EU Chinese import tariffs could be win-win for UK market

The European Commission's decision to impose tariffs of up to 38.1% on cars produced in China could further boost investment into the UK as a result, according to consultancy Gartner.

The consultancy is expecting the UK government to position itself differently to the stance from Europe and embrace Chinese investment.

The EC’s decision to impose tariffs follows preliminary findings from its anti-subsidy investigation which confirmed its suspicions that Chinese state support is distorting prices.

Although these EU tariffs are set to be formally imposed on July 4, the announcement remains preliminary.

Jonathan Davenport, Gartner senior director analyst, advanced manufacturing and transportation (UK), told AM that SAIC Group’s investment in its MG research and development facility in Longbridge, alongside the establishment of 150 MG dealerships, highlights an established success story for Chinese investment in the UK.

As a result, some UK consumers still recognise the MG brand as part of Britain's automotive history.

After SAIC bought MG from Rover's administrators it retained part of Longbridge as a final assembly plant, building MG TF roadsters, then the MG6 and MG3, but in 2016 car production ceased at Longbridge. Remaining buildings house the national sales company and R&D teams, but some of the property was redeveloped for housing.  

Multiple brands from China like BYD, GWM Ora and Omoda are rapidly partnering with UK dealer groups to establish franchised dealer locations.

UK automotive retailers will be hoping for clarification from the Government as soon as possible, although political parties are currently heavily focussed on campaigning for the general election ahead of polls opening on July 4.

Davenport said: “Geely has also created a joint venture with Renault to build low-emission petrol, diesel and hybrid engines and established its headquarters in the UK.

“This is the sort of investment that the UK economy values.”

Davenport said it’s worth noting too, that the UK is an increasingly important market for the Chinese car brands.

It is the second most important market for Chinese automakers outside of Russia, where brands such as MG and Volvo, whom consumers have historically known are strongest, while also being supported by new entrant EV brands such as Polestar appearing.

Davenport said: “The squeeze brought about by Europe’s decision could be a win-win for Chinese-UK automotive relations and see further investments in the region.

“The UK government will be listening closely to concerns from companies like Ford, Toyota, and Nissan – who have also invested heavily in auto manufacturing in the UK.

"The UK will need to carefully balance both the security of investment and the risks of existing partners pulling out of the country if they move too close to the Chinese automakers.”

China is urging the EC to reverse its decision on tariffs and other manufacturers have responded too, including Volkswagen Group, which like some other car brands, already has joint ventures in place with Chinese manufacturers.

German manufacturers criticise China tariff plan

Mercedes, BMW and Volkswagen have all criticised the EC’s tariffs on Chinese imports.

In statements shared with Automotive News Europe, BMW said, “protectionism risks starting a spiral”, while Mercedes said it does not want to see “increasing barriers to trade”.

VW Group said the timing of the tariffs would be “detrimental to the current weak demand for EVs in Germany and Europe”.

It added: "the negative effects of this decision outweigh any benefits for the European and especially the German automotive industry."

The multinational carmaker Stellantis, in response to the EU announcement, also expressed its position by advocating free and fair competition in a global business environment. The company said through its affordable EVs and cooperation with Chinese electric carmaker Leapmotor it has confidence in competing with Chinese products that have price advantages.

As a non-EU member state, Norway, which has one of the strongest market shares of EVs in Europe, said it will not follow the EU to increase tariffs on Chinese electric cars.