Chinese carmakers line up for ‘extraordinary opportunity’ in UK

ORA Good Car GT electric vehicle on display during the 43rd Bangkok International Motor Show - NurPhoto

ORA Good Car GT electric vehicle on display during the 43rd Bangkok International Motor Show – NurPhoto

Few cars can achieve the reputation of the Fiesta, Ford’s cheap, reliable car that millions of Britons have learned to drive.

But after selling 4.8 million units in the UK alone, the American carmaker discontinued the model. Production will end this year after nearly 50 years since its launch.

The pullback creates a vacuum at the bottom of the market as more and more automakers abandon cheaper models in favor of more expensive – and profitable SUVs. However, nature abhors the void and there are already new manufacturers lining up to replace the old protective layer. Most come from the same country: China.

As many as 30 new electric car brands are eyeing the UK car market, most of which are Chinese, according to a report by The Telegraph.

Challengers with designs at the cheaper end of the market, are set to sell mass-market battery-powered cars to the UK.

Companies such as BYD and Ora, which already have agreements with UK dealers, will join a host of other carmakers including Chery, Dongfeng and Haval. They are big brands in China but barely known to UK buyers.

Ford Fiesta - John Keeble/Getty Images Europe

Ford Fiesta – John Keeble/Getty Images Europe

Mark Raban, owner of Lookers, one of the UK’s leading car dealerships, said: “I read about the Chinese that they are very, very excited about the UK market.

Lookers will soon start selling cars from BYD, which is backed by billionaire American investor Warren Buffett. The company only started making cars in 2003 but already has a 17% market share of electric vehicle sales in China.

In addition to cars, BYD also manufactures batteries to go with them. This will become increasingly important as growing worldwide demand for batteries puts pressure on supply.

“I think we’re going to see some very, very competitive prices,” Raban said.

China’s auto market is the largest in the world but sales growth is slowing, in line with the broader economy. As a result, domestic automakers are now looking to export.

The UK is an obvious target: The UK has recently regained its position as the second-largest market in Europe, behind Germany, and the Chinese auto industry has well-established links here.

For example, MG is now one of the fastest growing car brands in the UK, surpassing Citroen, Honda, Renault and Skoda. Although a British brand, MG has been owned by China since 2005.

As The Telegraph revealed last month, MG plans to expand sales of electric cars further in the UK, sees “an important opportunity” in the country.

MG - Stock Photo Chiradech Chotchhuang/Alamy

MG – Stock Photo Chiradech Chotchhuang/Alamy

China’s Geely is also preparing to inject more capital into London Electric Vehicle Company, which makes black vans and battery-powered vans for London. Geely hopes to turn the company into a “massive” electric vehicle maker, Reuters reported.

Electric truck sales have been popular with customers, according to recently filed accounts from the Warwickshire company.

Such promising investments have raised hopes that China’s push into the car market could help Britain meet its goal of producing 2 million cars a year.

To do so, it will need new factories, possibly owned by companies that do not yet manufacture here, the industry lobby group said.

If China wants to sell here, can it bring jobs and production lines, Returning affordable car manufacturing to Britain?

Professor David Bailey, an expert on the automotive industry at the University of Birmingham, is skeptical.

“I think they can go to Central Europe, where labor costs are low. You know, what is the UK doing to be an attractive place to set up operations?”

The US has launched a tax bill worth hundreds of billions of dollars that is now attracting investment in green vehicles and has attracted startups such as electric truck maker Arrival. The EU is considering a similar plan.

“We are squeezed between two really big blocks that are working so hard to make this happen,” Bailey said.

For Lookers’ Raban, however, the emergence of a wave of affordable Chinese cars is an “extraordinary opportunity” for his business.

New brands could account for 10% of the UK EV market by 2025 and 18% by 2030, industry researchers estimate.

It is in the interest of Chinese manufacturers that other manufacturers are retreating as they seek to expand.

Jim Farley - Rebecca Cook/Reuters

Jim Farley – Rebecca Cook/Reuters

Last week, it was reported that Ford would cut 3,200 jobs across Europe as it shifted its focus from cheaper petrol cars to more lucrative electric cars.

Familiar automakers are abandoning cheaper models to sell larger SUV-style engines and higher-spec vehicles to make the best of limited parts supplies.

Ford is focusing on models like the £50,000 electric Mustang. It joins brands like BMW and Mercedes, both of which have openly said cheaper cars are no longer for them.

Not all are giving up on low-end cars: Nissan has increased Qashqai production by 16.5%, helping it replace the Vauxhall Corsa as Britain’s best-selling car last year.

However, Nissan’s Qashqai starts at £26,000, a far cry from the £16,000 a Fiesta could have bought just before the pandemic.

When starting from the bottom of the market, Chinese manufacturers are learning from Nissan. When the Japanese company entered the UK, it did so first under the guise of mass-market Datsun, in an attempt to knock out the competition. Over time, it has moved up the ladder to introduce more expensive, higher-spec models.

For companies like Ford, when it comes to entering the more crowded and expensive segment of the market, jostled by cost-cutting Chinese brands, Professor David Bailey, an expert on the automotive industry at the University of Birmingham, said there may not be a happy ending for them.

“There is no guarantee that they will survive,” he said. “And those are the people who switch to electric vehicles quickly, efficiently, and possibly at a reduced cost; they will be the survivors.”

Whatever the outcome, Chinese rivals will soon appear alongside European, American and Japanese models in sales. And for buyers looking for an affordable daily commute, they may increasingly become the only options.

Ford is focusing on models like the £50,000 electric Mustang. It joins brands like BMW and Mercedes, both of which have publicly said cheaper cars are no longer available to them, though Ford points out that despite the Fiesta’s sales decline, it’s still was a car in the top 10 last year and joins Puma and Kuga on the bestseller list.


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