Chinese giant Chery could build cars in UK

Chinese car giant Chery is weighing up the possibility of building cars in the UK, according to a senior executive.

Its UK head Victor Zhang told the BBC it was a “matter of time” before the company made a final decision.

He said Chery, which is already preparing to build cars in Spain, was determined to take a “localised” approach to the European market.

Mr Zhang denied the company’s exports had benefitted from unfair subsidies.

Chery, which was set up in 1997, is one of China’s largest car companies. It is already the country’s biggest exporter of vehicles, but has ambitious plans to expand further.

To help take that plan forward, it has set up two new brands focused entirely on the international market, Omoda and Jaecoo.

Last month, Omoda was officially launched in the UK. It has begun selling a mainstream SUV, the Omoda 5, in both electric and petrol-powered versions.

It has built a network of 60 dealerships, and hopes to have more than 100 here by the end of the year.

But it is far from the only Chinese manufacturer to see the British market as potentially lucrative.

BYD, which has been vying with Tesla for the title of the world’s biggest manufacturer of electric cars, has also opened dozens of dealerships here.

SAIC is already well-established in the UK, selling cars under the classic British MG marque.

Cars for sale in Europe are currently built at Chery’s manufacturing HQ in Wuhu, in Eastern China. But that situation is expected to change.

The company already has a deal with the Spanish firm EV Motors, which will allow Omoda and Jaecoo models to be built at a former Nissan factory in Barcelona. But it wants to establish other bases as well.

Earlier this year, the company said the UK could also be a candidate for an assembly plant. That option remains on the table.

“Barcelona, this is something we are already commited to”, explained Mr Zhang

“For the UK, we are also evaluating. To be honest, we are open for all options and opportunities.

“So I think it’s just a matter of time. If everything is ready, we will do it”.

A spokesperson from the Department for Business described the UK’s auto sector as “thriving”.

“While we cannot speculate on commercial investment decisions, we welcome Chery International’s Omoda launch in the UK and would positively view any new investment in the UK,” they said.

But the UK is not the only country on Chery’s list. It has also been talking to the Italian government about setting up production in Italy, for example.

Mr Zhang denied the decision would come down to whichever country was able to offer the best incentives.

“For such a big investment project, it’s a combination of factors”, he said.

“It’s not just government policy or incentives. You also need to look at the market itself; education, because you need good talented people such as engineers and factory workers; there’s also supply chain, logistics.

“So there will be many factors involved in our final decision”.

The pressure to set up manufacturing bases in Europe has increased since July, when the EU imposed steep tariffs, or taxes, on imports of electric vehicles from China.

This was done, Brussels said, because carmakers in China were benefitting from “unfair subsidies” which allowed their cars to be sold abroad very cheaply, undermining local manufacturers. China accused the EU of protectionism.

By building its products in Europe, Chery would avoid paying those tariffs. But Mr Zhang insisted his company was always committed to local production.

“We are not trying to use any unfair methods”, he insisted.

“We want to be adaptable to the local market, and provide the best products, using the best dealerships. To be localised is the only strategy for the long term,” he said.

The UK has yet say whether it will take a similar approach with tariffs of its own.

China’s domestic car market is vast, with more than 30 million vehicles sold each year.

Its stake in the global market is also already significant, with roughly 5 million cars exported last year. That was a 64% increase on the year before.

In the UK, Chinese brands still account for a relatively small proportion of cars sold, around 5%.

But established carmakers are concerned that figure could grow quickly, with the prices offered by Chinese brands expected to play a key role.