The UK has not received a real influx of Chinese new cars yet because there are other countries in Europe that are more profitable targets for the emerging brands, according to the head of the Society of Motor Manufacturers and Traders.
Although the likes of GWM, BYD and Omoda/Jaecoo have now established a presence in the UK, there are significantly more brands already trading on Europe’s mainland, such as Nio, XPeng, Voyah and Zeekr.
SMMT chief executive Mike Hawes said at a recent briefing: “One of the main reasons, if you look at the past 12 to 18 months in the UK market, is the cost of doing business.
The UK has not received a real influx of Chinese new cars yet because there are other countries in Europe that are more profitable targets for the emerging brands, according to the head of the Society of Motor Manufacturers and Traders.
Although the likes of GWM, BYD and Omoda/Jaecoo have now established a presence in the UK, there are significantly more brands already trading on Europe’s mainland, such as Nio, XPeng, Voyah and Zeekr.
SMMT chief executive Mike Hawes said at a recent briefing: “One of the main reasons, if you look at the past 12 to 18 months in the UK market, is the cost of doing business.
“They tend to be focused more on BEVs (battery electric vehicles) and actually it’s a really expensive country to do business in, compared to somewhere else in Europe where they’ll make better margins, where there are incentives in that market to enter and compete more affordably than they can in the UK at present.”
Nevertheless, Hawes noted that in China the OEMs are successfully bringing the production costs down of BEVs to levels that enables them to bring more models to the market.
More new car brands are set to launch in the UK by the end of this decade, including Leapmotor, Xpeng and Haval this year.
The huge challenge in the UK for all OEMs, whether European or Chinese, is that the market for battery electric vehicles is not yet strong enough, and there are not enough incentives to encourage more private buyers to go into electric cars.
That needs to change, according to Hawes: “We’re not saying ‘give us money to sell these things’. It’s money for the consumer. Reduce what the consumer pays in VAT.”
He said the Government is going to get a windfall from how the VAT falls because of the more expensive list price of BEVs, and in future the premium VED owners will pay.
Hawes said the industry is acutely aware of the financial pressures the UK faces, and were there no Government targets, such central support would not be necessary, as the market would find its own level. But the targets are causing issues when the natural demand is not there.
“The fact that you’ve implemented a regulation which is trying to dictate a market, well, it’s not happening on itself. So how would you make that happen?”
The UK Government is committed to a phase out of petrol and diesel new car sales by 2030, which makes the UK seem a good opportunity for China’s affordable BEV brands. However the industry hopes the consultation on the ZEV Mandate’s ‘flexibilities’ will bring some support.
Asked whether the industry wants the mandate abolished, Hawes responded: “No. I think the focus is making it work because everyone’s on the course.”
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