehicle production, research and development, component supply and logistics operations.

Stellantis and Leapmotor plan full-scale production at two sites in Spain

With Europe's OEMs focused on competing with the rapid growth of Chinese brands, automakers from both regions are looking for new ways to break into foreign markets, leading to new partnerships.

The project is expected to create around 2,300 jobs in its first phase and reach annual production capacity of 120,000 vehicles when operations begin before the end of 2028. Construction is scheduled to start in 2027.

For MG, which has rapidly expanded its European sales while continuing to import vehicles from China, the investment represents a significant step towards localisation. The move comes as Chinese automakers face increased pressure from European Union tariffs on Chinese-built electric vehicles and growing political scrutiny of imported vehicle volumes. Industry observers have long expected SAIC to establish a European manufacturing footprint to reduce tariff exposure and shorten supply chains.

According to MG, the Spanish site will integrate vehicle R&D, manufacturing, component supply and logistics functions within a single facility, creating what the company describes as a comprehensive industrial and logistics hub for its European operations.

Assembly-first strategy?

While the announced investment is substantial, the €200m commitment appears relatively modest compared with the capital typically required for a full-scale greenfield vehicle manufacturing operation in Europe.

Great Wall Motor earmarks first European plant, targets 300,000 units per year by 2029

Great Wall Motor is exploring opening its first European plant, most likely in Spain or Hungary, and is aiming to produce an annual total of 300,000 vehicles by 2029 to revive its sales in the region.

This suggests the first phase could focus on knockdown-kit assembly rather than fully integrated vehicle production. Such an approach would allow SAIC to establish a manufacturing presence within the EU, reduce tariff exposure and localise selected supply chain activities while limiting upfront capital expenditure.

The company has not yet disclosed detailed manufacturing plans or vehicle programmes for the site. However, previous reports regarding SAIC's European manufacturing strategy suggested initial production could begin through CKD or SKD assembly before expanding local content and manufacturing activities as volumes increase.

Why has MG chosen to place its European hub in Galicia?

Galicia's selection reflects both logistics advantages and the region's growing importance within Europe's evolving automotive landscape.

The region already hosts Stellantis' major vehicle manufacturing plant in Vigo, one of the largest automotive production facilities in Spain. More recently, Stellantis announced plans to work with Chinese EV manufacturer Leapmotor on European vehicle production, further strengthening Galicia's links to Chinese automotive investment.

MG's decision reinforces the emergence of north-west Spain as a potential hub for Chinese-backed automotive manufacturing and distribution activities serving the European market.

The project also benefits from access to port infrastructure, an established supplier base and proximity to existing automotive operations. Regional authorities have highlighted the area's industrial capabilities, skilled workforce and logistics connections as key factors behind SAIC's decision.