(By Observer Net, Zhang Jiadong, Editor: Gao Xin)

According to Reuters on July 8 local time, Chery Automobile said that in the coming weeks, two new SUV models under the Chery brand will be launched in the UK, which also signals that more Chinese automotive brands are joining the competition for the UK automotive market.

Last August, Chery launched the Omoda brand in Europe and entered the UK market. In January of this year, Chery further launched the Jaecoo brand in the UK.

MOTORTRADER

Although details of the two new SUVs were not disclosed, Chery stated that they would be "optimized for the local market" and would be available at dealerships across the UK.

The UK regional representatives of Chery, Omoda, and Jaecoo brands said that the launch of the new cars reflects their confidence in the UK automotive industry and the appeal of Chery cars to local buyers.

Chery is not the only Chinese automaker increasing its activity in the UK market. Last week, Geely also announced it would launch the Geely brand in the UK and plans to bring the EX5 to the market in the fourth quarter; Changan has already announced that it will sell its Deepal S07 to British consumers this year, starting deliveries in September.

At the same time, BYD, SAIC MG, Xpeng, and others have already laid out their presence in the UK market, starting to sell products. Leap Motor has also provided new cars to the UK through its joint venture with Stellantis, Leap International.

In addition, brands such as Aion, NIO, Firefly, Dinan, and Zeekr have all planned to enter the UK market within the next few months.

Reuters

Proportional to the comprehensive advancement of Chinese automakers in the UK, the sales of Chinese cars in the UK have also seen a rapid breakthrough. At the beginning of this month, according to the statistics of the Society of Motor Manufacturers and Traders (SMMT), in June alone, the sales of Chinese brand cars in the UK, including MG and BYD, reached 18,944 units, accounting for 10%, higher than 6% in the same period last year. During the first half of the year, the market share of Chinese cars in the UK exceeded 8%.

Whether from sales data or the high enthusiasm of enterprises, in just one year, flocking to the UK has become a new choice for Chinese automakers to break through the European market. However, it's still too early to conclude whether the UK, which has separated from the EU and has a more independent trade policy, can truly become an ideal place for Chinese automakers to go to Europe.

Policies Still Pose Risks

An important reason for the current surge of Chinese automakers entering the UK is the changes in international trade situations. Since last year, the EU and North America have imposed tariffs on Chinese cars, leading to a significant slowdown in the previously booming export of Chinese cars this year.

Although companies like BYD with sufficient capital continue to expand their channels rapidly, maintaining continuous growth in European sales, for most Chinese automakers who have just started to establish overseas channels, avoiding high tariffs in the EU and seeking higher profits in Southeast Asia, South America, and other markets has become a mainstream trend.

As a mature automotive market that has separated from the EU, the UK has thus become a new target market for Chinese automakers.

A analyst from market research institution Jato Dynamics said: "The UK does not impose additional tariffs on Chinese cars. With the continued rise in demand for electric vehicles, it is a huge opportunity for Chinese automakers. MG's market performance in the UK is closer to local brands, and the UK does not have a domestic automotive industry that needs to be protected as much as France and Germany, so there is less resistance."

Reuters

However, as Chinese automakers significantly increase their market share in the UK, industry professionals in the UK have begun to warn the government to tighten policies. John Neale, former chairman of SMMT and former CEO of Unipart, said this year: "Chinese manufacturers are launching more quality, cheaper, and more innovative models in every segment. Since they are selling cars in the UK, we must eventually require them to build factories in the UK."

Except for tariff access issues, another major reason why British consumers maintain a highly open attitude toward Chinese cars is due to the UK's previous active promotion of the electrification transition policy.

Compared to the EU's carbon emission policies that have caused headaches for German and French automakers, the UK Prime Minister's promise at the beginning of the election to ban the sale of all internal combustion engine new cars by 2030 is even more stringent. The policy-level push has once made British consumers actively try electric vehicles, providing a good opportunity for Chinese cars with an electric vehicle advantage in the UK.

From the data, the UK, with an electric vehicle penetration rate of 23% last year, ranks third in the world, after Norway and China.

However, behind the seemingly impressive results of the electrification transition, there are many problems. In addition to the overall penetration rate being lower than the previously set goals, the buyers of electric vehicles in the UK are mainly commercial fleets, while the penetration rate for private car purchases is only around 10%. Moreover, in SMMT's 2023 data, the production of electric vehicles in the UK reached a record high, growing by 48% year-on-year, accounting for 38.3% of total car production, far exceeding the sales ratio.

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Automakers such as Nissan and Toyota, which have a high production volume in the UK, have long expressed the desire to extend the sales period of hybrid vehicles in the region.

Due to these factors, in April this year, the UK government changed its strict sales ban regulation. The new law stipulates that new fuel-powered cars cannot continue to be sold after 2030, but plug-in hybrid vehicles can continue to be sold until 2035. Like the EU, which later relaxed its carbon emission policies, the UK, which had seemed determined to set electrification transition goals, ultimately gave in to market pressure. Now, as the UK renews its approach towards the US over tariff issues, whether Chinese automakers can still thrive as before in the UK remains to be seen.

Import and Export Powerhouse

Different from other countries, the production and sales of cars in the UK show a serious split characteristic. According to SMMT data, in 2024, the UK produced 779,000 cars, of which 603,000 were exported. However, during the same period, the number of new car registrations in the UK reached 1,952,800, highlighting the feature of the UK as both an import and export powerhouse for automobiles.

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Since nearly 77% of the cars produced in the UK are supplied to the export market, and the remaining capacity accounts for only 9% of domestic demand, it means that automotive manufacturers building factories in the UK rely more on the UK's整车 export trade compared to the domestic market.

And in this year's tariff war sparked by Trump, the UK's export volume of cars experienced a severe decline in May. The export volume to the US market dropped by 55.4% year-on-year, and the export volume to the EU dropped by 22.5% year-on-year. In the first five months of this year, the total production of cars in the UK was only 348,000 units, down 12.9% year-on-year, reaching the lowest level since 1953.

Therefore, if the UK follows the EU and forces Chinese automakers to build factories locally, the latter will not only need to significantly increase construction costs in this market with high labor costs, but also face the serious problem of declining UK car exports.

On the other hand, for Chinese automakers who continue to choose to export complete vehicles to the UK, there are indeed opportunities in the short term to seize market share by launching a large number of models.

But in terms of long-term development, without a nearby European factory close to the UK, establishing a large sales network in the UK market, which has an annual sales of about 2 million units and is approaching a saturated market, will also increase the transportation and overseas operating costs of the automakers. At the same time, during the process of Chinese brands fully entering the UK, although currently it is still in the stage of expanding the product matrix, it still needs to avoid excessive accumulation of similar products that could lead to mutual damage.

These hidden cost factors may be more important for most Chinese automakers that are still in a state of financial loss than sending a glowing overseas report to domestic consumers across the ocean.

This article is an exclusive article from Observer Net. Reproduction without permission is prohibited.

Original: https://www.toutiao.com/article/7525309937615667750/

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