MG's Spanish factory signals localisation drive as Galicia emerges as new automotive hub
SAIC's decision to build an integrated manufacturing and logistics facility in Galicia highlights the growing importance of localisation strategies as Chinese automakers expand their industrial footprint across Europe.
MG said the new facility will reach annual production capacity of 120,000 vehicles before the end of 2028
Source: MG, James Arbuckle
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.
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.
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.
Automotive Logistics' take on the move and its implications for supply chains
For automotive logistics providers, the project could create new opportunities across inbound component flows, finished vehicle distribution and multimodal transport operations.
The location, near Ferrol's outer port, provides direct maritime access for imported components and potential export flows, while the integrated logistics model outlined by MG suggests the company is seeking tighter coordination between manufacturing, supplier operations and vehicle distribution.
The commitment to combine manufacturing, supply and logistics activities within a single site also aligns with a broader trend among Chinese automakers in Europe, where localisation strategies increasingly focus on building regional ecosystems rather than relying solely on imported vehicles.
As Chinese brands continue to expand their European market share, MG's investment could mark the beginning of a wider shift towards regionalised production networks that reshape vehicle and component flows across the continent.