UK automobile business faces ‘troublesome trade-off’ between Chinese and EU financial hubs | Automotive business
Britain’s automobile business is grappling with a “troublesome trade-off” between China and Europe, as producers battle to stability the advantages of each financial hubs forward of looming commerce measures that might limit UK exports to the EU.
The UK is an outlier in selecting to not put import taxes on Chinese autos, even because the US has shut them out almost entirely, and the EU imposes duties of up to 45%.
EU officers reportedly warned Andy Burnham final month that the UK should put tariffs on low-cost Chinese autos in any other case Brussels would impose protectionist “made in Europe” barriers on British exports to the bloc, hitting British carmakers of their largest market.
Ministers have to this point resisted such calls, with Jonathan Reynolds, the corporate affairs secretary, arguing any levies would “in all probability be reciprocated” – costing UK producers gross sales in China.
Tariffs would additionally increase costs for British drivers, who’ve flocked to cheaper Chinese models, and will deter manufacturers corresponding to Chery, which is in talks to build cars at Nissan’s Sunderland plant, from investing additional within the UK.
“There is a troublesome trade-off,” mentioned Emily Sawicz, of the consultancy RSM UK, including that the UK “can not afford to float between the 2 indefinitely”. Chinese funding might be a “lifeline” for carmakers, whereas entry to Europe would even be “essential” for smaller producers.
“Being excluded dangers UK suppliers turning into more and more shut out of these European alternatives,” she added. “Manufacturers want readability on which course the federal government intends to take to allow them to make long-term funding selections.”
Ian Plummer, business director at Autotrader, mentioned competitors from Chinese manufacturers had made vehicles extra reasonably priced and “is encouraging extra folks to go and purchase a brand new automobile”.
Brands corresponding to BYD, Omoda and Jaecoo greater than tripled their share of the UK new automobile market within the first eight months of 2026, reaching 12% of gross sales, based on business figures.
Figures launched on Friday confirmed that British new automobile registrations rose 12% within the yr to September, the very best month for annual progress since 2017. The preliminary information from the Society of Motor Manufacturers and Traders (SMMT) confirmed the increase was powered by a requirement for electrical autos and Chinese manufacturers, with the Jaecoo 7 and BYD’s Sealion 7 among the many high sellers.
The commerce physique mentioned on Wednesday that the European Commission’s made in Europe guidelines, which limit subsidies, tax breaks and public procurement contracts to autos constructed throughout the EU, pose an existential risk to British automobile manufacturing. The EU accounted for 58% of UK automobile exports within the first half of the yr, in contrast with about 4% for China.
Mike Hawes, the SMMT’s chief govt, mentioned: “The UK and EU automotive industries are deeply built-in, so successfully excluding British-produced autos from their largest market would guarantee mutual injury.”
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Massimiliano Messina, Nissan’s chair in Europe, mentioned final month: “Europe can not have a Trojan horse the place the Chinese are going to flood the market via the UK.”
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Victor Zhang, the deputy UK chief of Chery, which owns the Jaecoo and Omoda manufacturers, rejected that declare, saying: “Most of what we promote are super-hybrids, not the vehicles that these tariffs are about, and the vehicles we promote right here keep right here.”
He added: “Tariffs can come and go, however we received’t change our ongoing funding within the UK.”
Brussels raised its personal tariffs on Chinese EVs in 2024, triggering a decline in what was then an accelerating gross sales trajectory. It is now going through requires contemporary obstacles to be imposed on importing hybrid electrical autos, probably quotas or worth flooring.
Imports of plug-in and battery hybrid vehicles rocketed after the EU tariffs were imposed on EVs, underlining China’s capacity to pivot its export efforts when hit by commerce obstacles.
Others within the business imagine tariffs might assist defend the UK’s producers, whose market share in Britain continues to be eroded Chinese companies.
Tim Tozer, a former chair of Vauxhall, mentioned that tariffs have been “very important” to cease Britain’s automobile sector “atrophying”. He mentioned: “We are ultimately knockings now, attempting to avoid wasting the business.”
He added that Reynolds was “whistling within the wind” with hopes of constant to export to China en masse, arguing the market had change into “fiercely nationalistic,” with patrons more and more loyal to home manufacturers “as a result of they’re bloody good”.
